Nelson v. Elway

908 P.2d 102 · Supreme Court of Colorado · 1995

Facts

Nelson, owner of two car dealerships, negotiated their sale to Elway and Buscher. An oral "Service Agreement" for Nelson's compensation was discussed but never signed, and was conditional on GMAC's approval. GMAC, the financier, later prohibited Nelson from receiving proceeds, leading Elway and Buscher to refuse to honor the Service Agreement.

Issue

Can a claim for promissory estoppel succeed when the alleged promise was expressly conditional and the condition precedent (GMAC approval) did not occur, making reliance unreasonable as a matter of law?

Holding

The Supreme Court reversed the court of appeals, holding that the conditional nature of the promise precluded the promissory estoppel claim because reliance on such a promise before the condition occurs is unreasonable as a matter of law. The court affirmed summary judgment on civil conspiracy and breach of contract claims.

Rule

Under Restatement (Second) of Contracts § 91, if a promise is conditional, any detrimental change of position by the promisee prior to the occurrence of the condition is unreasonable as a matter of law, thus precluding a claim for promissory estoppel under § 90. Additionally, merger clauses in written contracts between sophisticated parties bar extrinsic evidence of prior oral agreements, and part performance must be substantial and referable only to the alleged oral agreement to overcome the statute of frauds.

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Case brief last reviewed 2026-04-27. Prepared by CaseReader from the published opinion.