Dicker told the Goodman that
he could have a franchise selling radios.
In reliance on this promise,
Goodman hired salesmen and geared up to sell radios. However, Dicker
changed their minds and declined to give Goodman a franchise. Goodman sued
for beach of contract.
Despite the fact that there
never was a legal contract, just a promise to form a contract.
The Trial Court found in favor
of Goodman. Dicker appealed.
Goodman argued that Dicker,
by their representation and conduct, induced him to incur expenses in
preparing to do business under their franchise.
Goodman was out a fair bit
of money because of Dicker's actions.
Dicker unsuccessfully argued
that the franchise, if granted, could be terminated at-will and imposed
no duty to sell or buy radios, so there should be no liability.
Dicker never had a duty to
do anything, so how could they be liable for failing to live up to a
duty?
The Appellate Court affirmed.
The Appellate Court found
that the Trial Court was correct in awarding the Goodman's damages based
on how much he spent in reliance
on having the franchise and being able to sell radios.
However, the Court found
that Dicker was not liable for Goodman's lost profits on an initial order
of radios.
In a case like this, where the
plaintiff is suing because of a reliance interest, the damages are limited to the loss sustained
by expenditures made in reliance upon the assurance of a dealer franchise.
