Semester 1- Doctrine of Promissory Estoppel Flashcards
what is consideration? what is the doctrine of consideration?
consideration is something that has value in the eyes of the law ; it is an essential part of forming a contract. This means the exchange of things that have a value for a legally binding contract
The doctrine of consideration can be explained in outline in the form of three rules: (i) consideration must be sufficient but need not be adequate, (ii) consideration must not be past, and (iii) consideration must move from the promisee
consideration is required for a valid contract
Case law - Re Hudson (1885)
FACTS
Hudson died before final instalments
No consideration given in exchange for promise
A gratuitous promise
No contract in any legal sense of the word
What is consideration and how does it apply to case law ?
Currie v Misa (1875)
FACTS
Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915]
Terminology in consideration
Executed consideration – a promise in
return for an act
Executory consideration – an exchange
of promises to perform acts in the
future
What is Past Consideration
Definition
CASE LAW
Eastwood v Kenyon (1840)
Guardian took loan.
After the marriage, her
husband promised to pay
off the loan.
Loan not repaid.
Court held the guardian
could not enforce the
promise because his
actions were past
consideration
Re McArdle (1951)
Daughter-in-law decorated house
Note promised to pay her £488
Refusal to pay
Work was done BEFORE promise of
payment
Consideration was past
Roscorla v Thomas (1842)
Promise made afterwards therefore not
enforceable
No exchange
Consideration is not past when..
Pau On v Lau Yiu Long (1979)
FACTS
Authorities to illustrate
Re Casey’s Patents: (Stewart v Casey) (1892)
Stewart and Charlton, the joint owners of certain patent rights, wrote to Casey stating that, in consideration for his services as practical manager in working their patents, they promised to give him a one-third share of the patents. They later transferred the letters patent to Casey. After the death of Stewart, it was argued by Charlton and by Stewart’s executor that Casey was not entitled to possession of the letters patent. Casey contested this and argued that, as owner of a one-third share in the patents, he was entitled to possession.
Lampleigh v Braithwait (1615)
Brathwait had killed a man and he requested that Lampleigh should try to get him a pardon from the King. Lampleigh did as requested, which involved making journeys at his own expense, and obtained a pardon for Brathwait. Afterwards, Brathwait promised to pay him £100 for his endeavours. He then failed to pay Lampleigh and was sued by him. Brathwait’s defence was that the act had been performed before the promise of a reward was made
Authorities under consideration
Consideration must move from the promisee
Tweddle v Atkinson (1861)
FACTS
John Tweddle and William Guy agreed (at first orally, and later in writing) each to pay a sum of money to a couple on their marriage. The couple in question were their son and daughter, respectively. The claimant, John Tweddle’s son, tried to enforce his father-in-law’s promise when William Guy failed to make the agreed payment. (In fact, the action was brought against the executor of the deceased William Guy.
Contracts Rights of Third Parties Act 1999
Consideration need not be adequate
Mountford v Scott [1975] Ch 258
Thomas v Thomas (1842) 2 QB 851
FACTS
C’s husband had made it clear that if his wife survived him, she should have the use of his house. After her husband’s death, C agreed with the defendant, her husband’s executor, that she should have the use of the house as long as she did not remarry. Her husband’s executor made the agreement largely in deference to the deceased’s clearly expressed wishes. But C was also asked to pay £1 per year to the executors under the agreement. Had C provided consideration for the promise, or was the payment of £1 per year no more than a condition attached to a gift?
Consideration should be of some economic value
White v Bluett (1853)
Ward v Byham [1956] 2 All ER 318)
FACTS
The claimant (C) lived with the defendant (D) for five years as an unmarried couple. C gave birth to their daughter during this period, but the couple eventually separated. Initially, D was responsible for looking after the child, as C had been forced to leave their home. But when C found a housekeeping job, where she could have her daughter with her, D agreed to let her have the child and an allowance of £1 per week, provided that C could prove that their daughter was ‘well looked after and happy’. The daughter, who was allowed to decide with which parent she wanted to live, went to her mother’s. D made the £1 weekly payments, but stopped these when C married her employer. C brought an action for the £1 per week promised by D.
Chappell & Co v Nestle Co [1960]- Under adequacy of consideration- the general rule
FACTS
- the nestle company (D) offered a record entitled ‘Rockin’ Shoes’ to the public for 1s 6d (7.5p) plus three Nestlé chocolate bar wrappers. The requirement of sending in the wrappers in addition to the money was in order to promote the company’s chocolate; the wrappers were thrown away on receipt. The action arose because the claimant, who owned the p. 61↵copyright in ‘Rockin’ Shoes’, argued that he received insufficient royalties on the sale of the record. D paid a percentage based on the price of the record, which was 1s 6d. The claimant argued that the wrappers were also part of the consideration.
MacDonald & anor v Carnbroe Estates Ltd (201
Can performance of an existing duty
be good consideration?
- Performance of a duty owed already to a third party
New Zealand Shipping v Satterthwaite (The Eurymedon)
[1974] 1 All ER 1015 - Performance of a public duty
Collins v Godefroy (1831) 1 B&Ad 95
Glasbrook Bros v Glamorgan County Council [1925] AC
270 - Performance of a duty owed already to the promisor.
Duty owed to the promisor:
Stilk v Myrick (1809)
Not entitled to more payments as only performed
original contractual duties
Hartley v Ponsonby (1857)
Yes, entitled to additional payments as exceeded
original contractual duties. Consideration was
provided for the captain’s promise
A crew of 36 was reduced by desertions to one of 19, of which only a handful were experienced sailors. This situation was distinguishable from that of Stilk v Myrick (1809) and the claimant was able to enforce the captain’s promise of an additional £40. The situation was exceptional: continuing with the voyage was so dangerous that the remaining crew members were not simply fulfilling their existing obligations. Consideration was provided for the captain’s promise.
KEY case law
Williams v Roffey Bros & Nicholls
(Contractors) Ltd (1990)
FACTS
£20 000 for
carpentry on
27 flats
Penalty Clause if
work not completed
on time
Penalty Clause if
work not completed
on time
C sued D for the additional sum promised
D argued no consideration had been provided by C for the promise of
extra payment.
C of A held that C was entitled to the additional payments for the flats
completed:
No evidence of economic duress
D gained a benefit under this later agreement
C provided consideration for D’s promise of additional payment
D gained a ‘practical’ benefit
Refined Stilk v Myrick, not overruled
Types of consideration- including past
Can performance of an existing duty be
consideration?
Performance of a duty owed already to a third party
The performance of a public duty
Performance of a duty owed already to the promisor
PART 2 KEY Objectives CONSIDERATION
Explore whether part payment of a debt
may constitute consideration.
Examine what is the doctrine of promissory
estoppel.
Consider the requirement of intention to
create legal relation
Part payment of an existing debt
Stilk v Myrick (1809)
A crew of 36 was reduced by desertions to one of 19, of which only a handful were experienced sailors. This situation was distinguishable from that of Stilk v Myrick (1809) and the claimant was able to enforce the captain’s promise of an additional £40. The situation was exceptional: continuing with the voyage was so dangerous that the remaining crew members were not simply fulfilling their existing obligations. Consideration was provided for the captain’s promise.
Williams v Roffey (1990)
Pinnel’s Case (1602)
Payment of part of an existing debt could not amount to
consideration to accept a lesser sum and to forgo the balance
If something in addition was given, this could be good consideration
Or, if payment of a lesser sum is made at an earlier time than
originally agreed,
And therefore, if a benefit to the creditor can be discerned.
Here, held that a lesser amount of money cannot be consideration for
a greater sum owed.
Foakes v Beer (1884)
Judgment in the High Court against John Foakes for £2,090 19s
and more than a year later, Dr Foakes requested time to pay.
£500 immediately plus biannual instalments of £150, Mrs Beer
would ‘not take any proceedings whatever on the said judgment’.
Dr Foakes paid the debt but then Mrs Beer claimed interest.
Did Dr Foakes provide any consideration in return for Mrs Beer’s
promise?
The House of Lords found in favour of Mrs Beer and upheld her
claim for the interest
CASE LAW- D&C Builders v Rees (1966)
Defendant still owed £482
Accept £300 or no money
Reluctantly agreed to the £300
Then sued for the £182
Held: Entitled to the remaining £182
Application of Foakes v Beer
Such a case today would be voidable for economic duress
CASE LAW- Re Selectmove Ltd (1995)
Demanded immediate payment in full
S relied on ‘practical benefit’
Court held no – Williams v Roffey did not apply to an obligation
to pay a debt
Foakes v Beer is still good law
MWB Business Exchange Centres Ltd v Rock Advertising Ltd
(2016)
Licence agreement to occupy office premises
RA fell into arrears, MWB exercised rights under contract
RA counterclaimed for loss and damage - an oral agreement had been made
to clear the arrears.
MWB denied this agreement, arguing it would in any event be unenforceable
as it lacked consideration.
Oral agreement had been entered into, supported by RA’s consideration of a
practical benefit, BUT this agreement was unenforceable due to the anti-oral
variation clause in the licence.
C of A decided in favour of RA. Emphasised freedom of contract and party
autonomy.
Court accepted the application of the practical benefit approach as taken in
Williams v Roffey.
Future of Foakes v Beer?
Supreme Court: ‘any decision of’ the consideration issue was ‘likely to involve
a re-examination of the decision in Foakes v Beer’ and that it is probably ripe
for re-examination (at [18]) – but, not to be reviewed in instant case.
PROMISSORY ESTOPPEL
Promissory Estoppel
DEFINTION: Estoppel - stops the person against whom is it generated, enforcing their legal right. Promissory estoppel is a doctrine made without the exchange of consideration is binding and enforceable
Central London Property Trust Ltd v High Trees House Ltd (1947)
Hughes v Metropolitan Ry (1877)
6 months to repair or forfeit the lease.
Landlord to purchase but negotiations fell through
6 months to repair started from when negotiations fell through
Lord Cairns: ‘It is the first principle upon which all courts of equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results—certain penalties or legal forfeiture—afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those
rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties.
Estoppel - stops the person against whom is it generated, enforcing their
legal right.
Central London Property Trust Ltd v High Trees House Ltd (1947)
Hughes v Metropolitan Ry (1877)
6 months to repair or forfeit the lease.
Landlord to purchase but negotiations fell through
6 months to repair started from when negotiations fell through
Lord Cairns: ‘It is the first principle upon which all courts of equity proceed,
that if parties who have entered into definite and distinct terms involving
certain legal results—certain penalties or legal forfeiture—afterwards by their
own act or with their own consent enter upon a course of negotiation which
has the effect of leading one of the parties to suppose that the strict rights
arising under the contract will not be enforced, or will be kept in suspense, or
held in abeyance, the person who otherwise might have enforced those
rights will not be allowed to enforce them where it would be inequitable
having regard to the dealings which have thus taken place between the
parties.
CASE LAW= Central London Property Trust Ltd v
High Trees House Ltd [1947] KB 130
Rent of £2500 a year.
Sublet not possible and could not pay full rent.
Claimants accepted this position and reduced the rent to
£1250 a year
After WWII sublet flats still at £1250 a year.
Sued for the full rent
Held: Entitled to the full rent (in future and since 1945)
N.B. Obiter dicta comments of Denning J: promissory estoppel
could be a means of preventing a creditor claiming the full
debt after promising to accept a smaller sum in full payment.
A promise, relied upon by the other party
may suspend the promisor’s legal rights
BP Exploration Co (Libya) Ltd v Hunt (No 2) (1979)
FACTS
COMMENTS= Goff J:
‘(1) a legal relationship between the parties; (2) a
representation, express or implied, by one party that he will
not enforce his strict rights against the other; and (3) reliance
by the representee (whether by action or by omission to act)
on the representation, which renders it inequitable, in all the
circumstances, for the representor to enforce his strict rights,
or at least to do so until the representee is restored to his
former position.
Emery v UCB Corporate Services Ltd (2001) Peter Gibson
LJ
‘The fact that the promisee has not altered his position to his
detriment is plainly most material in determining whether it
would be inequitable for the [promisor] to be permitted to act
inconsistently with his promise.
Limitations on Promissory Estoppel
Combe v Combe [1951] 2 KB 215 – ‘shield not a sword’
The doctrine does not create a cause of action.
Denning LJ at 220:
‘Seeing that the principle never stands alone as giving a cause of action in
itself, it can never do away with the necessity of consideration when that
is an essential part of the cause of action. The doctrine is too firmly fixed
to be overthrown by a side-wind . . . it still remains a cardinal necessity of
the formation of a contract, though not of its modification or discharge.’
Johnson v London Borough of Brent [2020] EWHC 933 (Ch)
Effect is, generally, suspensory - see Collier v P and MJ Wright
(Holdings) Ltd (2008)
The promise must be clear and unambiguous
The promise must have been relied upon by the promisee
It is an equitable doctrine
Intention to create legal relations:
domestic and commercial contexts
Balfour v Balfour (1919)
Merritt v Merritt (1970)
Radmacher v Granatino (2010) UKSC 4
Blue v Ashley (2017)
MacInnes v Gross (2017)
Rose and Frank Co v JR Crompton & Bros Ltd (1925)
Mahmood v The Big Bus Co. (2017)
Consideration must not be past
Carlill v Carbolic Smoke Ball Co 1893
FACTS
- the d company offered a reward of £100 to anyone who bought their smoke balls and used it the in prescribed manner and caught influenza
- The c, who bought a smoke ball and used it, provided consideration for the company’s promise
-obviously she could not have claimed the reward unless she in fact caught the flu but this is hardly be described as part of the consideration
-The act done in return for the promise is referred to executed consideration.
