Hoffman v. Red Owl Stores, Inc.

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

Facts

Plaintiffs, the Hoffmans, relied on Red Owl's promises to establish a grocery store franchise, selling their existing grocery and bakery businesses, paying for a lot, and moving. Red Owl repeatedly changed the terms and ultimately failed to deliver the promised franchise, causing the Hoffmans significant financial detriment.

Issue

The court addressed whether Wisconsin should recognize promissory estoppel under Restatement § 90, whether the facts of this case satisfied its requirements, and the appropriate measure of damages for such a claim.

Holding

The court adopted promissory estoppel as a valid cause of action in Wisconsin and found that Red Owl's unfulfilled promises and Hoffman's detrimental reliance met its criteria. It held that damages for promissory estoppel are limited to reliance damages necessary to prevent injustice, not expectation damages like lost profits.

Rule

Wisconsin adopted Restatement (First) of Contracts § 90, which states that a promise reasonably expected to induce definite and substantial action or forbearance, and which does, is binding if injustice can only be avoided by enforcement. Damages for promissory estoppel are limited to the promisee's detrimental reliance, not the full value of the promised performance.

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Case brief last reviewed 2026-03-02. Prepared by CaseReader from the published opinion.