ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Thursday, May 2, 2019

The difficulties in establish an oral agreement, the difficulties in establishing promissory estoppel

A recent case out of the Fifth Circuit, Mr. Mudbug, Inc. v. Bloomin' Brands, Inc., No. 18-30626 (behind paywall), reminds us that, in the case of establishing the existence of an oral agreement, it helps to have testimony that comes from a third party.

The plaintiff asserted that it had entered into an oral agreement with the defendant where the defendant promised to buy 28 million pounds of various dressings. However, all of the testimony about the existence of the oral agreement came from the plaintiff's executives. While it was true that the plaintiff and the defendant had a ten-year business relationship, that by itself did not establish the existence of the 28-million-pound contract, especially where the defendant had provided evidence that it consistently refused to commit to a specific volume of purchasing. 

Having failed to establish the existence of a contract, the plaintiff turned to promissory estoppel, but you can only have promissory estoppel where a promise exists. The plaintiff asserted that the defendant told it that it would have to "substantially enlarge its . . . facilities" if it wanted "to produce all of the food products" that the defendant would need. But this was a declaration of fact, not a promise that the defendant would enter into contracts with the plaintiff if it expanded. 

https://lawprofessors.typepad.com/contractsprof_blog/2019/05/the-difficulties-in-establish-an-oral-agreement-the-difficulties-in-establishing-promissory-estoppel.html

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Comments

Was there a statute of frauds issue as well?

Posted by: Chris | May 8, 2019 9:47:50 AM

Good question. Statute of frauds was not discussed in the case.

Posted by: Stacey | May 24, 2019 8:45:36 AM

I'm a bit late to the post but it's an interesting question for an interesting case... I assume Statute of Frauds wasn't raised in large part because this case was removed to E.D. La. and sitting in diversity juris, the substantive contract law applied was Louisiana law, which I understand has a quite limited scope for SoF compared to standard U.S. common law jurisdictions... Just speculation on my part.

Posted by: Mitch | Jul 1, 2019 3:56:32 PM

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