Consideration Part 2 and Promissory Estoppel

Question 1

Traditional view of Consideration as performance of existing contractual duty. Case plus Judge

Answer 1

Still v Myrick
Lord Ellenborough.

Two reports of decisions. One by unreliable Espinasse, who, argues sailors denied on basis of public policy and duress. Second one of Campbell that notes it was for lack of consideration.

Question 2

Still v Myrick: Facts and name the Judge

Answer 2

-in course if voyage to the Baltic, two sailors deserted. Captain attempted to recruit replacements but failed to do so. Promised the remainder of the crew that he would,d divide the wages of the two deserters between then in return for their promise to work the ship home short-handed, upon rr]eturn home, promise was not nknojred. Question was whether sailors had given consideration for the promise, given that they were already contracted to serve for the duration of voyage. Held that they had not. Judge is Lord Ellenborough.

Question 3

Hartley v Ponsonby

Answer 3

Slightly different fact base to Myrick. Crew of 36 engaged for voyage from Liverpool to Austria, when ship reached Australia 17nif the men were imprisoned for refusing to work. The ship’s master, who had failed to find replacements at a reasonable price, promised some of the remaining men extra money to take the the ship as far as Bombay with a crew if “19 hands” was not paid. But unlike Myrick, payable because passage to Bombay was so short handed as to be dangerous and was unreasonable to see it as part of original contractual duties- new contract.

Question 4

Name the case that evades the rule in Stilk v Myrick

Answer 4

Williams Bros v Roffey

Question 5

Facts of Williams v Roffey. And name with smooth feet in the dance floor…

Answer 5

Defendants were contractors refurbishing a block of flats, and the plaintiff tiffs were subcontracted to them to carry out carpentry work, the plaintiffs ran into financial, difficulties while working for the defendants, partly because the parties had agreed an unusually low price for the work, and partly because the plaintiffs failed to supervise their workers properly, the defendants would be liable to lenalktkes jf the work was not done in time, they therefore agreed to pay more money in return for the plaintiffs finishing their work by the contractual dead,I ever, the defendants failed to pay and argued that the plaintiffs had given no consideration for the promise to pay more, since they were only doing what they were bound to do anyway. Court of Appeal held that the promise to pay more was enforceable

Question 6

Ratio of Williams v Roffey

Answer 6

Principle of Stilk v Myrick is indeed good law. A gratuitous promise is not enforceable unless made in a deed. Where, however, promise of conferred a PRACTICAL ADVANYAGE, the court would find that it was supported by consideration. Here, defendants benefitted from promise in that they avoided liability for late completion, they also obtained a more formalized relationship with the plaintiffs, and therefore more control over the work.

Question 7

What were Glidewell’s LJ 6 principles. In Roffey? Give the gist

Answer 7

(I) if A has entered into a contract with B to do work for, or supply goods or services to In return for payment by B, and

(Ii) at some stage before A has completely performed his obligations under the contract, B has reason to doubt that A will, or will be able to complete his side of the bargain, and

(iii)B therejpon promises A an additional payment in return for A’s promise to perform his contractual obligations on time and ‘’

(I’ve)as a result of diving his promise B obtains in practice a benefit or obviates a disbenefit, and

(V) B;S promise is not given as a result of economic duress or fraud on the part of A then

(Vi) the benefit to B is capable of being consideration for B;S promise so thank the promise will be legally binding.

Question 8

What is Professor Coote’s criticism of Williams v Roffey?

Answer 8

-case essentially anolishes the need for consideration in variation of contracts, if, as Russell LJ, says the assessment of consideration should reflect the parties’ intentions, then there is certain,y consideration in these facts- but the doctrine now seems to have virtually merged with the intention to create legal relations.

Question 9

What kind of cases does Williams v Myrick apply to?

Answer 9

Where the promisee has undertaken to do work or perform services for the promised? It does not apply to where promisee owes a debt to promisor?

Question 10

Which House of Lords decision governs part payment of debts?

Answer 10

Foakes v Beer

Question 11

In which case was an extension of the principle in Williams v Rofey considered in relation to part payment of debt? Name the judge

Answer 11

Re Selectmove

Peter Gibson LJ

Question 12

Facts of Re Selectmove

Answer 12

Question was whether there was a binding contract between Selectmove and the Inland Revune whereby the latter agreed not to put Selectmove into liquidation. The company argued that it had given consideration for this by offering the practical benefit of paying its debts in installments. Peter Gibson LJ, RELUCTANTLY, held that this did not qualify as consideration in cases of decreasing bargains, or where promisee owed promissor debt.

Question 13

What was the reasoning of the Gibson LJ’s judgement in Re Selectmove?

Answer 13

That even though he sympathized with applying the logic of Williams v Roffey to decreasing bargains, he felt himself unable to due to the hierarchy of the courts. Foakes v Beer was a House of Lords decision and it was for that court, or perhaps even Parliament, to change the law.

Question 14

What is the rule in Pinnel’s case?

Answer 14

Part payment of a debt is not itself capable of being satisfaction if the duty of debt to the creditor, even if the accord makes it quite clear that the creditor receives it as such,

Question 15

Facts of Pinnel’s Case?

Answer 15

Defendant pleaded that he had tendered part payment of a debt before the due date and that the creditor had received it as satisfaction for the whole. It was held that his defense failed, since he SHOULD HAVE argued that he tendered it in Full satisfaction. Had he done so it would have been good satisfaction for the whole debt because if the early payment.

Question 16

What exception does COKE CJ provide as an exception to the rule in Pinnel’s case?

Answer 16

That the provision of some alternate form of consideration not provided for in the original agreement, such as a “horse, hawk or robe”, will qualify for full statisfaction kf the debt,

Question 17

What is the historical idiosyncrasy at the heart of Pinnel/S case?

Answer 17

Pinnel’s case involved a penal bond with conditional defeasance. Under this arrangement, a party came subject to an extremely draconian penalty that was held in debt unless they could satisfy a condition before this debt matured. The envisaged performance in Pinnel’s case was the paying of money. This condition was not therefore actually legally speaking a part payment of a debt, rather it merely was a condition. That is why part payment of the condition will fail- but the provision of some other requested form of consideration such as chattel will succeed.

Question 18

In which decision was Pinnel’s Case upheld as good law?

Answer 18

Foakes v Beer

Question 19

Foakes v Beer: facts

Answer 19

Dr. Foakes abowed Mrs Beer £2090 19s. He asked for time to lay. She agreed that if he made a down payment if £500 and then paid the remaining sum in installments she would take no further action upon the judgement. Dr. Foakes duly made all the stipulated repayments but Mrs Beer the. Claimed that he was bound to pay interest in the debt as well.

House of Lords held that even if Mrs Beer had made this promise to Mr. Foakes, it was not binding as there had been no consideration.

Question 20

Who very nearly dissented in Pinnel’s case and why?

Answer 20

Lord Blackburn:”what weighs my thinking that Lord Coke made a mistake of fact is that men if business do everyday recognize and act on the ground that prompt part payment of a part of their demand may be more beneficial to them that it would be to insist in their rights and enforce payment of the whole.”

Question 21

What might be a policy reason behind the decision in Foakes V Beer? Who suspected this was the case?

Answer 21

Law does not readily presume a creditor is willing to forgo a debt, alive to the risk that an unscrupulous debtor may try and trick a creditor into doing just that.min Treital’s view (Some Lamdmarks of Twentieth Century Contract Law) this is exactly what Dr. Foakes’ solicitor had tried to do here.

Question 22

What are the two cases providing evasions to the rule in Pinnel’s case?

Answer 22

Vanbergen v St Edmunds Properties; Hirachand Punamchand v Temple

Question 23

Ratio of Vanbergen v St Edmunds Properties?

Answer 23

Payment at a different place/location will only count as full satisfaction if the debt if it is genuinely beneficial to the Creditor.

Question 24

Facts of Vanbergen v St Edmunds Properties?

Answer 24

The plaintiff, who was indebted to the defendants, had allegedly been promised by the latter that they would not serve a bankruptcy notice on him if he paid his debt on 7th July. On 6th July, he informed the defendants that he could not pay in the following day, but that he could borrow the money in Eastbourne on 8th July. The defendants asked him to pay it in to a bank in Eastbourne to the account of their solicitor. The plaintiff did so, but his letter serving notice of this to the defendant;smsolkcitor was not delivered.mthe bankruptcy notice was therefore served in him, he sued for breach of promise not to sue the notice. His action failed since it was held that the request to pay the money in Eastbourne had been a mere voluntary indulgence to the plaintiff from which the defendants derived no Actus, benefit,

Question 25

What is the ratio of Hirachand Punamchand v Temple?

Answer 25

That an exception to the Pinnel;S Case rule applies where part payment is made to the debtor BY SOMEONE ELSE THAN THE DEBTOR

Question 26

Which exception to the rule in Pinnel’s case is now defunct? Which case had provided for it?

Answer 26

-for all half that the marking of a part payment by a method other than cash amounted to substituted performance.

Question 27

Early example of promissory estoppel: Hughes v Metropolitan Railway Co

Answer 27

The tenants of houses were given notice by their landlord in October 1874 to carry out repairs to property within 6 months. Penalty for non-compliance was forfeiture of the Lease. Tenants agreed to do the repairs. He suggested that the landlord might wish to buy the remaining term of the lease from them. They made it clear that the repairs would be deferred pending negotiations. Negotiations j successful and landlord brought proceedings for possession at ending of original six month notice. House of Lords held that six months period did not run while negotiations were ongoing.

Lord Cair S: if one party has Effect of leading another into the impression that strict rights will not be enforced during a particular period, it would be inequitable for them to then enforce them.

Question 28

Which case extended Hughes v Metropolitan Railway co beyond Cases of forfeiture?

Answer 28

Birmingham District Land Vo v London Railway

Question 29

What is the combined effect of Hughes v Metropolitan and Birmingham District Land v London Railway? I.e. What is state of law before High Trees

Answer 29

What is envisaged as triggering reliance is an act or consent or conduct. It is one party’S behaviour, leading the other to infer that a contractual right will be suspended and to truly in the-at inference. As long as the Doctrine a out S to this, it is not obviously at odds with common law.

Question 30

What is the key case regarding promissory estoppel?

Answer 30

Central London Property Trust v High Trees House

Question 31

Central London Property Trust v Hugh Trees Facts

Answer 31

In 1937, the plaintiffs granted the defendants (who were their wholly owned subsidiary) a lease under seal of a block of flats in Clapha, in return for payment of a ground rent. During the war years, it became difficult to let the flats because tenants feared for their safety. As a result defendants were unable to pay the ground rent, the p,ajntjffs tberefore promised that they would accept half of the ground rent, and the defendants paid that reduced sum as it fell from time to time. By 19475, flats fully let again. Receiver who was now Mankato g the plaintiffs’ affairs brought the present action ti establish what rent was owed to the plaintiffs, the claim was for the last two quarterly installments of ful, ground rent which had fallen due after the flats were fully let. Denning J (baby denning) held that those sums were recoverable, since the ckncessionary reduction in the ground rent had been intended to last only as long as the wartime conditions made it difficult for the defendants to pay the full ground rent. However, he said obiter, that if the plaintiffs had sued for all the ground rent held back during this period, they would have been prevented from doing so by the rule in Hughes’ case.

Question 32

What does Denning J say has happened between contract law and equity in High Trees? What does he say about Foakes v Beer?

Answer 32

“The decisions are a natural result if the fusion of the law of contract and equity> for the cases of Hughes and Birmingham and District Land are a sufficient basis for saying that a part would not be allowed in equity to go back on such a promise. THE LOGICAL CONSEQJENCE IF THJS NO DOUBT IS THAT A PROMISE TO ACCEPT A SMALLER SUM IN DISCHARGE OF A LARGER SUN, IF ACTED UPON, IS BINDING NITWITHSTANDING THE LACK KF CKNSJDERATJIN. THIS ASPECT WAS NIT CONSIDERED IN FOAKES V BEER, AT THIS TIME OF DAY, HOWEVER, WHEN LAW AND EQUITY HAVE BEEN JOINED TIGETHER FKR KVER 70 YEARS. PRINCIPLES MUSY=T BE RECONSIDERED IN THE LIGHT IF THEIR COMBINED EFFECT.

Question 33

How does Denning J distinguish promissory estoppel in High Trees from estoppel known to common law in the previous case if Jorden v Money?

Answer 33

Jorden v Money had a theory of estoppel but it related to statements of fact, not promises. Second, Jorden v Money argued that if promises as to future conduct were to be binding they must be supported by consideration.

-Denning J finds two ways around this, the first is to reinterpret Jorden v Money as a case in which there was no intention to create legal relations. The second, is to avoid describing his principle as estoppel. Thus it becomes promissory estoppel.

Question 34

How does Denning J interpret Hughes?

Answer 34

Since Denning J found some difficulty in appropriating the term estoppel to njs use, he relies on a variety of cases to which several labels have been applied. The taxonomy is not agreed but the word ‘waiver’ is used in common to them. Hughes and Birmingham are both central to Denning J because they are both HoL decisions and thus benefit from HoL’s discretion to intervene from equity. Because Hughes is decided in Equity, Denning J I’d able to explain Foakes b Beer as a decision in which the fusion of law and equity was overlooked.

Question 35

The relationship between Hughes, Foakes v Beer and Hugh Grees

Answer 35

Treitel argued that House if Lords in Foakes v Beer was not likely to have been unaware if Hughes’ case, since it had been decided only seven years earlier and j vile day two of the judges who sat in Foakes v Beer. He reconciles the cases because rights were merely suspended in Hughes, whereas Dr, Foakes was applying for his debt to be permanently extinguished. But whether rights were suspended or extinguished in Hughes depends on the framing. After all, his right to repair in the original six months were permanently lost.

-professor Smith makes a different distinction between Hughes and Foakes v Beer. He says that the result of Hughes is that a claimant cannot sue for a breach if contract tract induced by his own behaviour, flakes v Beer, in the other hand, does not involve a breach if contract. It is for performance of duty. But this is not really a great distinction- between induced non-performance and induced breach.

Question 36

Name the four factors that allow High Trees to stand as its own, rendering it more than a negation of Foakes v Beer?

Answer 36

• it does not make a promise unsupported by consideration binding for all purposes. Only as a defense. Not as a cause in its own right.
• second there must be reliance by the pro I see in the promise.
• promise must be able withdraw the promise by giving notice.

Fourth, doctrine of High Trrees is expressed to be derived from equity and allows it to c,aim the status if equity; sander to the common law problem of Foakes v Beer.

Question 37

What are the characteristics of Promissory Estoppel?

Answer 37

1. The need for a clear promise
2. Inequity
3. Reliance

Question 38

Cear promise in promissory estoppel: applicable case

Answer 38

High Trees itself

Question 39

Reliance in promissory estoppel: applicable cases

Answer 39

Ajayi v Briscoe; The Post Chaser; Musumeci v Winadell

Question 40

Inequity in promissory estoppel: applicable cases

Answer 40

D & C Builders v Rees; Collier v Wright

Question 41

Promissory Estoppel: the need for a clear promise

Name two academics who disagree.

Answer 41

• clear promise accompanied by intention to affect legal relations
• however, as we have noted, this is more complicated than first appears. This is because Hughes and Birmingham District Land co where about waivers based in conduct not clear promises. Adams and Brownsword in iKey Issues j. contract suggests that a waiver could have more limited effect than promissory estoppel.

Stephen Smith, need for clear promise.

Andrew Robertson: maybe, but in practice lots of cases where thenpromise had been through city duct and has been less than clear.

-Atiyah suggests that a promise is not needed at all. Key element of promissory estoppel is reliance.

Question 42

Promissory Estoppel: Reliance: Ajayi v Briscoe

Answer 42

The defendant had hired lorries from the plaintiff on hire purchase terms and was paying the purchase price in installments. Some of the lorries were withdrawn from service because they needed repairs. The plaintiff replied that full hire purchase terms did not need to paid whilst the lorries were in service. BUT LATER CLIMED full payment. The defendant argued that the plaintiff was estoppel from claiming full, claimant because the defendant had made changes to the organization to his business on the basis that he would not have to pay in full. It was he,d that the evidence did not establish this, so that the estoppel argument fai,ed. The promise had not been acted upon j. The sense that the defendant had altered his position,

Question 43

Does promissory estoppel require reliance to be detrimental?

Answer 43

No. Though this is the subject of a debate between Stephen Spence who argues that detainment is not needed and Jack Edelman who argues that it is.

• Herling says no. Points to the locus classics of promissory estoppel itself: Central London Property Trust v High Trees.
• Lord Denning also denied it was needed in a later case, Alan v El Nasr [1972]

Question 44

In which case after High Trees did Denning J expressly deny that reliance in promissory estoppel required detriment?

Answer 44

Alan v El Nasr

Question 45

Promissory Estoppel: Key Case: Detrimental Reliance: Name, judge, facts.

Answer 45

The Post Chaser, Fobert Goff J,

-“to establish such inequity, it is not necessary to show detriment’ indeed, the represented may have benefited from the representation and yet it may be inequitable, st least without reasonable notice, for the representor to enforce his legal rights,

Question 46

Promissory Estoppel: Inequity: Definition

Answer 46

James Edelman- “we still lack conceptual certainty as to what inequity is…does it arise on mere breaking if promise or is something more required?’

-Mason CJ in Walton Stores v Maher argues that “something more is required than mere breaking if a promise.” Lord Neuberger has agreed with this arguing that “promissory Estoppel is not a form of US fifth cavalry riding to the rescue every time it thinks a defendant has acted badly.” Chen-Wishard argues.

But this seems contradicted by Arden LJ in Collier v Wright, who argued that to resile on a promise to accept part payment of a debt in satisfaction of the total debt was in itself inequitable.

Question 47

Promissory Reliance: Inequity case from 1966

Answer 47

D & C Builders v Rees [1966]

-the plaintiffs, a two-man building firm, did work for Mr and Mrs Rees. When the time came for settlement of the account, the plaintiffs were owed £483. They were in serious financial difficulty, as the defendants m ew. Mrs Rees offered £300 in full and final settlement, making it clear that she would not pay a penny more and that to alternative to acceptance on her terms was nothing, the plaintiffs accepted the sum offered since their circumstances gave them no realistic choice. They later brought an action for the balance. CoA held that they succeeded. The majority of the court simply applied Foakes. Ever, or The rule in Pinnel’s case there was no consideration for the plaintiffs; prkmjse to Mrs Rees. Lord Denning Mr treated the case as one kf promissory estoppel, but ruled that the doctrine only applied when necessary to prevent j equity, since the l,ajntjffs; promise had been extracted from them by pressure, there was no inequity in allowing the. To resile from it and sue for the remainder as the common law allowed them to do.

Question 48

Promissory estoppel: inequity: case from 2007

‘Automatic Inequity’

“This part of our law originated in the brilliant obiter dictum of Denning J in the High Trees case.

Answer 48

Collier v Wright Holdings Ltd (2007)

• pursuant to a county court order, the claimant was bound. Together with his two partners. To repay a debt at the rate if £600 per month, the claimant paid £20o per month, initial,h from the partnership’s bank account and later from her own resources, the claimant’s two partners were already bankrupt, and the defendant served a statutory demand on him for the full amount of the debt jointly owned. . Claimant argued that the defendant was estoppel from denying that only the lesser sum was owed, the court held that the first submission failed, but that the second submission raised a genuine triable issue sufficient to set aside the statutory demand, in the judgement if Arden LJ, the effect if promissory estoppel in the promise to accept the lesser payment was to extinguish the creditor’S right to a BAlance. “
• longmore LJ was doubtful whether it would be inequitable for the defendant to resile from a promise to accept part payment. Two linked facts should be made about Arden LJ’s notion of ‘automatic inequity’

1) only applies to part payment of debt
2) treat it with caution. Inequity should be judged in the facts of each case. The Case by case application of High Trees is one way in which it has been claimed it can co-exist with Foakes v Beer and Pinnel’s Case. If promissory estoppel automatically applies to cases if existing debt, then Foakes v Beer is left without application,

Question 49

The effect of promissory estoppel.

Which case confirmed Denning J’s indication in High Trees that contractually due payments may be irrecoverable as a result of promissory estoppel?

Answer 49

Tool Metal Manufacturing v Tungsten Electric

-contract to deal in alloys subject to Tool Metal Manufacturing patents subject to a duty to make compensation payments to Tool Metal Manufacturing if more than a certain quota were sold each month. In 1942, TECO stopped making payments, and TMMV agreed they would not c,aim for them pending negotiation if a new contract tract, negotiations failed, and k. 1946 tMMC counter claimed for the payments in action brought by ECO. The counterclaim was successful resisted by TECO. Right to contractual fees could only have been reawakened by giving notice. COMPENSATION PAYMENT WERE IRRECOVERABLE.

3 years later TECO brought a fresh action claiming payments since 1947. The claim succeeded in the House of Lords, whukenheldmthat the notice reviving the right to payments had been given by making the counterclaim in the earlier action.

Question 50

What did Lord Tucker say about giving notice as to withdrawal of promise in context of promissory estoppel?

Answer 50

Tool Metal v Tungsten Electric

“It is c,ear that the are some cases where the period of a suspension clearly terminates in the happening if a certain event or the cessation of a previously existing state of affairs or a lapse of a reasonable period thereafter, in such cases no intimation or notice of any kind may be necessary. But in other cases, where there is nothing to fix the end if the period, equity will no doubt require some notice or intimation/”

Question 51

Promissory estoppel: permanent extinction of rights

Answer 51

Ajayi v Brisco

-this relates where notice if a resumption of rights is give more but the promise has so a,there’d bjs position I. Reliance de k. The pro use as to be unable to resume the obligations if the contract, there is only one solution. If it would be inequitable to allow the resumption of rights in all the circumstances, then equity will extinguish them altogether. This is stated by Lord Hodson.

Question 52

Can promissory estoppel be deployed as part of a cause of action, if not as a cause of action in itself?

Answer 52

Yes Combe v Combe

-At time of divorce, a husband promised bjs wife that be won,d make annual maintenance payments to her, he never did so. She had a right to all,h to the Divorce Court for an order for maintenance but did not . She sues for the arrears of payment, arguing that she had given consideration. For her husband’S promise to pay by promising not to apply to the court for a maintenance order, the judge at first instance Byrne J held there was no consideration, but the principle of promissory estoppel applied. The Court of Appeal held this was not a case of promissory estoppel. Lord `Denning g said that as as much as he like the principle of High Trees, important that it should not be stretched too far, could be deployed as part of a cause of action, used to defeat another party’s counterclaim to your main line of argumentation. Not to be used as main cause if action.