Promissory Estoppel Flashcards
Hughes v Metropolitan Railway Company (1877), 2 AC 439 (H.L.)
(Key Example of Promissory Estoppel, Shows Detriment)
Issues:
- Did the landlord have the right to enforce the contractual obligations against tenant even though impliedly agreed to suspend the contractual right?
Rules:
- Promissory estoppel suspends X’s ability to enforce an underlying contractual right in the circumstances where X tells Y that they would not enforce the contractual right where Y relied on that promise.
4-part test to promissory estoppel:
· (1) there was an existing contract between the parties (the lease)
· (2) there was a clear (though implied) representation that the landlord would not enforce the contractual right
· (3) the tenants relied on the landlord’s representation that he would not enforce the right (tenant didn’t do repairs)
-tenant didn’t do repairs because he relied on the land lord not enforcing his contractual right to kick them out during negotiations.
· (4) it was inequitable for the landlord to ignore the promise that he wouldn’t enforce the contractual right for the repairs since the tenants would be kicked out (unfair to go back and insist on the obligation because of the other 3 points). The land lord taking back his gratuitous promise of not ignoring the repairs is problematic because it created an unfairness since the tenant relied upon this implicit promise.
Collier v. Wright (Holdings) Limited
(Recognized Promissory Estoppel As Displacing Foakes v Beer)
Issues:
- A promise to pay part of a debt is not good consideration for a promise to settle the whole debt. The debtor is already obliged to pay the full debt, and they cannot rely on an existing obligation as consideration
Rules:
- If an estoppel arises, it has the effect of modifying in equity the common law principle of foakes v beer
· Does not overrule common law because it’s a parallel system but suspends the Foakes v Beer rule if the 4-part test is met
· Promissory estoppel another way around Foakes v Beer if all 4 elements are satisfied in addition from the list in accord in satisfaction section.
John Burrows Ltd. V Subsurface Surveys Ltd. [1968] S.C.R. 607, 68 D.L.R. (2d) 354
(Part 2 of Promissory Estoppel Test, Friendly Indulgence is Not “Clear Representation”)
Issues:
- Does promissory estoppel apply against Burrows?
- Did the creditor provide a clear representation that they would not invoke the accelerator clause?
Rules:
- “Clear representation” in part 2 of the promissory estoppel test, whether done expressly or impliedly, is a high threshold to meet – “friendly indulgence” does not meet the threshold.
- You can be nice and accept late payments without losing your contractual right to refuse payment in the future.
- Must be a clear representation by me to you that I won’t strictly enforce something in that pre-existing contractual relationship (waiving).
* Clear representation = assessed in context by what a reasonable objective person would think.
D&C Builders v Reese [1966]
(Example of Duress, No Promissory Estoppel if Promised Under Duress, Part 4 of the Promissory Estoppel Test)
Issues:
- Can R claim promissory estoppel?
- Was it inequitable for D&C to cancel the gratuitous promise not to enforce the contract?
Rules:
- Example of whether the cancellation of a promise to enforce a contractual right would be considered inequitable.
- Part 4 of the estoppel test will fail if the promise not to enforce the contract (to accept less in satisfaction of more) is not truly voluntary or consensual and there is duress.
- When there has been a true accord, under which the creditor voluntarily agrees to accept a lesser sum in satisfaction, and the debtor acts on that accord by paying the lesser sum and the creditor accepts it, then it is equitable for the creditor afterwards to insist on the balance (Essentially what happens in Foakes v Beer).
- There must truly be an accord between the parties for this to occur and a true accord cannot occur under duress.
- Even if I make a promise to you and you rely upon it, you must still prove that there is a detriment on you because of reliance upon this promise.
- Equity will not favour an estoppel when the gratuitous promise is made under duress.
- For duress to occur, you need illegitimate pressure (a threat of breach of contract in not paying anything if you refuse to take less), and no practical alternative but to accept (being on brink of bankruptcy).
Saskatchewan River Bungalows Ltd. V Maritime Life Assurance Co. [1994] 2 S.C.R. 490 (S.C.C.)
(Retract Gratuitous Promise, Avoid Promissory Estoppel) Don’t worry about waiver as its not relevant for this course
Issues:
- Can a party promise to not strictly enforce a right, retract that promise, and then avoid estoppel?
- Is S entitled to benefits under the policy due to the fact that M waived their rights to expect timely payment?
- Can I take back my gratuitous promise to prevent an estoppel?
Rules:
- A gratuitous promise can be revoked and avoid promissory estoppel.
- Notice requirement does not need to be made when reliance is not an issue. In this case, reliance was not an issue.
- I can give you a gratuitous promise and can take it back and avoid the operation of an estoppel if I give you notice of revoking it before you are reliant upon it.
- You are not reliant if you hadn’t actually changed any behaviour or done anything making you rely upon the promise. There is no unfairness or detriment suffered.
-I can revoke a gratuitous promise not to enforce a pre-existing right if its not unfair if you haven’t actually done to change your position in a way that me revoking the promise would be unfair.
W.J. Alan & Co. v Nasr Export & Import Co. [1972] 2 Q.B. 189, [1972] 2 All E.R. 127 (C.A.)
(Detrimental Reliance Not Required for Promissory Estoppel)
Issues:
- Is detrimental reliance an essential element of promissory estoppel?
Rules:
- Waiver: If one party by his conduct leads another to believe that the strict rights arising under the contract will not be insisted on, intending that the other should act on that belief and he does act on it, then the first party will not afterwards be allowed to insist on the strict legal rights when it would be inequitable for him to do so.
- The person who waives his strict rights in a contract cannot afterwards insist on them, unless reasonable notice is given prior to.
- Detrimental reliance is not required for promissory estoppel to apply - Promissory estoppel requires that the claimant party rely on the actions of the other party and alter their position as a result – one just needs to act on the promise but no need to show that you’re worse off.
- Its inherently unfair to make a gratuitous promise and then take it back after someone has acted on it.
- Buyer was not worse off in paying in Kenyan shillings, there is no detriment here suffered by the buyer, however, you do not necessarily need a detriment to raise an estoppel.
Trial Lawyers Assn. of British Columbia v Royal & Sun Alliance Insurance Company of Canada (2021), SCC 47
(There Must be a Pre-Existing Contractual Relationship/Obiter on Detriment)
Issues:
- Can the insurance company invoke their underlying contractual right that say they don’t have to represent him?
Rules:
- One has to be subjectively aware of a right they are waiving before they waive it.
- Estoppel requires prejudice, inequity, unfairness or injustice.
The test to raise an estoppel is:
(1) pre-existing contract
(2) clear representation to the other party that the contract won’t be strictly enforced
(3) the other party acts on that promise (changes their position in some way
(4) suffer detriment if the promise is ignored and the underlying contract is strictly enforced
The Post Chaser [1982] 1 All E.R. 19 (Q.B.)
(Detriment for Promissory Estoppel)
Issues:
-Was there any sufficient reliance by the sellers on this representation to give rise to an equitable estoppel?
-Did the buyers by rejecting the seller’s documents constitute sufficient relance by the sellers on the buyers’ representation to render it inequitable for the buyers thereafter to enforce their right to reject documents?
-Did the buyer waive his rights to claim against the seller’s delay in sending the declaration of shipping or would it be inequitable to the seller to allow them to do so?
Rules:
- Detrimental reliance is required to raise an estoppel
- The test to raise an estoppel is:
(1) pre-existing contract
(2) clear representation to the other party that the contract won’t be strictly enforced
(3) the other party acts on that promise (changes their position in some way
(4) suffer detriment if the promise is ignored and the underlying contract is strictly enforced
Combe v. Combe, [1951] 2 K.B. 215, [1951] 1 All E.R. 767 (C.A.)
(Shield v Sword, No Consideration, No Promissory Estoppel)
Issues:
- Can the wife raise promissory estoppel?
Rules:
- Example of shield vs sword, promissory estoppel cannot be used as a sword to compel the other party to do something that they promised as a gratuitous gift. You cannot force someone to pay on the basis of promissory estoppel (sword).
- Estoppel can only be used defensively as a shield to prevent someone from utilizing their pre-existing contractual rights that they agreed not to enforce (waived).
M.(N.) v. A. (A.T.), (2003), 13 B.C.L.R. (4th) 73 (B.C. C.A.)
(Promissory Estoppel Can Only be Used as a Shied)
Facts:
· Man gives gratuitous gift of $100,000 to a woman he intends to marry, relationship ends, she argues promissory estoppel to keep the money.
· Woman argues that the relied upon the man’s promissory note to her detriment, as she quit her job to live with the man and could not find employment after the relationship ended.
· But there was no consideration, she did nothing in exchange for the money.
Issues:
- Can the woman invoke promissory estoppel?
Rules:
- The necessity of an existing legal relationship is a prerequisite to the application of the doctrine of promissory estoppel. AKA promissory estoppel only applies to existing contracts.
- A necessary element of promissory estoppel is the promisee’s expectation of a legal relationship.
Promissory estoppel cannot be used as a sword to compel the other party to do something that they promised as a gratuitous gift.
Central London Property Ltd. V High Trees House Ltd. [1947] 1 K.B. 130, [1956].1 All E.R. 256
Issues:
- Is the landlord entitled to bring the rent back to the original amount?
Rules:
- This is where Lord Denning invents promissory estoppel.
- Its inequitable to go back on a gratuitous promise and enforce the contractual right – issue is this is quite broad
