Promissory Estoppel Flashcards
Hughes v Metropolitan Railway Co. [1877]
Prelude to promissory estoppel.
Lessor and Lessee.
Lessee must carry out repair works within 6 months or lose lease.
Then 2 parties enter into negotiations to for lessor to buy their interest in the property.
Lessee didn’t carry out out repair work as required by contract during the period of negotiations.
When negs broke down and repairs not finished within 6 months:
H of L held that lessor had been ESTOPPED from enforcing the contract (to repair within 6 months) during the negotiation period - suspended their right during negotiations - continued once negs collapsed.
Lessee had been led to believe that lessor would NOT enforce their right during negotiation period.
CENTRAL LONDON PROPERTY TRUST V HIGH TREES HOUSE LTD
Rebirth of promissory estoppel - Denning
99 year lease - block of flats - annual rent for block = £2500
During WW2 - sub-letter unable to sublet flats due to Blitz - parties had discussions - letter agreed to accept £1250 per year during low vacancy.
BUT - later brought a claim for unpaid rent.
DENNING - lettor was estopped from claiming this - lettor’s promise to accept £1250 had effect of waiving right durign wartime years.
Merely suspensory - after war, had a right to claim £2500 a year.
AUTHORITY FOR DOCTRINE OF PROMISSORY ESTOPPEL
Ajayi v R T Briscoe (Nigeria) Ltd [1964]
Emergence of PE (following on from High Trees House)
WOODHOUSE A.C. ISRAEL COCOA S.A. v NIGERIA PRODUCE MARKETING CO. [1972]
AUTHORITY:
For promissory estoppel to apply, the PROMISE, REPRESENTATION OR INDICATION MUST BE CLEAR AND UNEQUIVOCAL.
D & C Builders v Rees [1966]
AUTHORITY THAT IT MUST BE INEQUITABLE FOR THE PROMISOR TO GO BACK ON HIS PROMISE.
i.e. promisor must have acted inequitably whilst promisee acted equitably.
In case - balance owed to company - D sent wife - said we can only pay x amount - bankrupt - accept this or nothing.
P accepted but later brought claim for the balance.
D sought to rely on defence of promissory estoppel.
C of A did NOT allow P.E.
Promisee had acted inequitably (not the promisor) by effectively holding the promisor to ransom.
It was perfectly equitable for the promisor to later go back on this promise due to way in which the promise was made.
(Other judges rejected P.E. due to rule in Pinnel’s case + Foakes v Beer.)
W.J Alan & Co. Ltd v El Nasr Export and Import Co. [1972]
AUTHORITY THAT, for promissory estoppel to be made out, amongst the other 2 requirements, THE PROMISEE MUST HAVE ‘ALTERED HIS POSITION’.
Contract of sale - contract said that payment must be made in Kenyan shillings - BUT promisor accepted credit in GBP for sometime.
When £ devalued - stopped accepting credit in GBP.
Ct ESTOPPED promisor from demanding payment in Kenyan shillings.
Promisee had conducted its affairs on the basis of the promise and had thus ALTERED ITS POSITION. - NEED NOT BE DETRIMENTAL RELIANCE.
Denning - interpreted ‘altered position’ as “acting differently from what he otherwise would have done.”
Collier v P & MJ Wright (Holdings) Ltd. [2007]
Also shows that promisee must have altered his position, per W.J Alan & Co. Ltd. v El Nasr Export and Import Co [1972]
Collier and 2 others owed debt of £46,000, for which they were jointly and severally liable.
Creditor promised only to claim 1/3 of debt from him and no more.
C of A held that creditor WOULD BE ESTOPPED from claiming rest of the debt
Lady Arden J - seemed to suggest that for debtor-creditor relationship, needs to be reliance from debtor (promisee) on creditor’s representation (promisor.) ALL DICTUM
Seems to undermine rule in Pinnel’s case.
NOT RATIO DECIDENCI.
Commentators: just reflects commercial world of today.
Tool Metal Manufacturing Co. v Tungsten Electric Co. [1955]
Authority that PROMISSORY ESTOPPEL IS GENERALLY (but not exclusively) SUSPENSORY.
Promisor not permanently precluded from enforcing contractual right - merely suspended from doing so (in most cases)
Just means that when promisor wants to start re-enforcing right, must GIVE NOTICE.
Case shows that P.E. is generally suspensory, BUT DOES NOT PRECLUDE THAT IT CAN SOMETIMES HAVE AN EXTINCTIVE EFFECT.
COMBE V COMBE [1951]
AUTHORITY: PROMISSORY ESTOPPEL CANNOT CREATE ITS OWN CAUSE OF ACTION
‘A SHIELD NOT A SWORD’.
Divorce - husband (D) promised wife (P) payments every year which he did not pay.
Wife made no application to divorce court.
Wife brought claim: even though she had provided no consideration for husband’s promise of payments, he should be estopped from going back on promise.
Allowed at trial! - P.E. endorsed for a promisee who didn’t get what they want - not for a promisor who had gone back on a promise inequitably.
C of A ALLOWED APPEAL - HELD THAT P.E. DOES NOT CREATE ITS OWN CAUSE OF ACTION - ONLY A DEFENCE.
Otherwise, would undermine the entire doctrine of consideration and all its purpose.
Walton Stores (Interstate) Ltd. v Maher [1988]
Australian case - differs from English law - allowed promissory estoppel to create a cause of action.
Contrary to UK decision in Combe v Combe.
Baird Textile Holdings Ltd. v Marks & Spencer Plc [2001]
Court declined to follow Aus/US example - that P.E. does not create own cause of action.
However, issue yet to be considered by UKSC at any point - possible that UK could go that way.
But in this case, C of A applied Combe v Combe.
Baird - long term supplier for M&S - but NOT a long term contract - rather orders were made as and when needed.
M&S changed suppliers.
Baird brought a claim that M&S should be estopped from terminating their commercial relationship without giving prior notice.
