Promissory Estoppel

Question 1

What is promissory estoppel?

Answer 1

Equitable doctrine
Can provide a means of making a promise binding, even without consideration

Applied with Ct discretion

Question 2

In what case was the doctrine of promissory estoppel developed in?
By whom?

Answer 2

Lord Denning’s obiter statement in the case of Central London Property Trust Ltd v High Trees House Ltd (1947)

Question 3

Central London Property Trust Ltd v High Trees House Ltd (1947)

Answer 3

Claimants = owners of a block of flats in London
Rented it to Ds for £2,500 per annum
World War II – difficult for Ds to let the flats
Claimants agreed to reduce rent to £1,250 per annum
Even after the war (1945) Ds continued paying the reduced rent
After the war, Claimants sought to return to £2,500 per annum + recover the difference for last 2 quarters of 1945

Held: Claimants could revert to £2,500 per annum
Could also recover the full rent from when the war ended

BUT Denning stated in OBITER: couldn’t recover for the war years
Even though they had provided no consideration, they were bound by their promise

Question 4

What did Lord Denning state in the Central London Property Trust Ltd v High Trees House Ltd (1947)?

What case + principle did he rely on?

Answer 4

‘A promise intended to be binding, intended to be acted on, and in fact acted on, is binding insofar as its terms properly apply’

Relied on the ‘equitable waiver’ case of Hughes v Metropolitan Railway (1877)

Question 5

Hughes v Metropolitan Railway (1877)

Answer 5

Landlord gave tenant 6 months notice to carry out repairs
Failure to do so would result in forfeiture of the lease
Landlord + tenant then entered into negotiations for tenant to purchase the freehold of the property
= thought by both parties that a conveyance of the property would take place
Tenant hadn’t carried out the repairs as they believed they would be purchasing the freehold + the repairs required by the landlord were not essential to his use of the property
Negotiations broke down
Landlord gave tenant notice for failure to carry out the repairs

Held: time limit imposed = suspended during negotiations

Question 6

What did Lord Cairns state in the case of Hughes v Metropolitan Railway (1877)?

(summary)

Answer 6

If parties agree on certain legal rights + at some point in the course of negotiations between the parties, 1 gives the indication that they will not enforce their legal right, then they won’t be able to go back on this

Would be inequitable

Question 7

What are the 6 requirements needed for PE to apply?

Answer 7

1. Must be an existing legal relationship
2. Doctrine can only be used as a ‘shield’ not a ‘sword’ (defence)
3. Clear + unequivocal representation must have been made
4. Must be reliance on the promise
5. Must be inequitable to go back on the promise
6. Doctrine only suspends, the rights + original terms can be revived

Question 8

Why must there be an existing legal relationship for PE to apply?

Answer 8

Doctrine cannot exist in a vacuum
Has to be base on the fact that there is already a legal relationship - that is then varied
Use the doctrine to support the variation

Question 9

Combe v Combe (1951)

Answer 9

During divorce process
Husband promised to pay wife tax-free sum of £100 each year
Represent a permanent maintenance payment
Wife = aware that the husband wasn’t in a good financial state + made no claim to this payment
Several years later, brought action to claim the £ owed under their agreement

CA: wife could only enforce her agreement for the payment which was promised by the husband if she had given consideration
No consideration = given by the wife
She had not agreed to apply for the maintenance that was promised by the husband
Husband didn’t request the wife to refrain from taking the maintenance payment
Wife couldn’t claim for £

Question 10

What did Lord Denning state in the case of Combe v Combe (1951)?

Answer 10

Consideration remained a cardinal necessity of the formation of a contract, but not of its modification or discharge

Question 11

The doctrine of PE can only be used as a ‘shield’ not a ‘sword’

What does this mean?

Answer 11

PE would generally only be available to be used as a defence

Correlated with the fact that there must be an existing legal relationship, can’t be used to form a new 1

BUT doesn’t mean that PE can only be used by Ds

Question 12

A clear + unequivocal representation must have been made

What does this mean?
Case?

Answer 12

An ambiguous statement cannot form the basis of an argument for promissory estoppel

A definite representation must have been made to the effect that a party will not enforce his contractual rights

WoodHouse AC Israel Cocoa SA v Nigerian Produce Marketing Co Ltd (1972)

Question 13

WoodHouse AC Israel Cocoa SA v Nigerian Produce Marketing Co Ltd (1972)

Answer 13

Contract for the sale of coffee beans = agreed to be payable in pound sterling
Sellers mistakenly sent an invoice stating price was payable in Kenyan Shillings
At the time the value of pound sterling + Kenyan shillings = equal
Buyers accepted the delivery + invoice with out objection
Subsequently the value of the pound fell quite dramatically in relation to Kenyan shillings
Buyers sought to revert to pound sterling as stated in the contract

Held: Buyers conduct in accepting the invoice unquestionably amounted to an implied clear + unambiguous promise to accept on those terms.

Question 14

There must be reliance on the promise

What does this mean?
Case?

Answer 14

Party seeking to rely on the doctrine must have taken some action on the promise
Translates to actually ‘doing something’ based on the reliance upon the promise
Party must have acted on the belief induced by the other party

High Trees case can be applied here

Question 15

For a party to use the doctrine of PE, they must have relied on the promise

Does this reliance have to be detrimental?

Answer 15

No, the reliance does not have to be detrimental

Lord Denning - WJ Alan + Co v El Nasr (1972)

Goff J - The Post Chaser (1982)

Confirmed in Collier v P + MJ Wright (Holdings) Ltd (2007)

Question 16

Which case confirmed that the reliance on the promise doesn’t have to be detrimental?

Answer 16

Collier v P + MJ Wright (Holdings) Ltd (2007)

Question 17

It must be inequitable to go back on the promise

What does this mean?
Case?

Answer 17

It must be equitable to enforce the promise
+ it mist be inequitable to allow the promisor to go back on the promise
Has its roots in equity

D + C Builders v Rees (1966)

Question 18

D + C Builders v Rees (1966)

Answer 18

D instructed the claimant to do some building work at his home
Value of £746
D paid £250
Claimant wrote to the D several times for payment
= unsuccessful
Had been no complaints as to the workmanship at this time
Claimant at the time = in financial need
D = aware of this
D offered £300 in satisfaction of the whole debt
Claimant reluctantly accepted
Later sued for the remaining balance

Held: Ds couldn’t rely on PE
D had taken advantage of the claimants position - no true acceptance
‘he who comes for equity, must come with clean hands’
Claimants = successful

Question 19

Doctrine of PE is only suspensory

What does this mean?
Case?

Answer 19

PE only suspends rights
A party can revert to the original terms by giving notice

High Trees case

Can apply in continuous obligations + extinguish rights in a 1-off debt/ contract - depends on the nature of the contract

Question 20

PE only suspends rights
This relates to continuous obligations

How would this apply to a single debt?
Cases?

Answer 20

D + C Builders v Rees
- ‘he who comes for equity, must come with clean hands’

Collier v P + MJ Wright (Holdings) Ltd

Question 21

Collier v P + MJ Wright (Holdings) Ltd

Answer 21

A partner in a partnership claimed that a creditor had promised that if the partner could pay off his individual share (one-third) of the partnership debts, his liability for the entire partnership debts would be discharged

Held: Mere fact that creditor agreed with a joint debtor to accept payment from him alone of his proportionate share did not result in a binding agreement
‘Agreement’ between C + W = accept a lesser sum from C than that which was due
= not a binding agreement in law since it had no consideration to support it (Foakes v Beer applied)

CA: = arguable case for PE to apply
Relied on the obiter view in D+C Builders v Rees

Question 22

Does PE destroy the doctrine of consideration?

Answer 22

Can be argued that the doctrine of PE = exception to the doctrine of consideration

BUT = based on requirements (Combe v Combe, Lord Denning)

Consideration = essential requirement for the formation of new contractual obligations

Question 23

What is the implication of PE on the case of Foakes v Beer?

Answer 23

D+C Builders (Denning)
Collier v P + MJ Wright (Holdings)
Based on these cases, can be argued PE can operate to extinguish ‘1-off’ debts
Means that the part-payment of debt can become satisfaction for the entire debt if promissory estoppel is applicable

Scope of the principle in F v B = narrowed
NOT BEEN OVERRULED
If the scenario can’t use PE, use F v B