Promissory Estoppel Flashcards
Hughes v Metropolitan Railway Co (1877)
*Tenants of a house were given notice by their landlord to carry out repairs to the property within 6 months. Non-compliance would result in eviction.
Negotiations occurred between the 2 parties and after an incomplete result after 6 months the landlord started proceedings for possession.
House of Lords, leading judgement by Lord Cairns held that the six month period of repairs did not run whilst the negotiations were ongoing.tenants had completed the repairs within the period allowed and were therefore protected from forfeiture.
Promissory Estoppel
Should the promisor in fairness be allowed to retract a concession on which the promisee has relied?
Birmingham and District Land Co v London & North Western Railway (1888)
Bowen LJ: ‘if persons who have contractual rights against others induce by their conduct those against whom they have such rights to believe that such rights either will not be enforced or will be kept in suspense or abeyance for some particular time, those persons will not be allowed by a court of equity to enforce the rights until such time has elapsed, without at all events placing the parties in the same position as they were before.
Promissory estoppel -
When one party to a contract in the absence of fresh consideration agrees not to enforce his rights an equity will be raised in favour of the other party.
Doctrine =it is one party’s behaviour, leading the other to infer that a contractual right will be suspended and to rely on that inference.
- so long as this remains the doctrine then it is not at odds with the common law, merely mitigates the effects of the common laws limited respect for reliance.
Central London Property Trust v High Trees House (1947)
If a promise was made, which was intended to be relied upon, and was relied upon, then in equity the promisor would not be allowed to go back on the promise even though there was no consideration for it.
1) Need for a clear promise.
High Trees makes it clear that the doctrine requires a distinct promise not to enforce full contractual rights, and the accompanying intention to affect the legal relations between the parties.
2) Reliance
The promise must have been relied on by the promisee before it will find an estoppel.
Societe Italo-Belge v Palm and Vegetable Oils (Malaysia): Post Chaser (1981)
Goff J quoted Lord Cairns in Hughes ‘the representer will not be allowed to enforce his rights where it would be inequitable having regard to the dealing which have thus taken place between the parties’.
To establish inequity it is not necessary to show detriment, indeed the representee may have benefited from the representation and yet it may be inequitable, at least without reasonable notice for the representor to enforce his legal rights.
Inequity
Inequity in an estoppel case arises at the retraction of the promise.
Detriment arises from the acceptance of the promise.
D & C Builders v Rees (1966)
- Rees owed the plaintiff £480
- told them they only had £300, either accept this or not get any payment.
- Plaintiffs accepted that the payment but later sought an action for the balance.
- Court of Appeal upheld the action for the balance on Foakes v Beer rule that there was no consideration for the plaintiffs promise to Mrs Rees.
- Denning MR saw it as promissory estoppel but that the doctrine could not be claimed as the promised had been extracted from them by pressure, so no inequity in allowing them to resile from it and use for remainder at common law.
Collier v Wright (Holdings) Ltd (2007)
Claimant was bound together with his two partners to repay a debt of £600 a month. Claimant paid £200 a month, other two partners were bankrupt.
Claimant was served a statutory demand for the full amount jointly owed.
Arden LJ the effect of promissory estoppel on the promise to accept the lesser payment was to extinguish the creditors right to the balance of the debt.
Collier = the debtor offers to pay part of the amount he owes; the creditor voluntarily accepts that offer; and in reliance on the creditors acceptance the debtor pays the part he owes in full, the creditor will, by virtue of the doctrine of promissory estoppel, be bound to accept that sum in full and final satisfaction of the whole debt.
For him to resile will of itself be inequitable.
-part payment circumstances promissory estoppel has the effect of extinguishing hrs creditor’s right to the balance of the debt.
Tool Metal Manufacturing Co Ltd v Tungsten Electric Co (1955)
Agreement was reached between the 2 parties to waive compensation payments during the war years.
TMM were not estopped from going back on their promise to waive payments in equity during the war years but could enforce them on termination of war.
-periodic payments like this that have been reduced because of pressing circumstances unlikely to persist - promissory estoppel can be used to extinguish legal rights.
Ajayi (EA) v Briscoe
Lord Hodson - if the promisee has so altered his position in reliance on the promise as to be unable to resume the obligations of the contract, it is inequitable to allow the resumption of rights in all the circumstances, then equity will extinguish them permanently.
Equity is subject to the qualifications:
1) that the other party has altered his position.
2) that the promisor can resile from his promise on giving reasonable notice, which need not be formal, but gives the promisee reasonable opportunity for resuming his position.
3) the promise only becomes final and irrevocable if the promisee cannot resume his position.
Defensive device
It gives effect to a promise unsupported by consideration as it allows that promise to be set up by its recipient as a defence to a claim that he has not performed in accordance with a contract.
Combe v Combe (1951)
‘Shield not a sword’.
*Promissory estoppel can be deployed as part of a cause of action, but not as a cause of action itself.
