promissory estoppel Flashcards
promissory estoppel
The doctrine that a promise made without the exchange of consideration is binding and enforceable if:
The defendant made a clear and unambiguous promise.
The plaintiff acted in reliance on the defendant’s promise.
The plaintiff’s reliance was reasonable and foreseeable.
advantages of promissory estoppel
- promisee does not have to provide consideration for the promise; instead promisee has to show they’ve relied on the promise
- (avoids the rules in foakes v beer)
requirements for PE
- A has made a clear and unequivocal promise not to
enforce legal rights against B; - B has relied on the promise
- It would be inequitable for A to resile
clear promise
There must be a “clear and unequivocal” promise or
representation that strict rights will not be enforced:
Woodhouse AC Israel Cocoa v Nigerian Produce
Marketing (1972)
-> the words need to be understood objectively and with certainty
no clear promise
-> woodhouse
promise can be implied
-> Hughes v Metropolitan Railway Co (1877)
reliance: detriment
In Hughes, T clearly acted to their detriment on the
promise since they would have otherwise carried out
the repairs in the 6-month period.
* But in High Trees (1947),
Denning J held that L was
estopped from claiming rent
during a 5-year period (over
WW2) when L had let T pay ½
normal rent.
-> second requirement: promisee must have relied on the promise
change of position as reliance
Change of position: where promisee bases their
affairs over a long period on the promise, so that it is
hard to say how things would have been otherwise.
* Eg Guest v Guest (proprietary estoppel case –
promise of interest in land), where a son worked for
many years on family farm after being promised to
inherit it by his parents: this was said to have
“incalculable whole-life consequences” for him
reliance likely insufficient where promisor re-asserts rights quickly
In MWB v Rock,
* C reschedules debt on condition that D pays £3,500
and agrees to new payment schedule.
* D succeeding before CA in arguing the contract had
been varied (as discussed in last Lecture).
* D’s alternative argument was that C was estopped.
Held:- estoppel defence fails, since D suffered no
prejudice (payment of the £3,500 did not count, and no
other possible prejudice since C was quick to re-assert
its rights).
connection between reliance and promise
As a matter of principle, it is probably necessary that the
reliance be reasonably foreseeable.
If that is right, this means the scope for p.e. to help in
cases where contract will not is limited. To qualify as
consideration, the promisee’s detriment must either be
agreed or requested, but we have seen that the request
can be implied (Alliance Bank v Broom)
inequitable to resile
must also be inequitable to resile from the promise; usually satisfied by detrimental reliance; but not necessarily
-> D+C builders
suspensory effect
ow long will the creditor’s indulgence last?
Often this is not explicit from what is said…
* In High Trees, L was permitted to revert
to the normal rent when it sent T a notice
to that effect (at the end of the war).
* In Hughes v Metropolitan Rly, the effect of
the estoppel was to stop the clock on T’s
repair obligation, not to entirely waive the
obligation for T to make repairs.
->however, in both cases, some of the creditor rights
were permanently lost/extinguished, eg in High Trees,
L could not claim the rent foregone during the war, nor
could L in Hughes insist on the repairs being done by
the original date.
Rather than saying (as some texts/cases do) that the
effect of promissory estoppel is “suspensory” not
extinguishing, the better view is that the effect
depends on:
a. what C could reasonably understand D to be
promising +
b. what is needed to prevent C from being prejudiced
if D changes mind
shield not sword
Promissory estoppel cannot be used to generate
additional obligations/rights
In Combe v Combe [1951] 2 KB 215, the wife was
promised £100 during divorce proceedings. She
argued, first, that there was a contract: this was
rejected because (Lecture 3) there was no
consideration. Second, she argued that the promise
was enforceable by promissory estoppel.
Held: estoppel cannot be used as a “cause of action”,
but only as a defence to a claim to enforce a promise
estoppel and contract modifications
General view is that as promissory estoppel cannot
generate new rights/obligations, it cannot be used
make Roffey-style “more for the same” promises
enforceable
can it be argued that there is an estoppel by convention
Estoppel by convention applies where parties to a
transaction proceed on a common assumption.
Eg: parties proceed on the basis that a contract of
guarantee covers certain loans made by X company,
but in fact on its literal wording it only covers loans
made by Y company: Amalgamated Investment and
Property Co v Texas Commercial International Bank
Held, guarantor estoppel from denying that
contract covers loans from X. Is this not, though,
using estoppel to create new/additional obligations?
