Restatement (Second) of Contracts
§ 139 Enforcement by Virtue of Action in Reliance
Summary
Section 139 provides that a promise which the promisor should reasonably expect to induce action or forbearance, and which does induce such action or forbearance, is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise. This section applies promissory estoppel principles to overcome the Statute of Frauds defense.
The section lists several factors courts should consider: the availability and adequacy of other remedies (particularly cancellation and restitution), the definite and substantial character of the reliance, the extent to which the reliance corroborates the promise, the reasonableness of the reliance, and the extent to which the evidentiary and cautionary functions of the Statute of Frauds are satisfied.
This provision represents a significant limitation on the Statute of Frauds, allowing courts to enforce oral agreements that would otherwise be unenforceable when the promisee has substantially and reasonably relied on the oral promise.
Key Elements
- 1Promise that the promisor should reasonably expect to induce reliance
- 2Actual action or forbearance induced by the promise
- 3Injustice can be avoided only by enforcement
- 4Availability of alternative remedies is a factor
- 5Character of reliance must be definite and substantial
Practical Application
Section 139 arises most frequently in real estate transactions where a buyer makes improvements to property based on an oral promise of sale, employment situations where an employee relocates based on an oral promise of long-term employment, and business deals where one party makes substantial investments based on an oral agreement that falls within the Statute of Frauds.
Exam Relevance
When a Statute of Frauds issue appears on an exam, always consider § 139 as a way to overcome the defense. The typical fact pattern involves an oral promise for the sale of land or a contract that cannot be performed within one year, followed by substantial reliance. Analyze each of the five factors listed in the section.