This Article examines more than three hundred promissory estoppel cases decided between January 1, 1981, when the Restatement (Second) of Contracts was published, and January 1, 2008, when research for this project began, to explore the manner in which courts conceptualize, decide, and enforce promissory estoppel claims under § 90 of the Restatement (Second) of Contracts. Specifically, because the drafters of the Restatement (Second) made several important changes to § 90 of the Restatement (First) with the intent of making promissory estoppel more available, the role of reliance more prominent, and the remedies awarded to successful litigants more flexible, this Article investigates whether these changes have had their desired effect on promissory estoppel doctrine as reflected in the case law.

The research presented here can be interpreted to support three major claims. First, these data suggest that promissory estoppel is a much more significant theory of promissory recovery than has been previously thought and seems positioned to continue to grow in importance in the coming decades. Second, the data reveal that promissory estoppel cannot be understood exclusively in terms of “promise” or “reliance,” as some scholars and judges have suggested. Instead, the data reveal that most judges require the existence of both promise and reliance before allowing a promissory estoppel claim to proceed, although surprisingly few judges require a plaintiff to show that the equitable principle of “justice” has been satisfied. Last, and most significantly, these data reveal that, with respect to remedies, courts tend to treat promissory estoppel actions as traditional breach of contract actions, in that courts generally tend to award the (usually) more generous expectation measure of damages, which is typical in ordinary breach of contract actions, over the (usually) less generous reliance measure of damages, which is often awarded where non-contractual obligations have been breached (such as in tort law). However, by replacing these conceptual labels (such as “expectation” and “reliance” damages) with a more functional classificatory scheme capturing whether a promissory estoppel plaintiff has obtained the highest recovery available under any other theory of promissory recovery, including a “traditional” breach of contract action, this Article argues that the extent to which courts have treated promissory estoppel claims as fully contractual has been underappreciated.

This Article critically examines the applicability of law and economics, or wealth maximization theory, to contract law by examining this theory from within the consequentialist framework of utilitarianism. Roughly speaking, wealth maximization theory is a consequentialist theory of justice holding that those actions that increase wealth are just and should be allowed, whereas those actions that decrease wealth are unjust and should be forbidden. This theory has been used not only to support such controversial doctrines as efficient breach, but also to inform the way that many scholars and judges think about remedies for the breach of contract. Although the growth and acceptance of wealth maximization theory has been rapid since it was first formalized several decades ago, it is by no means uncontroversial, having been subject to constant attack since its inception from many who, operating outside of consequentialism, have criticized the normative foundations upon which wealth maximization theory rests, expressing their dismay over a theory that encourages the breaking of a solemn oath in the name of efficiency. Until now, however, previous scholarship has not critically examined this theory from within the consequentialist framework to see whether it, in fact, actually maximizes wealth. This Article provides that approach.

Unlike other scholarship in this area, this Article does not challenge the normative foundations upon which wealth maximization theory rests, but rather argues that, on its own terms, this theory fails to maximize wealth within contract law. This is because wealth maximization theory is a fundamentally utilitarian theory that depends upon, and derives its legitimacy from, the utilitarian concept of value. Notably however, wealth maximization theory often prevents value from being maximized in the name of wealth. This insight has profound implications, suggesting not only that the continued application of this theory to contract law ought to be seriously questioned, but also that the way both consequentialists and nonconsequentialists think about remedies in contract law may need to be rethought. Indeed, this insight may even help reconcile these divergent theories within contract law because, as this Article suggests, the best way to achieve the consequentialist end of utility maximization is often through the nonconsequentialist means of contract enforcement, including the enforcement of liquidated damages clauses and specific performance.