Estoppel Flashcards
Ricketts v Scothorn [1898]
US case
FACTS: Defendant executed a promissory note for $2000 payable with 6% annual interest. Plaintiff sought to enforce the note and alleged that the consideration for the note was her promise to quit her job as bookkeeper and to stop working for a living. Defendant would rely on the interest as a means of support.
JUDGEMENT: Lower court was affirmed and the money was given to the plaintiff.
PRINCIPE: Equitable estoppel bars a party from asserting lack of consideration where reliance was induced by the party asserting there was no requisite consideration.
Combe v Combe [1951]
FACTS: A husband promised to make maintenance payments to his estranged wife but failed to do so. The wife brought an action to enforce the promise invoking promissory estoppel.
JUDGEMENT: Her action failed. There was no pre-existing agreement which was later modified by a promise. The wife sought to use promissory estoppel as sword and not a shield.
PRINCIPLE: Estoppel can be used as a shield (to defend a claim) but not a sword (to create a new cause of action where none existed apart from the estoppel)
Prime Sight Ltd v Lavarello [2013]
“Consideration remains a fundamental principle of the law of contract and is not to be ruled out of existence by the law of estoppel” - Lord Toulson
It is important to bear in mind that a promise will not be enforceable merely because the promisee had relied upon it to his detriment – otherwise, there would be no room for the doctrine of consideration.
Maclaine v Gatty [1921]
Lord Birkenhead provided the criteria for an estoppel by representation:
Where A has
• by his words or conduct
• justified B in believing that a certain state of facts exists, and
• B has acted upon such belief to his prejudice,
• A is not permitted to affirm against B that a different state of facts existed
Jorden v Money [1854]
FACTS: Plaintiff (P) owed £1200 and gave a bond to creditor for this amount. The defendant (D) inherited the bond. P was considering marriage but worried about finances. D stated she would never enforce bond and P married in reliance on her representation. P sought declaration the debt had been abandoned and release from the bond and was granted it in first instance but D appealed.
JUDGEMENT (HoL): Held that there was no estoppel as D’s representation was of intention, not fact.
PRINCIPLE: Representation must be of fact, not opinion or intention.
Panoutsos v Raymond Hadley [1917]
Before High Trees
A party who waives the right to terminate the contract cannot refuse to accept performance if the other tenders it within the period of the waiver (or if no time is set, within a reasonable time).
Hickman v Haynes [1875]
FACTS: The parties entered into a contract for the sale of goods. The buyer then requested the seller to delay the delivery of the goods. The seller agreed and offered a later date for delivery, which the buyer refused to accept. The seller brought an action for damages against the buyer who argued that the seller could not succeed, because he was in breach of contract in failing to deliver on time.
JUDGEMENT: The court held that the buyer had waived his right to demand delivery on time and that he could not reassert it without the giving of reasonable notice.
PRINCIPLE: An alteration with no consideration has no contractual effect, but effect may be given under the doctrine of ‘waiver’.
Hughes v Metropolitan Railway [1877]
FACTS: A landlord gave a tenant 6 months notice to carry out repairs; failure to do so would result in forfeiture of the lease. The landlord and tenant then entered into negotiations for the tenant to purchase the freehold of the property. It was thought by both parties that a conveyance of the property would take place. The tenant had not carried out the repairs as they believed they would be purchasing the freehold and the repairs required by the landlord were not essential to his use of the property. At the last minute negotiations broke down and the landlord gave the tenant notice to quit for failure to carry out the repairs.
JUDGEMENT: P was entitled to equitable relief. The time limit imposed for carrying out the repairs was suspended during negotiations.
PRINCIPLE: Highlighted the importance of of equity, promisor will only be prevented from enforcing strict legal rights if would be inequitable. The decision in Hughes was relied upon to develop doctrine of promissory estoppel & gives strength to argument that estoppel is primarily suspensory not extinctive.
Birmingham and District Land Co v London and NW Railway [1888]
A period of time laid down in a contract was held not to apply, because there was a tacit understanding that the period would not run whilst building operations were held up. The court took the view that if persons who have contractual rights against others induce by their conduct those against whom they have such rights, to believe either that such rights will not be enforced, or will be kept in suspense or abeyance for some particular time, those persons will not be allowed to enforce the rights until such time has elapsed.
Foakes v Beer [1884]
FACTS: Dr Foakes owed Mrs Beer £2,000 after she had obtained judgment against him in an earlier case. Dr Foakes offered to pay £500 immediately and the rest by instalments, Mrs Beer agreed to this and agreed she would not seek enforcement of the payment provided he kept up the instalments. No mention was made in this agreement of interest although judgment debts generally incurred interest. Dr Foakes paid all the instalments as agreed and Mrs Beer then brought an action for the interest.
JUDGEMENT: Dr Foakes was liable to pay the interest. The agreement reached amounted to part payment of a debt and under the rule in Pinnel’s case this was not good consideration for a promise not to enforce the full amount due.
PRINCIPLE: Upheld principle outlined in Pinnel’s Case [1602]: if a fixed sum is owed then payment of a lesser sum can never be satisfaction for the full amount owed if no consideration has been provided (such as early payment or additional goods)
Central London Property Trust v High Trees House [1947]
FACTS: High Trees leased a block of flats from CLP at a ground rent of £2,500. It was a new block of flats at the time the lease was taken out in 1937. The defendant had difficulty in getting tenants for all the flats and the ground rent left High Trees with no profit. In 1940 many of the flats were still unoccupied and with the conditions of the war prevailing, it did not look as if there was to be any change to this situation in the near future. CLP agreed to reduce the rent to £1,250 during the war years. The agreement was put in writing and High Trees paid the reduced rent from 1941. When the war was over the flats became fully occupied and the claimant sought to return to the originally agreed rent.
JUDGEMENT: The rent would be returned to the originally agreed price for the future only. CLP could not claim back the arrears accrued during the war years.
PRINCIPLE: Denning J (as he then was) established the doctrine of promissory estoppel. Promissory estoppel prevented CLP going back on their promise to accept a lower rent despite the fact that the promise was unsupported by consideration.
So what are the requirements for a promissory estoppel?
- Person by words or conduct
- makes unambiguous representation or promise as to his future conduct
- which is intended to be relied upon
- and this representation affects the legal relationship between the parties,
- then if the promisee/representee alters his position in reliance on the representation,
- the promisor/representor will be unable to act inconsistently with the representation
- if this would mean that the promisee/representee would be prejudiced
Avon CC v Howlett [1983]
FACTS: Mr Howlett was regularly overpaid whilst off work sick. When the employer discovered the mistake, they claimed back £1007. Mr Howlett had not been at fault in any way.
JUDGEMENT: Mr Howlett was regularly overpaid whilst off work sick. When the employer discovered the mistake it claimed back £1007. Mr Howlett had not been at fault in any way.
PRINCIPLE: An overpayment, even if due to a mistake of fact, is irrecoverable if the employee, relying on representations that the amounts are correct, has bona fide altered his or her position to his or her detriment in circumstances which are not his or her fault.
Woodhouse A.C. Israel Cocoa Ltd v Nigerian Product Marketing Co Ltd [1972]
FACTS: A contract for the sale of some coffee beans was agreed to be payable in pound sterling. The sellers mistakenly sent an invoice stating price was payable in Kenyan Shillings. At the time the value of pound sterling and Kenyan shillings was equal. The buyers accepted the delivery and invoice with out objection. Subsequently the value of the pound fell quite dramatically in relation to Kenyan shillings. The buyers then sought to revert to pound sterling as stated in the contract.
JUDGEMENT/PRINCIPLE: The buyers conduct in accepting the invoice unquestionably amounted to an implied clear and unambiguous promise to accept on those terms.
D and C Builders v Rees [1966]
FACTS: Mr Rees instructed the claimant to do some building work at his home to the value of £746. Mr Rees paid £250 on account and the claimant reduced the bill by £14 and there was a sum owing of £482. The claimant wrote to the defendant several times pressing for payment but was unsuccessful there had been no complaints as to the workmanship at this time. The claimant at the time was in dire financial need and the business was verging on bankruptcy; a fact that Mrs Rees was aware of. The defendant telephoned the home and Mrs Rees answered she made complaints about the work and said she would give them £300 in satisfaction of the whole debt. The defendant refused and said he would take the £300 and give her a year to clear the balance. He called at the house to collect the money but Mrs Rees remained firm that she would only pay £300 and demanded that the defendant wrote on the receipt ‘in completion of the account’ otherwise she would pay him nothing. The defendant needed the money immediately so reluctantly agreed to write this on the receipt but stated he fully intended to pursue the balance as the money paid did not cover the costs he had incurred. He subsequently brought an action to recover the balance. The defendant sought to rely on estoppel relying on the written receipt as demonstrating a promise to accept the lesser sum.
JUDGEMENT: The claimants were successful. Mrs Rees could not rely on estoppel as there was no true agreement to accept less and because Mrs Rees had taken advantage of the builder’s position and mislead them as to her financial position.
