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MEMORANDUM
To: Marcus Mathers
From: Frank Gipson
Date: 11/19/2011
Re: Gold v. Barnes – Promissory Estoppel Claim
QUESTION(S) PRESENTED
1. Under Indiana law, can a party establish a cause of action for promissory estoppel
when a close friend offers to pay the other party’s way through law school, but
then backs out of the offer?
2. Under Indiana law, if there is a cause of action for promissory estoppel under
these circumstances, is the claim barred by the applicable statute of limitations?
BRIEF ANSWER(S)
1 Yes. The five elements for promissory estoppel under Indiana law are: “1) a promise by
the promissor; 2) made with the expectation that the promisee will rely thereon; 3) which induces
reasonable reliance by the promisee; 4) of a definite and substantial nature; and 5) injustice can
be avoided only by enforcement of the promise.” Spring Hill Developers, Inc. v. Arthur, 879
N.E.2d 1095, 1100 (Ind. Ct. App. 2008).
The defendant made a promise to pay for all costs of plaintiff’s matriculation through law
school. Due to the close nature of the friendship between the plaintiff and defendant, and
communications between the two parties regarding actions the plaintiff took toward going to law
school, the defendant should have expected that the plaintiff would rely on the promise. Since
the defendant’s promise clearly stated an intention to pay for the plaintiffs law school related
costs, and given the defendant’s wealth and history of helping others who were seeking advanced

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degrees financially, the plaintiff actually did commit substantial time and money toward
acquiring a law degree. Finally, because the plaintiff reluctantly took out substantial loans to pay
for the law school, enforcing the promise is the only way to avoid injustice. After establishing
these five elements, a court will likely find a claim for promissory estoppel.
2. No. Under Indiana law, the statute of limitations for actions on unwritten
contracts is six years. Rees v. Heyser, 404 N.E.2d 1183, 1187 (Ind. Ct. App. 1980); Ind. Code
Ann. § 34-11-2-7 (West). The statute begins to run after a “reasonable amount of time” to
perform has lapsed. Id. at 1188. The court went on to suggest that what constitutes “reasonable”
under these circumstances should be left up to the trier of fact. Id. at 1188.
At present, the initial offer in this case was made on July 12, 2007. This means that any
“reasonable” amount of time a trier of fact determines is sufficient for performance will fall well
within the applicable statute of limitations. Therefore, a claim of promissory estoppel under
these facts is not barred by the statute of limitations.
STATEMENT OF FACTS
On July 12, 2007, our client, Margie Gold (“Gold”), was invited to dinner by her former
employer, and close friend, Doreen Barnes (“Barnes”). During the meal, Barnes asked if Gold
had any future educational plans. Gold replied by expressing an interest in attending law school,
but expressed doubt as to whether she could afford it, pointing at undergraduate debt as a reason.
Barnes was, nevertheless, interested in the idea of Gold attending law school, and offered to pay
all of Gold’s law school related costs, including reasonable living expenses, provided that Gold
maintain a 3.0 GPA.
Gold did not dismiss this generous offer because she knew that Barnes was extremely
wealthy, and Barnes had helped another person, who Gold knew personally, through medical

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school by paying that person’s medical school related costs. On September 10, 2007, Gold
called Barnes on the eve of taking the LSAT to make sure that Barnes’s offer was still good.
Barnes reiterated that all of Gold’s law school related costs would be paid. After confirming the
promise, Gold applied to law school and was accepted in March of 2008. At this time, Gold
contacted Barnes again to relay the good news. Barnes expressed delight, but told Gold that cash
flow was a problem, and advised Gold to keep track of her expenses so that Barnes could pay
Gold back once the cash flow problem was resolved. Gold paid her tuition deposits with money
she had saved from her job.
In August 2008, Gold relocated to New Jersey to attend Stanhope Law School where she
was accepted. Gold funded her first semester by taking out loans and financial aid she was able
to obtain from the school. When Gold came home for a visit in December 2008, Gold reminded
Barnes of her current debt and upcoming spring semester costs. Barnes told Gold that because
Barnes’s husband was being investigated for SEC violations, she did not want to expend the
money to pay for Gold’s law school related costs. However, Barnes once again reassured Gold
that all her costs would be paid once things calmed down.
Based on Barnes’s assurances, Gold remained in law school by taking out additional
loans and financial aid. Late in fall semester 2009, Gold sent Barnes a copy of her transcript so
Barnes could see that she was maintaining the agreed upon 3.0 GPA. At this time, Gold also
pleaded with Barnes to make some kind of payments toward Gold’s rising debt. Barnes
indicated that she was still not in a position to expend money, but that she would pay for Gold’s
law school related costs once Gold graduated from law school. Several more attempts were
made by Gold to obtain the promised funds through 2011, but were met without success. Now,
Barnes refuses to answer Gold’s phone calls or e-mails, and Gold has over $190,000.00 in debt

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that she is expected to start paying on in six months. Gold alleges that she never would have
decided to attend law school if Barnes had not offered to pay the costs.
DISCUSSION
I. A COURT IS LIKELY TO FIND A CLAIM FOR PROMISSORY ESTOPPEL
BECAUSE BARNES MADE A CLEAR AND DEFINITE PROMISE TO PAY
FOR GOLD’S LAW SCHOOL RELATED EXPENSES, AND GOLD RELIED
ON THIS PROMISE TO HER SUBSTANTIAL DETRIMENT.
Under the Statute of Frauds, contracts that require more than one year to perform, like the
one in our present case, are required to be in writing. Coca-Cola Co. v. Babyback's Int'l, Inc.,
841 N.E.2d 557, 562 (Ind. 2006). However, oral promises not enforceable under the Statute of
Frauds may be enforced by establishing the elements of promissory estoppel. Babyback's at 569.
Under Indiana law, to establish a claim for promissory estoppel, a party must show the following
elements: “(1) a promise by the promissor (2) made with the expectation that the promisee will
rely thereon (3) which induces reasonable reliance by the promisee (4) of a definite and
substantial nature and (5) injustice can be avoided only by enforcement of the promise.” Spring
Hill Developers, Inc. v. Arthur, 879 N.E.2d 1095, 1100 (Ind. Ct. App. 2008). The statute of
limitations for promissory estoppel is six years. Rees v. Heyser, 404 N.E.2d 1183, 1187 (Ind. Ct.
App. 1980); Ind. Code Ann. § 34-11-2-7 (West). (See Brief Answer (2) for more).
A. Gold will likely meet the first element of promissory estoppel because
Barnes was aware that Gold was reluctant to attend law school due to
undergraduate debt, made an offer to pay all of Gold’s law school
related costs, and reinforced this offer with multiple assurances.
To establish promissory estoppel, a party must show there was a promise made by the
promissor. First Nat’l Bank of Logansport v. Logan Mfg. Co., Inc., 577 N.E.2d 949, 954 (Ind.
1991). A promise must indicate willingness on the part of the promissor to follow through with
the obligation. Id at 955.

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In Logansport, the court determined that a promise existed between the plaintiffs, a
plastics company, and the defendants, a bank from whom the plaintiffs were trying to secure a
loan. Id. at 955. From the start, the defendant, through its senior loan officer, was aware that the
plaintiffs required funds from the bank in order to operate the plastics company. Id. at 955. This
senior loan officer indicated willingness, on the part of the defendants, to loan the plaintiffs the
money, and this willingness was reinforced by continued assurances that the plaintiffs would
receive the funds they required from the bank. Id. at 955. Therefore, based on these
“representations and actions,” the court concluded that “a promise to lend additional sums was
made by the bank during this period.” Id. at 955.
Similar to Logansport, Barnes was made aware of Gold’s desire to attend law school
when Barnes asked Gold about her future educational plans at dinner on July 12, 2007. Because
Gold was doubtful she could attend law school because of undergraduate debt, Barnes indicated
a willingness to pay for all of Gold’s law school related expenses, including reasonable living
expenses. Furthermore, like the defendant in Logansport, Barnes reinforced this willingness,
from the July 12, 2007 dinner through Fall 2009, with continued reassurances to Gold that all
law school related costs would be paid. Thus, just as the court in Logansport found that there
was a promise, a court will similarly find that, based on Barnes representations and actions, a
promise existed between Barnes and Gold. Given these facts, the first element of promissory
estoppel is established.
B. Gold will likely meet the second element of promissory estoppel
because, due to the closeness of the relationship between Gold and
Barnes, and communication between the two parties before and after
Gold was accepted to law school, Barnes should have expected that
Gold was going to rely on the promise.

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To establish promissory estoppel, a party must show that the promissor made the promise
with the expectation that the promisee would rely on the promise. Larabee v. Booth, 463 N.E.2d
487, 490 (Ind. Ct. App. 1984).
In Larabee, the plaintiffs built a house on a piece of land owned by the defendants.
Larabee at 489. It was agreed between the two parties that once the life tenant living on the land
died, the defendants would convey the property to the plaintiffs, and the defendants executed an
instrument agreeing to convey the land. Larabee at 489. When the life tenant died, the
defendant’s refused to convey the land, and the plaintiffs filed suit. Larabee at 489. The court
held that the defendant’s should have known, based on the friendship between the two parties,
that the plaintiffs would rely on the promise made. Larabee at 490. While the court in Larabee
does not indicate any specific reasoning behind why a friendship should illustrate the application
of this element, the reasoning in Logansport may offer us a more specific explanation. In
Logansport, the court found that the second element of promissory estoppel applied because of
the close relationship between the plaintiffs and the defendant, specifically because of multiple
communications the two parties had regarding intimate details about the plaintiffs business.
Logansport at 955. The court supported this conclusion by suggesting that it would be “unusual”
for the defendant not to expect that its promise to lend needed money would cause the plaintiffs
to rely on the promise by “…making preparations for the loan…” Logansport at 955.
Like the defendants in Larabee, Barnes should have known Gold would rely on the
promise because of the friendship that existed between Gold and Barnes. Similar to the
defendant in Logansport, the nature of Barnes’s friendship to Gold allowed Barnes to know
intimate details about Gold’s educational plans and about Gold’s reluctance to attend law school
due to her undergraduate debt. Furthermore, this friendship also allowed for numerous

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communications between Barnes and Gold while Gold was making preparations for law school
and well after. Like the Court in Logansport, a court will likely determine that in having such
intimate information, it would be unusual for Barnes not to expect that Gold would rely on a
promise to pay for the law school costs. Given these facts, the second element of promissory
estoppel is established.
C. Gold will likely meet the third element of promissory estoppel because
Barnes clearly stated her intention to pay for Gold’s law school costs,
and based on based on Barnes’s offer, history of prior loans of the
same nature, and wealth, Gold committed time, effort, and expense to
going to law school.
To establish promissory estoppel, a party must show that the promisee was actually
induced to reasonably rely on the promise. Spring Hill Developers, Inc. v. Arthur, 879 N.E.2d
1095, 1100 (Ind. Ct. App. 2008). In addition, to determine if reliance is reasonable, a party must
also show that the promise was clearly indicated. Coca-Cola Co. v. Babyback's Int'l, Inc., 841
N.E.2d 557, 570 (Ind. 2006).
In Logansport, the court determined that the plaintiffs were actually induced to
reasonably rely on the defendant’s representations that it would loan the plaintiffs funds to
operate their business. Logansport at 955-56. The court went on to suggest that this inducement
was evidenced by the fact that the plaintiffs made costly arrangements to relocate their company
to Indiana with the expectation that the defendant’s would loan the plaintiffs funds. Logansport
at 955-56.
In Babyback’s, the court further defined reliance in terms of reasonableness when it
determined that the plaintiffs, Babyback’s International, Inc., could not reasonably rely on a
promise it alleged the defendants, Coca-Cola Co., made concerning a national contract between
the two companies. Babyback’s. at 560. To illustrate, the court pointed to a fax that the

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plaintiffs sent to the defendants that contained a modified agreement the two companies were
negotiating. Babyback’s at 570. The court was interested in the cover letter of the fax which
contained the language: “taking pride in having reached an agreement with Coca-Cola
Enterprises.” Babyback’s at 570. The defendants immediately replied to the fax by pointing out
in writing: “We…feel compelled to remind you that contrary to your cover letter, we have not
reached an agreement with your company.” Babyback’s at 570. The court determined since
such a denial was clearly stated, that it was unreasonable for the plaintiffs to rely to the alleged
promise. Babyback’s at 570.
Our case is similar to Logansport because the inducement of reliance on Barnes promise
was evidenced by Gold undertaking the process of applying for, and enrolling in, law school
with the expectation that Barnes would pay the associated costs. Dissimilar to Babyback’s,
Gold’s reliance on Barnes’s promise was reasonable because Barnes clearly stated on at least
three occasions that she would stand by her original promise and pay for Gold’s law school
related costs. Furthermore, Gold also had reason to believe that Barnes’s offer was sincere
because Gold knew that Barnes had helped another person in paying for an advanced degree.
Gold was also aware that Barnes had both the wealth, and the means, to extend such a promise.
Reasonably believing that she could rely on Barnes’s promise, Gold was induced to apply and
enroll in law school. Like the court in Logansport, a court will likely find that Gold’s reliance
was reasonable, and that Barnes’s promise did induce Gold to act. Given these facts, the third
element of promissory estoppel is established.
D. Gold will likely establish the fourth element of promissory estoppel
because Barnes made her promise clear, and because the cost of
Gold’s law school loans far exceeded $100,000.

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To establish promissory estoppel, a party must show that the inducement of reliance on
the promise is of a definite and substantial nature. Spring Hill Developers, Inc. v. Arthur, 879
N.E.2d 1095, 1100 (Ind. Ct. App. 2008).
In Logansport, the court determined that the plaintiff’s inducement of reliance on the
defendant’s representations were of a definite and substantial nature because the defendant’s,
through multiple communications with the plaintiffs, made its promise clear, and because the
plaintiffs took out a previous $100,000 loan from the defendants in reliance that more funds
would follow. Logansport at 955. The court first reasoned that because defendant’s promise
was clear it was definite, and because the plaintiffs were personally liable for paying back the
loan, it was substantial. Logansport at 955.
Similar to Logansport, Gold’s inducement of reliance on Barnes’s promise was of a
definite and substantial nature because Barnes’s promise was clearly stated, and because Gold
had to take out loans to cover the law school costs, and Gold is now personally liable for those
loans. Furthermore, the amount of Gold’s loans far exceed $100,000. Like the court in
Logansport, a court is likely to find that Gold’s inducement of reliance on Barnes’s promise was
of a definite and substantial nature. Given these facts, the fourth element of promissory estoppel
is established.
E. Gold will likely establish the fifth element of promissory estoppel
because, in reliance of Barnes’s promise, Gold had to take out
substantial loans that she would not have had to take out if Barnes
had followed through with her original promise, and in doing so gave
up the manageable amount of debt Gold would have had if she had
decided not to attend law school.
To establish promissory estoppel, a party must show that injustice can only be avoided by
enforcing the promise. Spring Hill Developers, Inc. v. Arthur, 879 N.E.2d 1095, 1100 (Ind. Ct.
App. 2008). To do this, the part must further show that the reliance injury is “(1) independent

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from the benefit of the bargain and resulting incidental expenses and inconvenience, but also (2)
so substantial as to constitute an unjust an unconscionable injury.” Coca-Cola Co. v. Babyback's
Int'l, Inc., 841 N.E.2d 557, 569 (Ind. 2006).
In Hrezo, the plaintiff, a developer, and the defendant, a city, entered into negotiations for
a proposed redevelopment project. Hrezo v. City of Lawrenceburg, 934 N.E.2d 1221, 1223-24
(Ind. Ct. App. 2010). The plaintiff claimed that, in relying on the defendant to agree to the terms
of the redevelopment project, it suffered reliance injuries that included: “submit[ting] design
plans, form[ing] a new legal entity, devot[ing] time, effort and [choosing] to forego other
opportunities, appl[ying] for a liquor license and engag[ing] the services of various
professionals.” Id. at 1232. Based on this analysis, the court held that no independent reliance
injuries existed because the plaintiff would have had to perform these actions in the event that
the defendant agreed to the terms of the redevelopment project.
In Yoost, the plaintiff, an intern working for the defendant, accepted a loan from the
defendant. Yoost v. Zalcberg, 925 N.E.2d 763, 766 (Ind. Ct. App. 2010). The plaintiff
maintained that the defendant, based on an oral promise, had released the plaintiff from the
obligations of the loan. Id. at 766. Furthermore, the plaintiff claimed that, in relying on release
from the mortgage, it suffered an independent reliance injury by continuing to work for the
defendant over the next year. Id. at 769. The court held that plaintiff’s duties and pay remained
the same during this time. Id. at 769. Since nothing about either party’s behavior was
substantially changed, the court reasoned that no independent reliance injury existed. Id. at 769.
In Brown v. Branch, the plaintiff, a woman, brought action against the defendant, her
boyfriend for failing to convey land that the defendant allegedly promised to the plaintiff. Brown
v. Branch, 758 N.E.2d 48, 50 (Ind. 2001). The plaintiff claimed that she suffered reliance

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injuries when, based on the oral promise, she relocated to Indiana to be with the defendant. By
doing this, the defendant said the plaintiff would “always have the 135 house.” Id. at 50. The
plaintiff claimed that because she relied on this promise, she gave up her job, her education, and
had to pay costs associated with relocating to Indiana, that the she suffered reliance damages that
were unjust and unconscionable. Id. at 53. The court held that since what the plaintiff gave up
in reliance was not greater than what she would have given up in any event, the plaintiff’s
reliance injury was not sufficient enough to remove the oral promise from the Statute of Frauds.
Id. at 53. The court reasoned that, while the plaintiff may have been inconvenienced by giving
up her job, education, and by expending money and effort to relocate, such an inconvenience did
not constitute a reliance injury that was unjust and unconscionable. Id. at 53.
Unlike Hrezo, Gold suffered an independent reliance injury because, had Barnes actually
followed through with the promise in good faith, Gold would not have had to take out substantial
loans to cover the law school costs. Furthermore, unlike Yoost, Gold can establish the existence
of an independent reliance injury because Gold’s behavior changed significantly when Barnes
offered to pay the law school costs. Gold went from doubting whether she could afford to go to
law school to taking the LSAT, applying to schools, and eventually attending classes. Lastly,
unlike Brown, Gold gave up more in reliance than she would have in any event. Gold indicated
to Barnes that the reason she did not want to attend law school was because of her undergraduate
debt. Gold also alleged to our law firm that had it not been for Barnes’s promise, she would not
have quit her job to attend law school. In relying on Barnes’s promise, and going to law school,
Gold had to take out substantial loans, which meant giving up the manageable amount of debt
Gold would have had if she had chosen not to attend law school. Unlike the courts in Hrezo,
Yoost, and Brown, a court will likely determine that Gold’s reliance injury is substantial enough

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to remove Barnes’s promise from the Statute of Frauds. Given these facts, the fifth element of
promissory estoppel is established.
CONCLUSION
Margie Gold can establish a claim for promissory estoppel, and thereby remove the oral
contract from the Statute of Frauds, because she relied on Barnes’s promise to her detriment.
First, Barnes made a promise when she offered to pay for Gold’s legal education, and backed up
this promise with multiple assurances. Second, because of the intimate nature of their friendship,
Barnes should have expected that Gold would rely on the promise. Third, because Barnes
clearly stated her promise to Gold, and because Gold had reasons to believe that Barnes’s
promise was genuine, Gold was actually induced to reasonably rely on Barnes’s promise.
Fourth, Gold’s inducement of reasonable reliance was of a definite and substantial nature
because Barnes’s promise was clearly stated, and because Gold had to take out loans for which
she is now personally liable. Finally, Gold’s reliance injury was independent of the benefit of
the promise because Gold would not have needed to take out loans if Barnes had followed
through with her promise. Also, Gold’s reliance injury was unjust and unconscionable because
Gold gave up more by taking out these substantial loans in reliance of the promise than she
would have if she had decided not to go to law school. Given these facts, and the above cited
authority, a court will like find a claim for promissory estoppel in this case.