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Hoffman v. Red Owl Stores, Inc.

Hoffman v. Red Owl Stores, Inc.



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Published by: crlstinaaa on Apr 08, 2008
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Remedies where Agreement Incomplete or IndefiniteCase: Hoffman v. Red Owl Stores, Inc. (1965, WI) [pp. 435-443]Parties: Plaintiff - HoffmanDefendant - Red OwlFacts: Lukowitz (as agent for Red Owl) made an agreement with Hoffmans that RedOwl would build a store and stock it with merchandise in return for P's putting up$18,000. In reliance on this agreement, Hoffman sold his bakery and grocery (whichwas only a temporary experiment to gain experience in the grocery business); theyalso rented a house in Chilton where they thought they were going to move.Basically, Hoffman let Red Owl know he could only get $18,000, and he receivedassurances like “everything is ready to go, get your money together and we areset.” Then, the situation kept chaning and ultimately Red Owl asked for $34,000,and which $13k investment from P's father-in-law in exchange for being a partnerwas going to be an outright gift . At this point, Hoffman said he couldn’t goalong with this. They had negotiated but had not reached final agreement on alldetails at the time P withdrew from negotiations. There was no contract evermade, but P acted in reliance of D's promises.Issue: What kind of damages can be awarded when no contract was ever made, but Pacted in reliance of D's promises?Holding: Court decides to enforce the indefinite agreement based on promissoryestoppel and awards reliance damages.Reasoning: Although the details of the agreement weren't all established, theyare enough to satisfy a claim of reliance via promissory estoppel (which says thatreliance can substitute for consideration and allow enforcement based onreliance). Rest §90 does not require that in order to use PE the promise has tobe definite. It only requires that (1) the promise is of the type that promisorshould reasonably expect to induce action or forbearance of a definite andsubstantial character on the part of the promise, (2) the promise induced suchaction or forbearance, and (3) injustice be avoided only by enforcement of thepromise. The first 2 questions are the be determined by the jury and the jury inthis case found in favor of P. The last question requires court’s discretion, andit finds that justice can only be avoided if P is compensated.Damages: Since there was no contract, the damages are limited to thosenecessary to avoid injustice - reliance damages.Reliance damages awarded $3,265 for the selling of the bakery
 and his moving costs, etc.® Also included: Chilton option (the ground he would buy),moved to another city to rent an apt.P can get difference between fair market value of store and the
 price he received® But need more info on fair market value (new trialgranted for this) P had to sell quickly, and didn’t get as much as he should have.® Cant get damages for lost profits, there was no contract.he does NOT get expected profits, because the court thinks this
 would be expectation (only for breach of K)RULE:· A party can be held liable w/o a K, if they induced reliance on part of otherparty prior to making of a definite K.· Promissory estoppel can be used to recover damages in absence of a clearcontract and finalized details.

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