Hoffman v. Red Owl Stores, Inc.

26 Wis. 2d 683 · Wisconsin Supreme Court · 1965

Facts

Hoffman, relying on Red Owl's repeated promises to establish him in a franchise store, sold his grocery and bakery businesses, paid for a lot, and incurred moving expenses. Red Owl continuously changed the terms and ultimately failed to deliver on its promises, causing Hoffman to suffer financial losses. The jury found that Red Owl made promissory representations, and Hoffman relied on them to his detriment.

Procedural history

The case is before this court on an appeal and cross appeal. The trial court framed the special verdict based on the theory of Restatement, 1 Contracts, sec. 90. The trial court also granted a new trial on the issue of damages related to the sale of the Wautoma grocery-store fixtures and inventory.

Issue

Whether Wisconsin should recognize promissory estoppel as a cause of action under Restatement (First) of Contracts § 90, and if so, whether the facts of this case warrant its application to hold Red Owl liable for Hoffman's reliance damages.

Holding

The Wisconsin Supreme Court adopted the doctrine of promissory estoppel as stated in Restatement (First) of Contracts § 90. It found that Red Owl's promises induced Hoffman's definite and substantial reliance, making the doctrine applicable, and affirmed most damage awards while ordering a new trial on one specific damage item.

Rule

A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise (Restatement (First) of Contracts § 90). Damages in promissory estoppel are limited to reliance losses necessary to prevent injustice, not necessarily full contract damages.

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Case brief last reviewed 2026-04-18. Prepared by CaseReader from the published opinion.