CONTRACT - WEEK 2

Question 1

Currie v Misa [DEFINTION OF CONSIDERATION]

Answer 1

valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.”

Question 2

Chappell and co v Nestle [CONSIDERATION]

sufficent but need not be adequate

Answer 2

FACTS: Chappell owned the copyright for a piece of music called ‘Rockin Shoes’. Nestle, in an attempt to sell more chocolate, provided a deal that meant by providing 3 Nestle chocolate bar wrappers (valued at 6 dimes) one could purchase the Rockin Shoes record for 1 dime 6 Shingling’s (as opposed to the original price of 6 dimes).

Copyright laws hold that 6 ¼ of the ‘original selling price’ must be paid in royalties. The copyright owners claimed that including the wrappers in the price meant it was not an ordinary retail sale, therefore breaching the copyright act. Nestle argued that it was not a bread as the wrappers were not valid consideration so there was no breach (as there was not a valid contract for the records)

RATIO: The wrappers were held to be a part of the consideration (even though they were of trivial value  this illustrates that the courts will not access adequacy of the consideration – it doesn’t matter that the value of what one party receives is significantly lowers than what is giving to the other party)

• Lord Reid = As it was the intention of Nestle to get people to buy chocolate (not records) even though a single person may not purchase chocolate for the purposes of the contract at hand, in general the wrappers play a part in the intention of Nestle when making the contract (as they are the beneficial advertising component for Nestle).
• Lord Somervell = the meaning of s8 ‘[for] a sale to be within the section, must not be retail, but in one which there is no other consideration for the transfer of property in record but the money price”. As the wrappers as described as a part of the offer they make up a part of the consideration.
   it is irrelevant that the wrappers have no intrinsic value; “a contracting party can stipulate what consideration he chooses. A peppercorn does not cease to be good consideration if it is established that the promise does not like pepper and decided to throw it away”

Question 3

Bainbridge v Firmstone [CONSIDERATION]

sufficent but need not be adequate

Answer 3

Facts: D asked permission to weigh the Ps boilers and promised he would return them in the same condition as when he took them. He returned them disassembled and P sued. D claimed there was no consideration

Outcome: Lord Denman “the D clearly must have had some reason for wanting to weigh the boilers and could derive this benefit by promising to return them in a particular way. We do not need to inquire what benefit he might have expected to derive”

Question 4

White v Bluett [CONSIDERATION]

sufficent but need not be adequate / change of behaviour

Answer 4

A son’s promise not to bore his father with complaints about distribution of property was not good consideration.

Question 5

Hamer v Sidway [CONSIDERATION]

sufficent but need not be adequate / change of behaviour

Answer 5

FACTS: Uncle promised his nephew that if he refrained from gambling and drinking/smoking until he was 21 he would pay him $5k. The P did this and claimed his money. D claimed there was no consideration as he had no detriment as giving up the substances was a benefit to him.

OUTCOME: Court ruled that there was valid consideration as the P has restricted his freedom and legal rights to fulfill the promise.

 White v Bluett may not be decided the same way now as there might now be greater judicial willingness to find consideration in domestic agreements (however this was NOT an English case so some care needs to be taken)

Question 6

Shadwell v Shadwell [CONSIDERATION]

sufficent but need not be adequate - preexisting duties - 3rd parties

Answer 6

Recognized the promise to marry (at that time a legally effective promise) as good consideration

Question 7

The Eurymedon [CONSIDERATION]

sufficent but need not be adequate - preexisting duties - 3rd parties

Answer 7

Promise not to sue for damage when unloading ships goods held to be good consideration although the shippers were already under obligation to unload the ships goods to the (third party) carrier.

Question 8

Jones v White [CONSIDERATION]

sufficent but need not be adequate - preexisting duties - 3rd parties

Answer 8

A promise to perform (as opposed to the actual performance of) a contractual duty did not constitute consideration
* However, in other ‘promise to performance’ cases Scotson v Pegg and Pao On v Lau Yui Long, these type of promises could amount to consideration (preferred views?)

Question 9

Ward v Byham [CONSIDERATION]

sufficent but need not be adequate - preexisting duties - legal duties

Answer 9

FACTS: Unmarried parents of illegitimate child split up M wrote to F promising custody of the child as well as $1 a week for her with the provision of proving she is happy/well looked after and that it was C’s choice to see M or not. C went to live with M until M got remarried. M then claimed back the $1 and won good consideration on F’s promise despite her statutory duty to look after C.

• Because there is a statutory duty for M to look after F is their good consideration despite the statutory requirement of the M of an illegitimate child to provide care.

OUTCOME: There was good consideration on the promise. The mother had agreed to do more than her legal duty: she has promised to make the child happy (applying Glasbrook)

• Minority reasoning - Denning: The mother “is only doing what she is legally bound to do”, but this is still consideration as “it is a benefit to the person to whom it is given” - it is a benefit to the father to have the child looked after by their mother. Attacking Glasbrook.
   Unilateral contract: The father’s promise is a unilateral contract (“a promise in return for an act”), so there was a binding contract when the mother started on the act, and as long as she continued, she was entitled to £1 a week

Question 10

Williams v Williams [CONSIDERATION]

sufficent but need not be adequate - preexisting duties - legal duties

Answer 10

FACTS: Wife deserted her husband, and a few months later there was an agreement made between the pair that that H would pay W $10 a week for maintenance provided the wife lead a ‘chaste life’.
* Husband failed to make payments and wife sued for breach of contract. He argued there was no consideration

RATIO:The wife has suspended her right to maintenance by her act of deserting and she could revive it at any time before the divorce by making a genuine offer to return. As such a promise not to use his name for credit was valuable as was the consideration

• Point by Lord Denning that despite that keeping oneself chaste was a legal requirement (and as such she was simply promising to perform her legal duty) a person should be able to rely on an existing legal duty as consideration if the promise benefits the other party.

 Agreed with the suspension ground but also said (dismissed by the other Lords) that a benefit to the husband arises because he does not have to deal with legal claims by the wife since the agreement exists.

• (Adequacy of consideration – Morris LJ) it was irrelevant that the wife was not likely to return the payment to her husband

Question 11

Glasbrok Borthers Ltd v Glamorgan CC [CONSIDERATION]

sufficent but need not be adequate - preexisting duties - legal duties

Answer 11

• This case highlights the difficulty in telling if someone has gone above their duty for the purposes of establishing consideration

FACTS: During a miners strike the miners (colliery) manager requested that a number of policemen came to the mine in order to allow it to stay open. A special price was agreed between the Manager and the Police superintended about the pay and specific rates for the policemen. After the job was completed, the manager refused to pay on the basis that the police were acting within their duty and as such no payment was due

Outcome: As the police had gone beyond their public duty there was good consideration for the promise to pay, although if it has been in their public duty this would not have been the case

“It has been recognized that where individuals desire that services of a special kind, which though not within the obligations of a police authority, can most effectively be rendered by them, should be performed by members of the police authority … I conclude that the practice o lending constables for special duty in consideration is not illegal or against public policy”

Question 12

Michaels v Chief Constable of South Wales Police
[CONSIDERATION]

sufficent but need not be adequate - preexisting duties - legal duties

Answer 12

FACTS: The police did not respond to a 999 call, resulting in a woman being murdered

OUTCOME: What is the duty of a policeman? (following from Glasbrook): “The duty is one which any member of the public affected by a threat of breach of the peace, whether by violence to the person or violence to property, is entitled to call on the police to perform. In short, it is a duty owed to the public at large for the prevention of violence and disorder.”
* Parker CJ, Rice v Connolly [1966]: It is the duty to “to take all steps which appear to him necessary for keeping the peace, for preventing crime or for protecting property from criminal injury”

Question 13

Stilik v Myrick [CONSIDERATION]

sufficent need not be adequate - preexisting duties - contractual duties

Answer 13

FACTS: C, as seamen contracted w the D, a shipmaster, to sail to the Baltic and back at $5 a month. At the destination 2 crew deserted and the captain promised that the wages of the 2 deserters would be / among the crew in exchange for sailing back shorthanded. C claimed back his extra wage upon return and was refused as he was already under a preexisting contractual duty to perform the same task.

OUTCOME: The agreement was not enforceable as there good consideration on the promise considering that the C was already bound to perform the duty by a previous (perfect) contract.

Note: this case was reported twice and the reasoning as to the decision of the case varies between the 2

Espinasse report: The agreement is unenforceable because of policy reasons - we do not want the crew to extort masters out of money just because they are performing their contractual duty.
- Dubious, as economic duress had not yet been recognised.
- Focus on this version renewed in Williams v Roffey.

Campbell report: There is no consideration because the sailors already had a contractual obligation to finish the voyage.
* They were not going above and beyond their duty in this way as there was a clause in their contract that said they would still be obliged to complete the voyage even if all other sailors died, even if this meant working harder.
* A more likely option that focuses on legal than practical benefit, since the remaining sailors did have to work harder. Accepted as English law in The Atlantic Baron and WRN Ltd v Ayris [2008].

Question 14

Hanson v Royden & Hartley v Ponsonby

sufficent need not be adequate - preexisting duties - contractual duties

Answer 14

The same as pre-existing legal duties if the new promise is to do more than the existing obligation with the promise, consideration can be found

Question 15

Williams v Roffey Bros & Nicholls (contractors) Ltd [CONSIDERATION]

sufficent need not be adequate - preexisting duties - contractual duties

Answer 15

FACTS: A builder hired a subcontractor. It became apparent the price was too low for the subcontractor to work effectively and finish the job. The time penalty clause meant the builder would be liable if the subcontractor did not complete the work on time. The builder offered to pay an additional £575 for each flat as it was completed, but they did not.

• Was there consideration, even though there was no legal obligation added to the original contract?

OUTCOME: Court of Appeal held that the C had provided good consideration for the promise of extra $ even though he was merely performing a pre contracted duty as the builder got practical benefit.

Gildwell LJ: If A has entered into a contract w/ B to do work/supply goods in return for payment, and at some stage before A has performed side but B has some reason to doubt that A will be able to do so and, B promises an additional amount to fulfil obligations on time, as a result B obtains practical benefit or obviates disbenefit and, B’s promise is not given in academic duress, then the giving of the benefit to A can be valid consideration.

• As there was no economic duress in this case, and the D knew the practical benefits there was valid consideration

This case will “refine and limit the application of [Stilik], but leaves the principle unscathed e.g where B secures no practical benefit to his promise” – it does not “contravene” Stilik

Russel LJ: In changing the system of payment with a more structured one per flat and the variated avoided the need to employ a new subcontractor. This could been seen as an actual change in legal obligations rather than just/only practical benefit
- “True it was in my view that the plaintiff did not undertake to do any work additional to that which he had originally undertaken to do, but the terms upon which he was to carry out the work were varied and, in my judgement, that variation was supported by consideration which a pragmatic approach to the true relationship between the parties readily demonstrates”

Purchas LJ:
- “There was clearly a commercial advantage to both sides from a pragmatic point of view”
- “with some hesitation … I consider the modern approach to the question of consideration would be that where there were benefits derived from each party to a contract of variation even if one party did not suffer a detriment this would not be fatal to establishing of sufficient consideration to support the agreement”

Question 16

WRN v Ayris [CONSIDERATION]

sufficent need not be adequate - preexisting duties - contractual duties

Answer 16

“well established” that a promise to perform a preexisting duty “will not, in law, constitute consideration” (Judge Seymour)

Question 17

Atrill v Dresdner Kleinworth [CONSIDERATION]

sufficent need not be adequate - preexisting duties - contractual duties

Answer 17

CoA held that “the continued work of the employee … is at least arguably adequate consideration” (note use of arguably and that this case also involved retention packages so concerned the exercise of the right to terminate contract)

Question 18

Blue v Ashley [CONSIDERATION]

sufficent need not be adequate - preexisting duties - contractual duties

Answer 18

Williams has effectively rendered the rule that performance of an action could not constitute consideration

Question 19

Foakes v Beer [CONSIDERATION]

sufficent need not be adequate - preexisting duties - contractual duties

Answer 19

FACT: D was owed $ by C and was also entitled to interest on the sum until it paid off. C asked for more time to pay off $ and it was agreed that if he paid $500 immediately and $150 on 2x occasions annually until the debt was paid off ‘she would not take any proceedings on the judgement’. C paid D in this way however D then bought an action claiming for the interest.

OUTCOME: It was held that as there was no consideration C was required to pay interest on the debt.

Question 20

Collier v P & M J Wright Ltd [CONSIDERATION]

sufficent need not be adequate - preexisting duties - contractual duties

Answer 20

A debtor who pays (as distinct from one who merely promises to pay) the promised part of a debt may now be able to rely upon promissory estoppel in order to defeat a claim bought by the creditor to recover the balance of the debt. (Arden LJ)

Accepted that there was a case for estoppel held that a) there must be clearly established in evdicede b) must establish that the creditor has agreed to give up his right on a permanent basis not simply suspended it for a period of time c) it must be inequiteable for the creditor to go back on his promise (Longmore LJ)

Remains to be seen if this has impact on Foakes. If accepted it could hold a creditor who voluntarily agrees to accept payment of part of a debt in discharge of the entire debt and who receives that part payment from the debtor, may find that his right to claim the balance of the debt has been extinguished by operation of the doctrine of estoppel

Question 21

Re Selectmove Ltd [CONSIDERATION]

sufficent need not be adequate - preexisting duties - contractual duties

Answer 21

Clarifies that Foakes v Beer remains good law despite Williams v Roffey but does nothing to resolve the tension.

FACT: The IRS petitioned the court for a winding-up order of Selectmove which was in debt with respect to taxes owed. The company appealed on the grounds that they had agreed with a tax collector that they could pay the debt in instalments instead of being wound up. The IRS argued the collector did not have authority to make this agreement and that there was no consideration as they were paying what was already owed. The company said the IRS got a practical benefit.

RATIO: An agreement for a company to pay off its unpaid taxes (debt) in monthly instalments was not valid - there was no consideration. Williams could not be followed here and was not extended to part payment of debts, so Foakes was followed.

• On Foakes’ ratio: Despite Lord Blackburn’s concerns, “it is clear that the House of Lords decided that a practical benefit of that nature is not good consideration in law”.
  o Seems to be a lukewarm reception to Foakes?
   “In the absence of authority there would be much to be said for the enforceability of such a contract.”
• Foakes and Williams: They are inconsistent on the consideration point but Foakes should be followed.

o Gibson LJ: If Williams were extended to “an obligation to make payment, it would in effect leave the principle in Foakes without any application”, as payment of money will always constitute a “practical benefit” to the creditor.

Overturning Foakes?: “Foakes was not even referred to in Williams and it is in my judgment impossible, consistent with the doctrine of precedent, for this court to extend the principle of Williams to any circumstances governed by the principle of Foakes” - this is up for the Lords or Parliament.

Question 22

MWB Business Exchange Centers Ltd v Rock Advertising Ltd [CONSIDERATION]

sufficent need not be adequate - preexisting duties - contractual duties

Answer 22

FACTS: RAL claimed MWB should not have locked them out of a building because they had renegotiated rent (to pay a lower amount than under the original contract) and paid £3,500 under it. MWB said the renegotiated deal would be unenforceable as there was only an oral agreement (where their contract said the written agreement was the entire agreement and could not be varied) and no consideration.

Status is uncertain because the UKSC overturned the CA’s decision, but on different grounds, as the UKSC did not look at the consideration issue (they did not say the CA’s decision was wrong). Therefore does not overrule Foakes.

RATIO:
CA =The anti-oral variation clause did not preclude any variation. A subsequent variation meant the written clause was ineffective. Applying Williams v Roffey Bros, consideration was found because one party derived a practical benefit from a promise to pay more money and the £3,500. So, the oral variation was binding for as long as payments were made.

• This case is distinguishable from Selectmove.

Is allowing part payment of a debt to be enforceable a good rule?

• It could “strike a satisfactory balance between on the one hand enforcing promises and enabling debtors to rely on their creditors’ promises and on the other hand of protecting creditors from debtors who seek unfairly to gain an advantage from their creditors”.

UKSC: The oral variation was invalid, so the court held it unnecessary to consider if there had been consideration.

Post MWB it appears that while Foakes is still good law it has been confined to cases where the creditor obtains no benefit other than the promise to pay part of the debt or obtains to more benefit than prompt payment of a part of the debt and a promise that the balance of the arrears will be paid. (McKendrick)

Question 23

Roscorla v Thomas [CONSIDERATION]

consideration must not be from the past - the general rule

Answer 23

If two parties have made a contract and one wishes to confer an additional benefit, that promise is not binding as the promisee’s consideration (his entry into the original contract) is past.

Question 24

Lamplegh [CONSIDERATION]

Answer 24

FACTS: An act by the promisor with the understand that it will be rewarded is valid consideration even it if it were performed prior to the promise for the reward being given.

RATIO: It was held that the consideration was valid and he did have a binding contract as a result.

“even if it were true … that a past service cannot support a future promise, you must look at the document and see if the promise cannot receive a proper effect in some way”

Question 25

Re McArdle

Answer 25

FACTS: W left a house to his children in = shares with a life interest for his widow. Wife (M) of one of the sons carried out house imporvmeents excess of $400 to which she bore the cost. She got the sons to promise upon distribution of the will to be reimbursed. However they refused to pay her.

RATIO: Held that there was no transaction and the agreedment was imperfect. There was only a promise to pay (not a gift), however as M had already performed her work her consdiderationwas in the past and past consideration /= good consideration.

Question 26

Eastwood v Kenyon [CONSIDERATION]

consideration must not be from the past - the general rule

Answer 26

Shows how harsh the rule is.

FACT: Claimant was legal guardian of a girl under 21. He took out a loan from a Mr Blackburn to cover $140 worth of costs for the costs of educating/looking after the girl. It was promised that after she came of age her Husband (Kenyon) would pay off the debt. He failed to do so and was sued by Eastwood. Question arose as to whether the past consideration was sufficient to bind the promise.

RATIO: The past consideration could not be considered as valid as consideration for the agreement.
* The guardian’s actions were not requested by the promisor and could not have been performed in response to the later promise.
* The husband’s moral obligation to pay could not be converted into a legal obligation by his promise.
* Lampleigh was not applicable as the D had not asked the D had not asked the C to borrow the $. There was also no ratification of the contract.

“we find that the consideration, for it as past and executed long before, and yet it is not laid to have been at the request of the defendant … and the declaration really discloses nothing but an express promise by the defendant to pay money”

Commentary: A promise to pay for what the promise has already done is a type of gratuitous promise – the denial of past consideration as being good consideration is consistent with the divide between promises and bargains

Question 27

Pau On v Lau Yin Ling [CONSIDERATION]

consideration must not be from the past - exceptions

Answer 27

FACT: The D was a majority shareholder in a company called Fu Chip, while the C was a majority shareholder in a company Shing On. As agreement to sell shares was made between the pair to sell a number of shares from Shing On to Fu Chip. Both parties in cognizance of the share market came up with an agreement that
a) The market value of the Fu Chip was set at $2.50
b) 60% of the shares would be retained after April of 1974
The C became unhappy as they resailed if there was a significant rise in the market price and they were still required to sell at $2.50 a share. The C to rectify this made a promise to only sell at $2.50 in the event of the market price falling

RATIO: Outcome: The consideration was valid. It was held that if the conditions laid out by Lord Scarman were met then it was, in some cases, possible for a past promise to suffice as consideration. In order for a promise to confer a benefit and be considered good consideration it must;
a) Have been done as the request of the promisor
b) The parties must have understood that the act was to be remunerations either by payment or conferment of some benefit; and
c) The payment or conferment of a benefit would have been enforceable had it been promised in advance

 An act prior to when the promisor makes his promise can be valid consideration for the promise if the made at the promisors request and the parties understood that it will be awarded by the promiser in the future

• Valid consideration found: A promise to perform, or the performance of, a pre-existing contractual obligation to a third party can be valid consideration. C here had given consideration to D by performing their pre-existing obligation to sell the company to D.

Question 28

Coombe v Coombe [CONSIDERATION]

Answer 28

FACTS:
A Husband D agreed to pay his wife $100 a year tax free but made no payment at all. Wife sued for arrear.

RATIO: Claim rejected; there was neither good consideration
* Forebearance by the wife not to apply to court for payment was not requrested by the husband

Question 29

Hughes v Metropolitan Railway Company [ESTOPPEL]

Answer 29

FACTS: Landlord gave Tenant 6 months to carry out repairs with the power of enforcement being forfeiture of the lease. T suggested L might like to buy interest on the lease and that he would suspend repairs until he heard from L. L wrote back expressing potential interest however no relevant communications occurred. T completed the repairs 6 months after the end of the negotiations. L served a writ of ejectment on T for not adhering to the 6 months.

RATIO: HOL dismissed L’s claim holding T was allowed relief against the forfeiture. The notice was in suspension for the duration of the notification. The T later carried out the repairs within the extended 6 months.

• Promissory estoppel: If parties enter into a contract but later enter into negotiation which has the effect of making one side believe that the contract will be suspended or not enforced, the other side cannot enforce the contract if it would be inequitable having regard to the dealings which have thus taken place between the parties.
  o Here, promissory estoppel had a suspensory, rather than extinctive, effect. It suspended the original promise until the promise not to enforce it expires, rather than extinguishing the original promise [like in Collier].
• “if parties who have entered into definite and distinct terms involving certain legal results … afterwards by their own act or with their own consent enter into a course of negotiation which has the effect of leading one of the parties … the person who would otherwise have enforced the rights may be unable to enforce them.”

Question 30

Central London Property v High Trees House Ltd [ESTOPPEL]

Answer 30

FACTS: C (landlords) let a block of flats to D (tenants) on a 99 year lease at a set price. During the 2nd WW, as many people were leaving London, the D was unable to sublet all the flats. An agreement was made that ground rent would be reduced and the reduced rate was paid from 1940-1945. Once the time period was up, a receiver for C demanded the full amount for future and some arrears (money owed).

A friendly action was bought to test the position in law

RATIO: The claim was allowed, and it was held by Lord Denning that the promise to accept less rent in the wartime conditions prevailed as binding despite the absence of consideration.

There was promissory estoppel - there was i) a promise intended to create legal relations which ii) the landlord knew would be relied upon and iii) was actually relied upon. This suspended the landlord’s right to extra rent while the promise was in effect, but once the conditions giving rise to the promise had ceased, the landlord could demand normal rent again (but not arrears).

• “they are cases in which a promise was made which intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person whom it was begin made and which was in fact acted on. In such cases the courts have said that this promise must be honored”
• “they are really promises – promises intended to be binding, intended to be acted on and in fact acted on”
• “I prefer to apply the principle that a promise intended to be binding, intendted to be acted on and in fact acted on, is binding so far as its term properly apply”

Clash with Foakes: “The logical consequence, no doubt, is that a promise to accept a smaller sum in discharge of a larger sum, if acted upon, is binding notwithstanding the absence of consideration: and if the fusion of law and equity leads to this result, so much the better. That aspect was not considered in Foakes v Beer”.
Detrimental reliance separates this from Foakes

Question 31

Combe v Combe [ESTOPPEL]

Answer 31

FACTS: During their divorce, a husband promised to pay his wife £100 each year as a maintenance payment. The wife knew the husband was not in a good financial state and did not claim the payment until years later, claiming the arrears.

RATIO: The wife could only enforce her agreement for the payment if she had given consideration, but there was no consideration here. Not exercising a legal right (by not claiming a statutory maintenance) does not count as consideration - the wife would have actually agreed to give up the right. Promissory estoppel cannot create a new cause of action, only a defence, as otherwise consideration as a doctrine would be undermined.

• The High Trees principle “should not be stretched too far, lest it should be endangered. That principle does not create new causes of action where none existed before. It only prevents a party from insisting upon his strict legal rights, when it would be unjust to allow him to enforce them, having regard to the dealings which have taken place between the parties”.

Question 32

D and C Builders v Rees [ESTOPPEL]

Answer 32

FACTS: Customers did not pay for building work on their house. When the builder needed the money, the customers told them they could have less than the full amount or nothing.

RATIO: The agreement was unenforceable (Foakes v Beer was applied, so there was no consideration) and the builder could sue for the rest of the money. There was no promissory estoppel because the promise had been obtained by unfair pressure and it would not be inequitable for the creditor to go back on his agreement to accept part payment.

Question 33

Crabb v Arun DC [ESTOPPEL]

Answer 33

FACTS: A promised C, an adjoining landowner, a second right of way from a portion of A’s land and erected gates for two access points. In reliance on this, C sold the portion of his land with the existing access, but A closed off the second access point, blocking C from his land. A demanded £3,000 for the access.

RATIO: It would be inequitable to allow A to renege on its promise when this had induced C’s detrimental reliance. C could not access his land for a number of years, so the court granted the right of way without payment but said that in an appropriate case, the promisee would be required to pay its fair value.

o Estoppel cannot be found unless it would be “unconscionable and unjust” to allow A to enforce their rights.
o “It is for a court of equity to say in which way the equity may be satisfied”.

Can it be a cause of action?:

“There are estoppel and estoppel. Some do give rise to a cause of action. Some do not.”

Proprietary estoppel does give rise to a cause of action.

o An estoppel may have the effect that a party can enforce a cause of action which, without the estoppel, he would not be able to do”.

Question 34

Amalgamated Investment v Texas Commerce Internation Bank [ESTOPPEL]

Answer 34

FACTS: T’s subsidiary made loans to A’s subsidiary. Both parties assumed that A guaranteed the loans but A guaranteed loans made by T and not T’s subsidiary. A’s liquidators sought a declaration that it had no liability when A’s subsidiary defaulted and T argued it was protected by estoppel by convention.

RATIO: A was estopped by convention from seeking a declaration that it had no liability regarding loans to A’s subsidiary (that it had guaranteed its subsidiary). T could have sued on the guarantee to recover the sum and since the guarantee did not cover the loan, the claim would be founded on estoppel.

• “The doctrine of estoppel is one of the most flexible and useful in the armoury of the law.“

Can estoppel be a cause of action? (not normally): A purely gratuitous promise being acted upon will “generally speaking” not give rise to an estoppel as this would be “inconsistent with the general principle that purely gratuitous promises will not be enforced: see Combe v Combe”.

o This is because the promisee “may reasonably expected to appreciate that […] he cannot therefore safely rely on it as a legally binding promise without first taking the necessary contractual steps”.

o Estoppel is a shield, not a sword, in the sense that “estoppel is not, as a contract is, a legal obligation”.

• Estoppel can be a cause of action:* Promissory estoppel requires an existing legal relationship between the parties but with other estoppels, there does not need to be such a contractual relationship.
  o “It is in myjudgment not of itself a bar to an estoppel that its effect may be to enable a party to enforce a cause of action which, without the estoppel, would not exist.”

Question 35

Walton Stores (interstate) Ltd v Maher [ESTOPPEL]

Answer 35

FACTS: Walton Stores wanted one of Maher’s buildings to be demolished and a new one erected. Even though no contract was signed, Maher relied on the representations and demolished the building. No contract eventuated due to difficulties in negotiations. Waltons eventually called off the deal and Maher sought to enforce the agreement.

RATIO: Maher could enforce the agreement by relying on promissory estoppel, which can be used to create a cause of action. Promissory estoppel applies to representations or promises as to future conduct as “it does not accord with principle that equity, in seeking to avoid detriment occasioned by unconscionable conduct, can give relief in some cases but not in others.”

• English defensive view of promissory estoppel: It has been deemed a “defensive entity” (Hughes and Combe)
• English support for estoppel as a sword:
  o Denning in High Trees treated promissory estoppel “as a wide-ranging doctrine operating outside the pre-existing contractual relationship”, so “there is certainly no reason why the doctrine should not apply so as to preclude departure by a person from a representation that he will not enforce a non-contractual right”.

o Crabb “lends assistance to the view that promissory estoppel may in some circumstances extend to the enforcement of a right not previously in existence where the defendant has encouraged the plaintiff the belief that it will be granted and has acquiesced in action taken by the plaintiff in that belief”.

Question 36

Commonwealth of Australia v Verwayen [ESTOPPEL]

Answer 36

FACTS: X sank Y’s boat. X said it would not, as policy, take advantage of the statute of limitations and would therefore admit liability. Y (the plaintiff) prosecuted X, but X tried to use the statute of limitations. Y argued the government had either waived its right to raise the defence or that estoppel would prevent them from going back on their former assurance.

RATIO:The government was not free to raise the defence. Two judges believed the government had waived their rights to do so and two believed there was an estoppel (applying Walton and allowing estoppel to apply to future representations).

What is reliance/detriment?: This can include spending time, effort and money pursuing litigation. Stress, anxiety and inconvenience suffered can be considered.

Question 37

Baird Holdings Ltd v Marks and Spencers plc [ESTOPPEL]

Answer 37

FACTS: C had been supplying clothes to M&S for 30 years without an actual contract. M&S terminated the agreement with no warning. C argued they should be compensated for a reasonable notice period based on estoppel.

RATIO: Estoppel cannot create an enforceable right for C to continue the supply arrangement (as to do so would “represent a dramatic, if not indeed a revolutionary development of the law”). For both promissory and conventional estoppel, the parties should have had “the objective intention to make, affect, or confirm a legal relationship”, but this was not present here.

Question 38

Collier v P& MJ Wright (Holdings) Ltd [ESTOPPEL]

Answer 38

FACTS: Three partners were jointly liable for a debt. Two stopped paying their debt and one of them agreed with the creditor to carry on paying a ⅓ share. The creditor later sued him for the full amount. Strictly speaking, CA only held there was a triable issue on promissory estoppel

RATIO: There was no contract because there was no consideration under Foakes v Beer, but, the debtor had an arguable case that there was an estoppel preventing C from pursuing the whole debt, as he had actually made the part payment (detrimental reliance).

• New principles established: 1) Seems to go against the principle that promissory estoppel suspends but does not extinguish rights (following from Denning in High Trees that this requires “accord and satisfaction” - must have been paid already). 2) Shows a broad approach to promissory estoppel that allows the debtor to enforce an agreement to accept less.

SEE MORE IN NOTES

Question 39

Prime Sights ltd v Lavarello [ESTOPPEL]

Answer 39

It “may be going too far” to say that there is no point to have a separate category of estoppel by deed, as it seems to be covered by estoppel by representation or convention.

“In Johnson v Gore Wood & Co, Lord Goff of Chieveley expressed reservation about attempting to encapsulate the many circumstances capable of giving rise to an estoppel within a single formula, in part because consideration remains a fundamental principle of the law of contract and is not to be reduced out of existence by the law of estoppel”.

Question 40

MWB Business exchange centre Ltd v Rock Advertising [ESTOPPEL]

Answer 40

FACTS: RAL claimed MWB should not have locked them out of a building because they had renegotiated rent (to pay a lower amount than under the original contract) and paid £3,500 under it. MWB said the renegotiated deal would be unenforceable as there was only an oral agreement (where their contract said the written agreement was the entire agreement and could not be varied) and no consideration.

Technically not the law because the UKSC overturned the CA’s decision, but on different grounds, as the UKSC did not look at the consideration issue.

RATIO: The anti-oral variation clause did not preclude any variation. A subsequent variation meant the written clause was ineffective. Applying Williams v Roffey Bros, consideration was found because one party derived a practical benefit from a promise to pay more money and the £3,500. So, the oral variation was binding for as long as payments were made.

Kitchin LJ: You cannot just get estoppel because you have made a part payment in reliance on the agreement - it depends on what is fair in the circumstances [clarifying Collier v Wright].

• What is estoppel?: “The broad principle that if one party to a contract makes a promise to the other that his legal rights under the contract will not be enforced or will be suspended and the other party in some way relies on that promise, whether by altering his position or in any other way, then the party who might otherwise have enforced those rights will not be permitted to do so where it would be inequitable having regard to all of the circumstances”.

High Trees was “the first case in which it was suggested that [promissory estoppel] could be applied so as to mitigate the rule in Foakes v Beer”.

Question 41

Tweddle v Atkinson [PRIVITY]

establishes the common law rule

Answer 41

FACTS: The bride father and groom’s father agreed to pay money to the bride and groom upon their marriage. The father of the bridge failed to deliver his payment to the groom after they were wed. The groom made a claim against his father in law.

RATIO: Claim was rejected  the groom had provided no consideration as he was a 3rd party and the groom was a stranger to the consideration provided by his father.

• This approach to privity characterises it as an extension of the doctrine of consideration (although modern cases do not view it this way).
• Shows privity as rigid: defeats the intentions of the fathers to pay their children.

Question 42

Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [PRIVITY]

Answer 42

FACTS: Dunlop’s dealers agreed with the retailer (Selfridge) to not sell tyres below the RPP - if Selfridge did so, they would have to pay £5 in damages to Dunlop. Selfridge sold the tyres below RRP and Dunlop sued them, but they were a third party to the agreement.

RATIO:Claim rejected.
* Viscount Haldane - privity argument: Dunlop was not a party to the agreement and it is a “fundamental” principle that “only a person who is party to a contract can sue on it”.

o The claim should therefore be rejected not only due to the lack of consideration.

o The Viscount does recognise however that the principle stopping 3rd party rights ability to sue on a contract is not absolute  possible to confer a right in a trust and via the doctrine of agency

• This case would now be regulated by the statue (Competition Act 1998)

Question 43

[PRIVITY]

Answer 43

FACTS:

RATIO:

Question 44

[PRIVITY]

Answer 44

FACTS:

RATIO:

Question 45

[PRIVITY]

Answer 45

FACTS:

RATIO:

Question 46

[PRIVITY]

Answer 46

FACTS:

RATIO: