A wealthy donor verbally promised to donate $100,000 to a local nonprofit organization to fund its new community center. Relying on the donor's promise, the nonprofit signed binding construction contracts and spent $50,000 on preliminary expenses. Later, the donor informed the nonprofit that they no longer wished to donate the funds. The nonprofit seeks to enforce the promise. What legal doctrine is the most likely basis to enforce the donor's promise in this situation?
The correct answer is the doctrine of reliance, also called promissory estoppel. Promissory estoppel applies when one party makes a promise that they should reasonably expect to induce action or forbearance by the other party, the other party justifiably relies on the promise, and enforcement of the promise is necessary to avoid injustice. Here, the nonprofit relied on the donor's promise to its detriment by incurring significant expenses, making promissory estoppel the most applicable doctrine.
Restitution, while related, applies when one party has conferred a benefit on another and seeks to prevent unjust enrichment. However, this does not address the nonprofit's reliance on the donor's promise in this scenario. Consideration would require a bargained-for exchange, but no such exchange exists here. Furthermore, the doctrine of mutual assent deals with the formation of agreements, which is not directly applicable in the absence of consideration in this case.
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What is promissory estoppel?
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What are the differences between promissory estoppel and consideration?