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March 23, 1978


Bristol. Contract and tort. Writ in the Superior Court dated December 19, 1969. Following the decision of this court in 1 Mass. App. Ct. 801 (1973), the case was tried before K. Smith, J.

Keville, Grant, & Brown, JJ. Justice Grant concurs in the result.



The opinion of the court was delivered by: Keville

Discussion of the doctrine of promissory estoppel. [154-157]

Where the defendant subcontractor quoted a price for supplying and installing metal partitions to the plaintiff, knowing that the plaintiff, as general contractor, might use this price in bidding on a construction contract and where the plaintiff used the quoted price in submitting its successful bid and subsequently the defendant refused to execute a subcontract, the defendant was liable to the plaintiff on a theory of promissory estoppel for the difference between the quoted price and that paid by the plaintiff to another company engaged to supply and install the partitions. [157]

In an action by a general contractor against a manufacturer of metal partitions seeking damages for the manufacturer's refusal to execute a subcontract in accordance with a price quoted by the manufacturer and used by the contractor in its successful bid for the contract, the contractor's delay of two and one-half months after award of the general contract before notifying the manufacturer that its subbid was accepted did not preclude, as matter of law, recovery against the manufacturer on a theory of promissory estoppel. [157-158]

The plaintiff-appellee (Loranger) is a general contractor. The defendant-appellant (Hauserman) manufactures movable metal partitions. On May 20, 1968, Loranger was preparing a bid for a contract to construct buildings for a community college. A sales engineer employed by Hauserman, knowing of Loranger's plan to bid on the general contract, telephoned Loranger and quoted a figure of $15,900 for supplying and installing the metal partitions. The quotation was based upon plans and specifications of the buildings which the engineer felt were a sufficient basis for the quotation. Hauserman's was the sole bid for the partition work; and Loranger included the $15,900 figure in its bid for the general contract submitted on that day, May 20, 1968.

On June 21 or June 26, 1968, Loranger was awarded the general contract. On September 12, 1968, Loranger forwarded to Hauserman an unsigned subcontract form based upon the $15,900 figure. The parties stipulated that no employee of Loranger had communicated with any employee of Hauserman subsequent to Hauserman's telephone quotation until September 12 when the subcontract form was mailed to Hauserman. On October 24, 1968, Hauserman, from its New York offices, informed Loranger that it rejected the subcontract. Loranger then engaged another company to supply and install the partitions for $23,000. This action was brought by Loranger to recover $7,100, the difference between Hauserman's quoted price and that paid by Loranger to the substituted subcontractor for the partitions. The jury returned a verdict for Loranger in that amount.

Loranger's complaint was in four counts, all save count 1 were subsequently waived. In count 1 of its amended complaint, Loranger alleged that Hauserman's telephone quotation on May 20 was an offer which Loranger accepted and relied upon in submitting its general bid. In count 4 Loranger alleged that Hauserman's quotation was an offer which was accepted by Loranger after Loranger's bid on the general contract had been accepted. Count 4, which rested upon an alleged acceptance by Hauserman after the award of the general contract in June, was waived by Loranger at trial. Consequently, Loranger cannot successfully argue for recovery on that basis. Goldsmith v. Traveler Shoe Co., 236 Mass. 111, 113-114 (1920). Dalton v. Post Publishing Co., 328 Mass. 595, 598-599 (1952). With respect to count 1, Loranger does not assert, nor does the evidence demonstrate, that any action taken by it prior to the award of the general contract in June constituted an acceptance by Loranger. Thus Loranger is foreclosed from recovery on any traditional contract theory. However, we hold that Loranger is entitled to recover on the theory of promissory estoppel, a basis for recovery not previously explicitly accepted in the courts of this Commonwealth.

The theory of promissory estoppel, as embodied in the Restatement of Contracts § 90 (1932), permits recovery if (1) a promisor makes a promise which he should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, (2) the promise does induce such action or forbearance, and (3) inJustice can be avoided only by enforcement of the promise. See Janke Constr. Co. v. Vulcan Materials Co., 527 F.2d 772, 777 (7th Cir. 1976). Simpson, Contracts § 61, 118 (1965). Boyer, Promissory Estoppel: Requirements and Limitations of the Doctrine, 98 U. Pa. L. Rev. 459, 460 (1950). Initially, courts were reluctant to allow recovery based upon promissory estoppel, and application of the theory was limited to such areas as reliance placed by charities upon promised donations. 1 Williston, Contracts § 140, at 609 (3d ed. 1957). Annot., 48 A.L.R.2d 1069, 1078, 1081 (1956). 1A Corbin, Contracts § 198, at 204 (1963). Henderson, Promissory Estoppel and Traditional Contract Doctrine, 78 Yale L.J. 343, 350 n.29 (1969). However, application of the theory has been expanded more recently to cover disputes arising in commercial transactions (1 Williston, Contracts § 140, at 610 [3d ed. 1957]; Calamari & Perillo, Contracts § 6-8, at 211 [2d ed. 1977]; see, e.g., Janke Constr. Co., 527 F.2d at 772-776; Drennan v. Star Paving Co., 51 Cal. 2d 409 [1958]; Hoffman v. Red Owl Stores, Inc., 26 Wis. 2d 683, 686-690 [1965]), and refusal to apply the doctrine to commercial transactions has been the subject of criticism. Boyer, (supra) at 492-493.

Courts of this Commonwealth have of course applied the traditional doctrine of equitable estoppel. Calkins v. Wire Hardware Co., 267 Mass. 52, 68-69 (1929). Looney v. Trimount Theatres, Inc., 282 Mass. 275, 277-278 (1933). That doctrine differs from promissory estoppel primarily in that equitable estoppel permits recovery only where there has been reliance upon the misrepresentation of past or present facts whereas recovery may be had under the theory of promissory estoppel where reliance has been placed upon statements of future intent. 1 Williston, Contracts § 140, at 611-615 (3d ed. 1957). Calamari & Perillo, Contracts § 6-6, at 209 (2d ed. 1977). Langdon v. Doud, 10 Allen 433, 436-437 (1865). While Massachusetts has not accepted the theory of promissory estoppel by name, its underlying principles have in effect been applied to reach equitable results and our courts have applied the theory of estoppel to representations of future intent. See McLearn v. Hill, 276 Mass. 519, 526-527 (1931); *fn1 Baglio v. New York Central R.R., 344 Mass. 14, 19-20 (1962). Compare Antonelli Constr. Co. v. Aetna Cas. & Sur. Co., 354 Mass. 465, 468 (1968). In Cellucci v. Sun Oil Co., 2 Mass. App. Ct. 722 (1974), S.C. 368 Mass. 811 (1975), a contract was held to be enforceable where the defendant's agent gave false assurances, upon which the plaintiff relied, that a contract would be approved by the defendant. *fn2

Massachusetts has in effect applied the theory of promissory estoppel in cases involving charitable subscriptions. Most cases allowing recovery where a charity has relied upon the promise of a donation purport to find consideration by the charity for the promise. Trustees of Amherst Academy v. Cowls, 6 Pick. 427, 432 (1828). Ladies' Collegiate Inst. v. French, 16 Gray 196, 201 (1860). However, those cases appear to have elasticized the concept of consideration for in essence they amount to enforcement of gratuitous promise upon which a charity relied to its detriment. 1A Corbin, Contracts § 198, at 207-210 & n.21 (1963). Henderson, (supra) at 354. Boyer, (supra) at 472-473. See Martin v. Meles, 179 Mass. 114, 116 (1901). An approach similar to that taken in the charitable subscription cases has been followed in commercial settings. Id. Sherwin v. Fletcher, 168 Mass. 413, 415 (1897). Cellucci v. Sun Oil Co., 2 Mass. App. Ct. at 729. Elasticizing traditional approaches, rather than openly adopting the theory of promissory estoppel in appropriate instances, has led to some confusion. Henderson, (supra) at 377 n.188. 1 Williston, Contracts § 140, at 607-609 (3d ed. 1957).

Our acceptance of the theory of promissory estoppel follows a trend established elsewhere and has the approval of authoritative comment. Drennan v. Star Paving Co., 51 Cal. 2d at 414-415. Constructors Supply Co. v. Bostrom Sheet Metal Works, Inc., 291 Minn. 113, 114-118 (1971). E.A. Coronis Associates v. M. Gordon Constr. Co., 90 N.J. Super. 69, 76-77 (1966). Hoffman v. Red Owl Stores, Inc., 26 ...

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