Promissory Estoppel as a legal theory in debt suits

PROMISSORY ESTOPPEL THEORY 

Is promissory estoppel a viable theory for collection of a credit card debt? 

Promissory estoppel is a common-law theory that may attach binding legal consequence to a promise by one party if the other party relied on it without there being a formal contract between the parties. But if the subject of the dispute is addressed by a contract between the parties, the theory of promissory estoppel has no place in a lawsuit by the party that claims to have been wronged. Like other alternative theories of recovery (such as quantum meruit and unjust enrichment), promissory estoppel and breach of contract are also incompatible and mutually exclusive.

The elements of promissory estoppel include: (1) a promise; (2) foreseeability of reliance by the promisor; and  (3) substantial reliance by the promisee to his detriment.  Promissory estoppel is not applicable to a promise covered by a valid contract between the parties however. As an equitable theory, promissory estoppel only applies to promises outside a contract.

CMA PRECLUDES PROMISSORY ESTOPPEL 

Because a credit card debt claim always arises from a contractual relationship between creditor and consumer that is even subject to federal law (TILA), which requires disclosure of credit terms in writing, a promissory estoppel claim is not a proper theory in debt collection litigation.

If a creditor or debt-buyer nevertheless pleads promissory estoppel, and moves for summary judgment on it, the theory, and basis for the motion, should be attacked as non-viable as a matter of law. Prior to the plaintiff filing its motion for summary judgment, the theory could also be challenged by special exceptions, or by a matter-of-law motion for summary judgment brought by the Defendant.

ELEMENTS OF PROMISSORY ESTOPPEL WHEN THE THEORY IS NOT BARRED 

Under circumstances in which the theory is not precluded due to the presence of an express contract, the plaintiff must plead and prove the following elements: (1) a promise, (2) foreseeability of reliance thereon by the promisor, and (3) substantial reliance by the promisee to his detriment.

Additionally, to be actionable under the theory of promissory estoppel, the underlying promise must have been made with the requisite specificity to create a justifiable expectation of fulfillment.  While a specific, detailed promise might support a promissory estoppel claim, relying on a vague, indefinite promise – such as of future business --  is unreasonable as a matter of law.

The statute of limitations for promissory estoppel  as a cause of action for affirmative relief is four years.