## Facts

- D & G Stout, Inc. (doing business as General Liquors, Inc.) was a long-time wholesale liquor distributor in northern Indiana.
- Bacardi Imports, Inc. had used General as its northern Indiana distributor for more than 35 years in an at-will relationship.
- During 1980s market consolidation, General’s business weakened; by April 1987, two major suppliers withdrew, removing over half of General’s gross sales.
- General began negotiating to sell its business to another distributor and Bacardi knew the negotiations were ongoing.
- While the sale negotiations were pending, Bacardi gave repeated assurances that General would continue as Bacardi’s distributor in northern Indiana.
- Relying on those assurances, General rejected the negotiated sale price it had been offered.
- About one week later, Bacardi withdrew its line from General.
- General then returned to the prospective buyer and sold for $550,000 less than the earlier offer.
- General sued Bacardi for promissory estoppel, seeking the $550,000 sale-price differential as damages.

## Issues

1. Whether assurances of continued dealings in an at-will distributorship can support promissory estoppel.
2. Whether the claimed $550,000 sale-price differential is a recoverable reliance loss under promissory estoppel rather than nonrecoverable expectation damages for continued at-will business.
3. Whether summary judgment was proper where a jury could find a definite promise, reasonable reliance, and causation.

## Decision

- The Seventh Circuit reversed the district court’s grant of summary judgment for Bacardi and remanded for trial.
- The court held that promissory estoppel is not categorically barred by the at-will nature of the distributorship.
- The court ruled that General’s alleged injury—rejecting a higher sale offer because of Bacardi’s assurances—could qualify as reliance damages if proved.
- The court emphasized that recovery, if any, was limited to reliance damages; expectation damages such as lost future profits from continued dealings were not available on these facts.
- The court concluded that whether Bacardi made a promise and whether General reasonably and foreseeably relied on it were factual questions inappropriate for summary judgment.

## Legal Principles

- Under Restatement (Second) of Contracts § 90(1), a promise is binding when the promisor should reasonably expect it to induce action or forbearance, it does so, and enforcement is necessary to avoid injustice.
- The at-will character of a commercial relationship does not automatically defeat promissory estoppel; it limits the remedial scope.
- Promissory estoppel protects reliance interests, not the expectation of continued performance in an at-will relationship.
- Foreseeable forbearance from a favorable transaction (such as rejecting a sale offer) can constitute actionable reliance.
- A plaintiff must prove a promissory statement, reasonable and foreseeable reliance, and causation between the reliance and the claimed loss.

## Conclusion

The court held that an at-will distributorship does not preclude promissory estoppel where the defendant’s assurances foreseeably induce detrimental forbearance; the plaintiff may pursue reliance damages for the sale-price differential if it can prove a promise, reasonable reliance, and causation at trial.


D & G Stout, Inc. v. Bacardi Imports, Inc., 923 F.2d 566 (7th Cir. 1991)