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LAW 2101 > ESTOPPEL > Flashcards

ESTOPPEL Flashcards

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1
Q

What is estoppel?

A

Not a part of contract law, runs alongside it
Can be invoked to provide relief if a promise/assumption has been detrimentally relied upon and is not enforceable through contract law
Protects against loss that would be suffered if someone was allowed to act inconsistently

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2
Q

Elements of estoppel

A 
Assumption
Inducement
Detrimental reliance
Reasonableness
Unconscionability 
Departure
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3
Q

Assumption-

A

Assumption- The relying party have adopted an assumption, either of fact or about future conduct

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4
Q

Inducement-

A

The assumption must have been induced by the conduct of the representor- made a representation in relation to a particular fact, or made a promise (must be a clear and unequivocal representation)

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5
Q

Detrimental reliance-

A

Relying party must have acted on the assumption in such a way that he/she will suffer detriment if the representor does not adhere to assumption- somehow changed their position to their detriment (assessed at the time of the departure, not limited to financial loss)

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6
Q

Reasonablesness-

A

Relying party has acted reasonably in adopting the assumption, and in the detrimental action they took in reliance on the assumption

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7
Q

Unconscionability-

A

It would be unconscionable in the circumstances for the representor to depart from the assumption- has to be pretty bad

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8
Q

Departure-

A

Representor has departed or threatened to depart from the assumption adopted and acted upon the relying party

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9
Q

Common law estoppel-

A

estoppel by representation, estoppel in past (representations that lead to assumptions of an existing fact) “I have signed the contract”

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10
Q

Equitable estoppel-

A

representations that lead to an assumption about future conduct “I will sign the contract”

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11
Q

Proprietary estoppel

A
  • assumptions of a grant of an interest in land
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12
Q

Promissory estoppel-

A

assumptions that a contractual right will not be enforced, or is about assumptions concerning anything but a grant of an interest in land

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13
Q

Je Maintiendrai Pty Ltd v Quaglia

issue

A

• Quaglia argued that the landlord should be estopped from claiming the rental arrears under the doctrine of promissory estoppel. On this basis, the landlord’s promise related to a future intention to accept reduced rent as and when it became due
– Could Je Maintiendrai (landlord) claim the extra rent in arrears under contract law?

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14
Q

Je Maintiendrai principles

A
  • Promissory estoppel introduced into Australia and accepted by Australian courts
    • Pre Walton: Estoppel used as a defence of a contract claim
    • Flexible approach to detriment

Detriment should be assessed at the time of the representing party’s departure or threatened departure from the assumption

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15
Q

Je Maintiendrai Pty Ltd v Quaglia application

A

Assumption: Quaglia assumed they wouldn’t have to pay the full rent price (they would just pay the reduced price)
Inducement: Landlord’s agreement to a reduced price
Detrimental Reliance: Paying a lump sum (much more difficult especially for a small, struggling company), giving up opportunity to abandon the shop
Reasonableness: Landlord accepted the lower rent for a period of time
Departure: Je Maintiendrai requesting extra money
Unconscionability: They accepted the money before; if they didn’t want the lower rent they could have disagreed at the start

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16
Q

Legione v Hateley - issue

A

Was Mrs. Williams statement “I think that’ll be all right but I’ll have to get instructions” a clear representation for which the Hateleys could have relied upon

17
Q

Legione v Hately - principle

A

Statement was not clear enough to warrant promissory estoppel
Mrs. Williams was a secretary and therefore it was not reasonable that she had the authority to make such a promise
Estoppel argued as a defence to breach of contract claim (failed)

18
Q

Walton Stores Ltd v Maher - facts

A

Mahers owned land with a building on it. They negotiated with Waltons Stores for Waltons to lease the property and for the Mahers to demolish the existing building and build a store to Walton’s specifications

- Negotiations on agreement
- 21 Oct: Waltons send draft lease
- Maher sends revised lease
- Early Novemeber: Mahers begin demolitions and advises Waltons to sign lease before Christmas
- Late November: Waltons advises solicitor to 'go slow' with lease
- Early January: Mahers commences building. Reaches 40% complete.
- Late January: Walton advises does not want to proceed
19
Q

Walton Stores Ltd v Maher - was there a contract?

A

○ No: Instruments Act s126 requires an agreement in writing, signed by the person to be charged

20
Q

Walton Stores Ltd v Maher - 2. Could Promissory estoppel be applied?

A

○ Existing form could not be applied:
§ Parties were not in an existing contractual relationship
§ Promissory estoppel only acted as a shield, not a sword. Mahers wanted to use it as a sword: o enforce their rights.

21
Q

Walton Stores Ltd v Maher - effect on estoppel (5)

A
  1. The doctrine of estoppel can operate in the absence of existing contractual relations (pre-contractual)
  2. Estoppel can be used offensively as a separate cause of action (sword) as well as defensively if someone else sues first (shield)
  3. Unification of proprietary and promissory estoppel into a single doctrine of equitable estoppel
  4. Remedy is the minimum necessary to meet the detriment (could be reliance based or expectation based damages)
  5. Established elements
22
Q

Walton Stores Ltd v Maher - elements

A

Assumption:
- Legal relations existed
- Waltons would sign the contract
Inducement:
- Waltons encouraged actions
- Silence
- Agreement that ‘time is of the essence’
Detrimental Reliance:
- 40% construction of a specific building for Waltons
○ Time
○ Building they don’t want/need
Reasonableness:
- Walton’s silence whilst knowing that construction had started
Departure/threat to depart:
- Walton’s withdrew and denied any existence of an agreement
Unconscionability
- Building was already 40% completed and Walton’s knew that and didn’t do anything - actually slowed signing process

23
Q

Mobil Oil - elements

A
  • No inducement: All they committed to was a generalised commitment to ‘find a way’ to implement an appropriate tenure for achievement scheme and this did not give rise to an expectation of a particular legal relationship coming into existence or the grant of an identifiable ‘interest’. They were too uncertain so as to induce an assumption for an estoppel to operate
    • No detrimental reliance: their efforts working harder was actually beneficial to their business practises
24
Q

Effect of Common law estoppel

A

Representor is prevented from asserting facts contrary to the representation
Rights of parties are then determined by reference to that assumed state of affairs
Equates to the “expectation” interest- as if fact is true

25
Q

Effect of equitable estoppel

A

Raises an “equity” in favour of the relying party- court will provide the “minimum equity” to do justice between the parties
May be the reliance loss or the expectation loss
Relying party has prime facie entitlement to have the relied upon assumption made good
Subject to pragmatism
Subject to proportionality
Relief is discretionary

26
Q 
Cho promises to pay for $10,000 holiday for Molly
Molly pays $2,000 non refundable deposit
Cho changes his mind
expectation loss?
reliance loss?
A

Molly’s expectation loss is $10,000 (as if the assumption is made good)
Molly’s reliance loss is $2,000 (loss from relying on the assumption)

27
Q

Commonwealth v Verwayen

Issue

A
  • Could the Commonwealth change their policy and therefore change their defences in the negligence case against Verwayen
28
Q

Commonwealth v Verwayen elements

A

ELEMENTS
Assumption: Commonwealth wouldn’t use the Limitations Act as a defence
Inducement: Indication not to use it; two years didn’t use it
Detrimental reliance: Legal costs, hopes were risen in the possibility of claiming compensation
Reasonableness: Yes, no indication to use it as a defence until 2 years into law sit
Departure/threat to depart: Commonwealth attempting to claim the Act as a defence
Unconscionability: Had the opportunity to use it at the beginning, allowed Verwayen to put time/money/ effort into case for two years

29
Q

Commonwealth v Verwayen judgements

A

Dawson and Deane JJ (in estoppel): the remedy should be to prevent the Commonwealth from going back on its promise not to plead the defences

Gaudron and Toohey JJ (in waiver): the Commonwealth should be prevented from pleading the defences; so Verwayen was able to proceed with his claim
Dissenting

Mason CJ, Brennan and McHugh JJ (in estoppel): minimum necessary to meet the detriment would be to cover Verwayen’s legal costs, and that the Commonwealth should still be able to plead the defences

30
Q

Guimelli v Guimelli

facts

A
  • The case involved a family orchard business. There were two sons in the family. One of the sons, Robert, was a partner in the business and he lived on one of the properties owned by his parents
    • His parents promised him that if he stayed on the property, the land would be subdivided and they would transfer the land with the house to him. In reliance on this promise, he passed up full time work to stay and work on the farm
    • Relationship broke down when he married a woman his parents did not approve of. Robert’s parents refused to transfer the property to him
    • His brother moved onto the property and made improvements to it
31
Q

Guimelli v Guimelli

elements

A

Assumption: He would get the property with the house when the land was divided
Inducement: Statement from parents
Detrimental reliance: Gave up opportunity to work full-time
Reasonableness: Relationship with parents - was reasonable to believe his family would uphold their word
Departure: Parents refusing to give house
Unconscionable: Directly, knowingly went against the agreement with the knowledge that it’d affect their son - out of spite because they didn’t like the girlfriend/wife

32
Q

Guimelli v Guimelli judgement

A
  • The Full Court ordered that as a remedy the farm should be conveyed to Robert. That gave effect to expectation damages.
    • The matter was appealed to the High Court on basis that it did more than award the minimum necessary to award Robert on basis of reliance on assumption
    • But High Court did not accept that lesser relief should be given on these facts
    • Changed the order from one of specific performance to an award of equitable damages for the same amount
    • The circumstances of the family relationship made it a bad idea to allow Robert to move onto the property! Also, his brother was living on the property so it affected a third party
33
Q

Ways to ‘make good’ the assumption

A

○ Specifically enforce a promise upon which the relying party has relied (so this can involve ordering that some property be transferred to the relying party); or
○ Make an award of damages to compensate the relying party, because to enforce the promise would be impractical, unjust or unfairly impact on a third party; (used in Giumelli v Giumelli) or
○ Make an award to compensate the relying party for losses incurred up until the point the representor sought to resile from the assumption

34
Q

Can estoppel be used as an independent course of action?

A

Yes W v G

- sword rather than sheild

35
Q

W v G elements

A

Assumption: The defendant created or encouraged in the plaintiff an assumption that she would act as parent to the children, accept responsibility for their general welfare and provide for the needs of their mother
There was no emphasis that there be an existing or expected legal relationship of any type
Inducement: The inducement was that the defendant induced the Plaintiff to adopt the assumption by encouraging the conduct and she was quite closely involved in the artificial insemination concept
Detriment: the task and expense of bringing them up on her own, whereas if G had acted in accordance with that assumption, W would have had her assistance in this task
Reasonableness: the Plaintiff’s reliance here was not unreasonable so as to prejudice the finding that there was reliance and that this was intended by G
Unconscionability: it was unconscionable for G to make no contribution whatsoever to the upbringing of the children.
Ordered: G provide $150,000 to be paid for the benefit of the children

LAW 2101 (13 decks)

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