S3: Primary Estoppel

Question 1

What is Primary Estoppel ?

Answer 1

Estoppel by representations prevents a person from going back on a statement of fact.
Promissory estoppel estops (prevents) a person from going back on a promise that has been relied upon by another person, where the outcome would be inequitable.
It is an equitable doctrine and can only be used as a defence.
The doctrine can therefore make a promise that is unsupported by consideration, enforceable.

Question 2

What must be established for Primary Estoppel to be successful ?

Answer 2

1.There is a pre-existing contractual obligation between A and B, and then a later clear and unequivocal promise by A to vary or discharge B’s original obligation.
2.B relies on A’s promise. E.g. B changes their position in reliance of the promise.
3.A tries to go back on the promise. E.g. A denies making the promise.
4.A will be ‘estopped’ from going back on the promise where it would be inequitable for A to do so. E.g. where B relies on A’s promise to B’s detriment, it would be inequitable for A to go back on the promise.

A pre-existing contractual obligation must exist between A and B.

‘The principle does not create new causes of action where none existed before. It only prevents a party from insisting on his strict legal rights when it would be unjust to allow him to enforce them.’

Question 3

Key Cases for Primary Estoppel

Answer 3

• Jorden v Money [1854]- Estoppel by representation requires a statement of fact whereas promissory estoppel relates to promises as to the future (first seen in the case of Hughes v Metropolitan Railway Co (1876))
• Hughes v Metropolitan Railway Co (1876)- Hughes conduct led to the railway company to believe that he had suspended his rights under the lease during the period of negotiation and it would be inequitable to enforce these at a later date.
• Collier v P & M J Wright (Holdings) Ltd (2007)- Collier had a pre-existing payment with Wright

Question 4

The Role of Primary Estoppel and Critique

Answer 4

• Other jurisdictions have a wider interpretation of promissory estoppel e.g. in Australia a non-bargain promise (not supported by consideration) can be positively enforced even if it does not amend or discharge a pre-existing contract.
• Walton Stores (Interstate) Ltd v Maher [1988]
• The reasoning behind this decision is that is a promise to modify or discharge an obligation/contract could be enforced then promises to create new obligations should also be capable of enforcement.
• A similar principle exists in the USA under the US Restatement of Contracts.