South-Western Legal Studies in Business

Promissory Estoppel Provide Grounds for Breach of Contract and Infringement Action
Description The Georgia appeals court affirmed a jury verdict for the purchase price of a business, and the value of profits earned by use of a well-known trade name, when a buyer failed to pay the seller of the business the sum promised in an oral agreement to transfer business ownership.
Topic Contracts
Key Words Promissory Estoppel; Promise; Trade Name
C A S E   S U M M A R Y
Facts Morgan Cleaners contended that it had an oral agreement for DeCelles to pay $88,550 for a dry cleaning store. Payment was to be made over time by DeCelles paying Morgan to process all clothing brought to the store run by DeCelles. Morgan would receive a surcharge of 7% above the normal cleaning rate until the loan was repaid. In reliance on the promise, Morgan closed one of its stores and supported DeCelles in opening a new store under the name Morgan Cleaners. After 15 months, DeCelles refused to send clothing to Morgan and left an unpaid balance of $66,290 and continued to use the Morgan name. The jury found for Morgan for breach of contract and infringement of trade name. DeCelles appealed.

Affirmed. Promissory estoppel means a “promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” The jury properly found, based on the evidence provided, that DeCelles’ promise induced reliance by Morgan, so the damages of the remainder of the purchase price stands. Further, DeCelles improperly used the Morgan trade name. Once DeCelles ended affiliation with Morgan, it should have ceased using the name, so the jury could award damages for infringement, which it did, based on the profits earned by DeCelles after it ended relations with Morgan.

Citation DeCelles v. Morgan Cleaners & Laundry, Inc., --- SE2d --- (2003 WL 21093776, Ct. App., Ga., 2003)

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