Construction law is largely contract law. Most of us know a contract when we see one. Courts enforce agreements rather than mere promises, and require an offer, its acceptance, and an exchange of something of value (what lawyers call “consideration”). One party promises to pay the other for a specified performance; the other promises to perform in exchange for the payment; and the mutual promises serve as consideration for each other. If one party makes a gratuitous promise to the other (i.e., for no consideration), there is no enforceable contract.
But there may still be a basis for recovering damages under a legal doctrine called “promissory estoppel.” Courts recognize that if someone reasonably relies on a promise, and suffers some detriment as a result – or even does something that benefits the promisor – it is fundamentally unfair to leave him without any legal remedy. Promissory estoppel fills this gap, holding that “a promise reasonably understood as intended to induce action is enforceable by one who relies on it to his detriment or to the benefit of the promisor.” Panto v. Moore Business Forms, Inc., 130 N.H. 730, 738 (1988).
Promissory estoppel is used “to enforce promises underlying otherwise defective contracts,” Great Lakes Aircraft Co., Inc. v. City of Claremont, 135 N.H. 270, 290 (1992). But the doctrine is only available as a back up theory; “in all instances, application of promissory estoppel is appropriate only in the absence of an express agreement.” Id. at 290. If there is consideration for the promise, there is a contract, and promissory estoppel won’t apply. New Hampshire Speedway, Inc. v. Motor Racing Network, Inc., 2013 N.H. LEXIS 153, at *10 (N.H. Sup. Sept. 25, 2013) (“Because we have already determined, as a matter of law, that there is consideration for the Agreement, Network may not rely upon promissory estoppel to enforce the promises contained therein.”).
In the construction world, promissory estoppel often applies in bid scenarios. Granite State Glass, low bidder on a municipal contract who nevertheless wasn’t awarded the contract, used this theory in Marbucco Corp. v. City of Manchester, 137 N.H. 629, 633 (1993). The Court held that “Granite State’s reasonable reliance on the city’s promise, if it awarded the contract at all, to award it to the lowest responsible bidder submitting all essential information prior to the bidding deadline, could entitle Granite State to damages under the theory of promissory estoppel.”
In the other direction, promissory estoppel can hold a subcontractor to its bid until the general contractor has had a reasonable time to accept the bid after receiving the prime contract. Our Supreme Court has yet to rule on the issue, but the leading case nationwide is Justice Traynor’s opinion in Drennan v. Star Paving Co., 51 Cal. 2d 409, 415 (1958) (“Clearly defendant had a stake in plaintiff's reliance on its bid. Given this interest and the fact that plaintiff is bound by his own bid, it is only fair that plaintiff should have at least an opportunity to accept defendant's bid after the general contract has been awarded to him.”).
When it comes to damages, promissory estoppel may not be as generous as a breach of contract award would be. Breach of contract damages include lost expectation damages. i.e., the value of what was promised. In contrast, damages under promissory estoppel are sometimes limited to “reliance” damages, i.e., the amount or value of what the plaintiff expended in money or effort. (That’s what happened with Granite State Glass in the Marbucco case; it was awarded its bid preparation costs.) But in general, “the value of the promise is the presumptive measure of damages for promissory estoppel, to be rejected only if awarding so much would be inequitable.” Jackson v. Morse, 152 N.H. 48, 53 (2005).
One open question in New Hampshire is whether promissory estoppel requires a plaintiff to prove that injustice can be avoided only through enforcement of the promise. Our Supreme Court has this issue on its plate right now in Collision Communications, Inc. v. Nokia Solutions and Networks OY, No. 2025-0140. I’ll update you when the decision is handed down.
But there may still be a basis for recovering damages under a legal doctrine called “promissory estoppel.” Courts recognize that if someone reasonably relies on a promise, and suffers some detriment as a result – or even does something that benefits the promisor – it is fundamentally unfair to leave him without any legal remedy. Promissory estoppel fills this gap, holding that “a promise reasonably understood as intended to induce action is enforceable by one who relies on it to his detriment or to the benefit of the promisor.” Panto v. Moore Business Forms, Inc., 130 N.H. 730, 738 (1988).
Promissory estoppel is used “to enforce promises underlying otherwise defective contracts,” Great Lakes Aircraft Co., Inc. v. City of Claremont, 135 N.H. 270, 290 (1992). But the doctrine is only available as a back up theory; “in all instances, application of promissory estoppel is appropriate only in the absence of an express agreement.” Id. at 290. If there is consideration for the promise, there is a contract, and promissory estoppel won’t apply. New Hampshire Speedway, Inc. v. Motor Racing Network, Inc., 2013 N.H. LEXIS 153, at *10 (N.H. Sup. Sept. 25, 2013) (“Because we have already determined, as a matter of law, that there is consideration for the Agreement, Network may not rely upon promissory estoppel to enforce the promises contained therein.”).
In the construction world, promissory estoppel often applies in bid scenarios. Granite State Glass, low bidder on a municipal contract who nevertheless wasn’t awarded the contract, used this theory in Marbucco Corp. v. City of Manchester, 137 N.H. 629, 633 (1993). The Court held that “Granite State’s reasonable reliance on the city’s promise, if it awarded the contract at all, to award it to the lowest responsible bidder submitting all essential information prior to the bidding deadline, could entitle Granite State to damages under the theory of promissory estoppel.”
In the other direction, promissory estoppel can hold a subcontractor to its bid until the general contractor has had a reasonable time to accept the bid after receiving the prime contract. Our Supreme Court has yet to rule on the issue, but the leading case nationwide is Justice Traynor’s opinion in Drennan v. Star Paving Co., 51 Cal. 2d 409, 415 (1958) (“Clearly defendant had a stake in plaintiff's reliance on its bid. Given this interest and the fact that plaintiff is bound by his own bid, it is only fair that plaintiff should have at least an opportunity to accept defendant's bid after the general contract has been awarded to him.”).
When it comes to damages, promissory estoppel may not be as generous as a breach of contract award would be. Breach of contract damages include lost expectation damages. i.e., the value of what was promised. In contrast, damages under promissory estoppel are sometimes limited to “reliance” damages, i.e., the amount or value of what the plaintiff expended in money or effort. (That’s what happened with Granite State Glass in the Marbucco case; it was awarded its bid preparation costs.) But in general, “the value of the promise is the presumptive measure of damages for promissory estoppel, to be rejected only if awarding so much would be inequitable.” Jackson v. Morse, 152 N.H. 48, 53 (2005).
One open question in New Hampshire is whether promissory estoppel requires a plaintiff to prove that injustice can be avoided only through enforcement of the promise. Our Supreme Court has this issue on its plate right now in Collision Communications, Inc. v. Nokia Solutions and Networks OY, No. 2025-0140. I’ll update you when the decision is handed down.
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