Copyright 2007 Thomson Delmar Learning. All Rights Reserved. HOFFMAN v. RED OWL STORES, INC. 26 Wis.2d 683, 133 N.W.2d 267 (1965) Case Brief

Copyright 2007 Thomson Delmar Learning. All Rights Reserved. HOFFMAN v. RED OWL STORES, INC. PURPOSE: An example of promissory estoppel.

Copyright 2007 Thomson Delmar Learning. All Rights Reserved. HOFFMAN v. RED OWL STORES, INC. CAUSE OF ACTION: Contract.

Copyright 2007 Thomson Delmar Learning. All Rights Reserved. HOFFMAN v. RED OWL STORES, INC. FACTS: An agent for Red Owl Stores engaged in continuing negotiations for over two years with Hoffman, who wanted to run a Red Owl supermarket. Hoffman sold his bakery at the agent’s request and bought and worked in a small grocery store. During this period, the price of the franchise was raised twice. When Red Owl insisted that $13,000 put up by Hoffman’s father-in-law be agreed by the father-in-law as a gift, Hoffman balked.

Copyright 2007 Thomson Delmar Learning. All Rights Reserved. HOFFMAN v. RED OWL STORES, INC. ISSUE (1): Whether the promise necessary to sustain a cause of action for promissory estoppel must embrace all essential details of a proposed transaction between promisor and promisee so as to be the equivalent of an offer that would result in a binding contract between the parties if the promisee were to accept.

Copyright 2007 Thomson Delmar Learning. All Rights Reserved. HOFFMAN v. RED OWL STORES, INC. ISSUE (2): Whether Plaintiffs can collect loss of profits.

Copyright 2007 Thomson Delmar Learning. All Rights Reserved. HOFFMAN v. RED OWL STORES, INC. HOLDING: 1. No, something less than complete details required for promissory estoppel. 2. No, cannot collect lost profits.

Copyright 2007 Thomson Delmar Learning. All Rights Reserved. HOFFMAN v. RED OWL STORES, INC. REASONING (Issue 1): The Court applies § 90 of the Restatement of Contracts: (1) Was the promise one which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee? (2) Did the promise induce such action or forbearance? (3) Can injustice be avoided only by enforcement of the promise?

Copyright 2007 Thomson Delmar Learning. All Rights Reserved. HOFFMAN v. RED OWL STORES, INC. REASONING (Issue 2): While a breach of contract action may include loss of profits, this is not a breach of contract action. Where damages are awarded in promissory estoppel instead of specifically enforcing the promisor’s promise, they should be only such as in the opinion of the court are necessary to prevent injustice. The wrong lies in causing the plaintiff to change position to his detriment. It would follow that the damages should not exceed the loss caused by the change of position.