Consideration: Estoppel

[Flash Card 1 of 3]

• consideration usually required to make promise enforceable / if no consideration provided estoppel may help promisee enforce promise if he acted on promise to his detriment
• Lord Birkenhead: acted upon such belief to his prejudice (Maclaine v Gatty [1921])

Estoppel by representation

• promisor estopped from acting inconsistently with representation of fact / if other detrimentally acted in reliance
• debt bond / P relied on D statement of intent / insufficient must be representation of fact not opinion or intention (Jorden v Money (1854))

Promissory estoppel

• equitable doctrine / enforces promise to waive legal rights / even if no consideration

Central London Property Trust Ltd v High Trees House Ltd [1947]

• P let flats to D / 99 yr lease / £2500 per yr
• wartime: evacuation / D not cover rent / P agreed halve rent / after war: D let all flats / P wanted D resume paying full rent / D refused
• held: future representation (promise to suspend P's right to full rent during war) / P intent to create legal relations & knew would be relied upon so enforceable / only while conditions prevailed / post war P could claim full rent
• key elements: promise to waive strict legal rights / intent create legal relations & to be acted upon by other / reliance on promise (not necessarily detrimental) / shield not sword
• Denning (obiter): if P tried claim rent for war would fail

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Consideration: Estoppel

[Flash Card 2 of 3]

Promissory estoppel

Reliance

• reliance does not have to be detrimental
• sufficient: altered position or impossible promisee resume original position ( Ajayi v Briscoe [1964] )
• Lord Denning: ..all that is required is that one should have 'acted on the belief induced by the other party'... (WJ Alan & Co v El Nasr [1972])

Extinctive or suspensory

• ongoing payments: existing obligations (rent in High Trees) extinctive / future obligations suspensory
• D manufactured items using P's patent / P agreed not claim royalties during war / after war sought resume / held: P revive right with reasonable notice (Tool Metal Manufacturing v Tungsten Electric [1955])
• D gave P to make repairs within 6 months / if not would forfeit lease / negotiations for sale broke down / P not made repairs in 6 months / D regarded lease forfeited / held: P equitable relief / negotiations suspended notice period (Hughes v Metropolitan Railway Company (1877))
• as Hughes relied upon to develop doctrine in High Trees / gives strength to argument estoppel is primarily suspensory not extinctive

Shield not a sword

• promissory estoppel acts as a shield not a sword
• D promised P £100 per yr maintenance / P better finances than D / 6 yrs later P sued for arrears / held: promissory estoppel not create action / P only able to sue if provided consideration ( Combe v Combe [1951] )

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Consideration: Estoppel

[Flash Card 3 of 3]

Promissory estoppel

Equity

• maxim: he who comes to equity must come with a clean hands
• D owed P £482 / offered £300 in settlement because knew P in financial trouble / P agreed begrudgingly & later sued for balance / held: promissory estoppel not defence / not inequitable for P to go back on promise as not freely given ( D & C Builders Ltd v Rees [1966])

One-off payments

• promissory estoppel only been invoked in cases of continuing obligations (rent or maintenance) / not for one-off payment (pre-existing debt)
• Lord Denning (obiter) D & C Builders Ltd v Rees [1966] / suggested possible to apply promissory estoppel to debt / if debtor acted equitably / possible conflict with earlier decisions
• conflict Foakes v Beer (1884): decision upheld obiter principle in Pinnel's Case (1602): if a fixed sum is owed then payment of a lesser sum can never be satisfaction for the full amount owed if no consideration provided (eg early payment or additional goods)
• reconciled remarks in D & C Builders v Rees: obiter / Denning not argue a creditor should never be allowed to enforce payment of the balance / merely should be limited inequitable / creditor was entitled as equitable on facts
• High Trees decision more easily reconciled with Foakes v Beer: promissory estoppel suspends debtor's obligation to pay rather than extinguish creditor's right to balance / if in reliance on creditor's promise to accept part payment debtor spends money he would have used to pay balance may be inequitable for creditor to go back on promise

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