Promissory Estoppel Flashcards
What is promissory estoppel?
A promise or an undertaking which can be enforced but it is not a contract
The core idea: a party may be ‘estopped’ from going back on a promise where it would be inequitable to do so.
Modern Doctrine - Central London Properties v High Trees House
Plaintiff let a block of flats in central London to D for 99 years, at a ground rent of £2500 pa. D intended to let out individual flats at a profit.
Shortly afterwards, WW2 broke out and D was unable to find sufficient tenants for the flats, meaning it could not pay the full ground rent.
P agreed to a 50% reduction in the ground rent, which D paid.
After the war, the flats were fully let, proceedings were brought to determine whether P could claim the full rent again.
P’s promise was intended to affect the parties’ legal relations.
It was intended to be acted upon by D and was in fact acted on.
But, on the facts, the scope of the promise was intended as a temporary expedient and so it did not apply once the flats were fully let.
This meant the rent could be put back up after the war, but the shortfall incurred during the war could not be clawed back.
Elements of promissory estoppel - 1
A clear and unequivocal promise or representation by the promisor that they will not enforce their strict legal rights against the promisee.
Promise or assurance is distinguished from ‘bowing to the inevitable’: James v Heim Galleries
May be words or conduct: Hughes v Metropolitan Railway Co.
Strict legal rights – may be contractual rights or other kinds of right: Robertson v Ministry of Pensions.
Elements of Promissory Estoppel - 2
Intended to be and is in fact relied on.
Promisee must act on the promise by altering his/her behaviour in some way.
There need not be a detriment: consider High Trees or Hughes v Metropolitan Railway Co
Elements of promissory estoppel - 3
Promisee will be estopped from going back on the promise to the extent that it would be inequitable to do so.
A flexible, context-specific standard – it is not possible to restate this requirement as a hard and fast rule or checklist. Instead, you must consider the cases and draw analogies.
D&C Builders v Rees [1966] 2 QB 617 –> The debtor’s wife held the creditor to ransom. The creditor was in need of money to meet his own commitments, and she knew it. When the creditor asked for payment of the £480 due to him, she said to him in effect: “We cannot pay you the £480. But we will pay you £300 if you will accept it in settlement. If you do not accept it on those terms, you will get nothing. £300 is better than nothing.”
Promissory estoppel as the solution to Foakes v Beer
High Trees itself involved a promise to accept a lower amount than what was owed.
Rather than making the promise to accept the lower amount enforceable as a contract, promissory estoppel operates to stop the promisor from going back on the promise not to insist on its strict legal right to payment of the full amount.
The practical relevance of Foakes v Beer therefore depends on how easy it is to invoke promissory estoppel where the debtor has paid a lower sum in reliance on a promise that they would be released from liability for the full amount owed.
