Introduction

• consideration usuually required to make promise enforceable
• if no consideration doctrine of estoppel may help promisee enforce promise, if he has acted on promise to his detriment

  Maclaine v Gatty [1921] 1 AC 376

  • Lord Birkenhead: .. where A has by words or conduct justified B in believing that a certain state of facts exists, and B has acted upon such belief to his prejudice, A is not permitted to affirm against B that a different state of facts existed at the same time...
• possible conflict between doctrines of consideration & estoppel to overcome courts only permit estoppel as a shield not a sword (cannot establish a new cause of action only used as defence)

Estoppel by representation

• person may be estopped from acting inconsistently with a representation of fact he has made, if other party has acted in reliance to his detriment
• representation must be of fact not opinion or intention

  Jorden v Money (1854) LR 5 HL 185

  Facts:

  • plaintiff (P) owed £1200 & gave a bond to creditor for this amount, defendant (D) inherited the bond
  • P was considering marriage but worried about finances, D stated she would never enforce bond, P married in reliance on her representation
  • P sought declaration the debt had been abandoned & release from the bond, granted in first instance but D appealed

  Issue:

  • had D made a representation of fact which P then relied upon?

  Held:

  • HoL: no estoppel as D's representation was of intention not fact
  • Lord Cranworth LC: .. I think that that doctrine does not apply to a case where the representation is not a representation of fact, but a statement of something which the party intends or does not intend to do...

Promissory estoppel

• equitable doctrine of promissory estoppel allows a promise to waive legal rights to be enforced, even where there is no consideration for the promise

  Central London Property Trust Ltd v High Trees House Ltd [1947] 1 KB 130

  Facts:

  • P let a block of flats to D on a 99-year lease for £2 500 per year
  • evacuation during war meant D unable to sublet flats to cover rent so P agreed to halve rent
  • after war D able to sublet all the flats & P asked for original rent

  Issue:

  • could the promise be enforced despite the lack of consideration?

  Held:

  • statement was a representation as to the future, a promise to suspend P's right to full rent during war
  • P knew it would be acted upon & D acted upon so was enforceable despite lack of consideration but only while conditions which led to promise prevailed(wartime lack of demand for accommodation) once conditions ceased P could claim original rent
  • decision outlined elements of doctrine: a promise to waive strict legal rights, promise intended to create legal relations & to be acted on by other party, act in reliance on the promise (not necessarily detrimental), shield not a sword (courts will prevent promisor acting inconsistently with promise)
  • Denning J: .. it might be said that in any event the estoppel would cease when the conditions to which the representation applied came to an end...
  • Denning J (obiter): if P tried to claim full rent during war would fail

Reliance

• reliance does not have to be detrimental

  Ajayi v Briscoe (Nigeria) Ltd [1964] 1 WLR 1326

  • Lord Hodson: promissory estoppel may be induced if the other party altered his position on basis of promise
  • limitation to estoppel where impossible for promisee to resume his original position

  WJ Alan & Co v El Nasr [1972] 2 All ER 127

  • Denning LJ: ..all that is required is that one should have 'acted on the belief induced by the other party'...

Extinctive or suspensory

• debate whether promissory estoppel operates to extinguish or merely suspend promisor's strict legal rights
• in relation to existing obligations (rent owed during war in High Trees) is extinctive however for future obligations suspensory

  Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 1 WLR 761

  Facts:

  • P owned a patent & D had to pay royalties if manufactured items using the patent
  • P agreed to waive right during war, after P sought to resume right to royalties

  Issue:

  • could P revive original legal rights?

  Held:

  • P's promise enforceable during war but after could revive their legal entitlement to royalties by giving reasonable notice
• decision in High Trees was a development of earlier foundations

  Hughes v Metropolitan Railway Company (1877) 2 App Cas 439

  Facts:

  • D gave notice to P, his tenant, to carry out certain repairs within six months, if D did not the lease could be forfeited
  • during six months negoitaions commenced about sale of the lease to P & it was suggested repairs be deferred pending negotiations
  • negotiations broke down & P had not made the repairs within the six months, D wished to treat lease as forfeited

  Issue:

  • could P seek equitable relief from forfeiture?

  Held:

  • P was entitled to equitable relief, negotiations had the effect of suspending the notice & six month period should run from end of negotiations
  • highlighted the importance of of equity, promisor will only be prevented from enforcing strict legal rights if would be inequitable
  • Lord Cairns LC: .. the person who otherwise might have enforced those rights will not be allowed to enforce them where it would have been inequitable having regard to the dealings which have thus taken place between the parties...
• decision in Hughes was relied upon to develop doctrine of promissory estoppel & gives strength to argument that estoppel is primarily suspensory not extinctive

Shield not a sword

• promissory estoppel acts as a shield not a sword

  Combe v Combe [1951] 2 KB 215

  Facts:

  • D promised to pay P, his ex-wife, £100 per year maintenance but failed to do so P was in a better financial situation & did not pursue court proceedings for the money but later brought an action for arrears of £675

  Issue:

  • was the promise enforceable?

  Held:

  • P could not use promissory estoppel to create a cause of action, it can only be used as a defence to an action to enforce legal rights which have been waived
  • P only be able to sue if she provided consideration, P argued not bringing proceedings to enforce was consideration but court held that her forbearance was not done at D's request & therefore was not consideration

Equity

• a maxim of equity: he who comes to equity must come with a clean hands

  D & C Builders Ltd v Rees [1966] 2 QB 617

  Facts:

  • D owed P £482, aware of P's financial difficulties D offered £300 in full settlement indicating if P did not accept the money would not be repaid
  • P begrudgingly agreed but later sued for the balance

  Issue:

  • could D use the principle of promissory estoppel as a defence?

  Held:

  • promissory estoppel did not provide a defence to the claim because it was not inequitable for P to go back on promise as it had not been freely given
  • Denning LJ (obiter): .. we can say that when a creditor and debtor enter on a course of negotiation which leads the debtor to suppose that on payment of a lesser sum the creditor will not enforce payment of the balance and on the faith thereof the debtor pays the lesser sum and the creditor accepts it in satisfaction, then the creditor will not be allowed to enforce payment of the balance when it would be inequitable to do so...

One-off payments

• promissory estoppel has been invoked in situations concerning continuing obligations (rent or maintenance) but not applied where there was a one-off payment (pre-existing debt)
• Lord Denning (obiter) in D & C Builders Ltd v Rees [1966] suggested would be possible to apply promissory estoppel to a debt, if the debtor had acted equitably
• approach presents possible conflicts with earlier decisions regarding part payment of debts

  Foakes v Beer (1884) 9 App Cas 605

  Facts:

  • P had a court judgment for payment of a debt of £2090 19s against D
  • P agreed if D paid off the debt, by a £500 lump sum payment followed by six monthly instalments of £150, she would not take any proceedings whatever on the said judgment
  • D complied, however, P then sued for interest which had accrued under the judgment

  Issue:

  • was the agreement made for part payment of the debt, excluding the interest, enforceable?

  Held:

  • P had agreed not to sue on the judgement at all, even for interest but that this was not enforceable as D did not provide good consideration
• decision in Foakes v Beer (1884) upheld principle outlined 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 has been provided (such as early payment or additional goods)
• seeming conflict with D & C Builders v Rees: but these were made obiter & Lord Denning did not argue that creditor should never be allowed to enforce payment of balance of a debt but merely that he should be limited if it would be inequitable (in that case creditor was entitled to claim balance as it was equitable on the facts
• decision in High Trees more easily reconciled with Foakes v Beer: promissory estoppel will suspend debtor's obligation to pay rather than exbtinguish creditor's right to balance of the debt, but if in reliance on creditor's promise to accept part payment debtor had spends the money he would have used to pay the balance it may be inequitable for creditor to go back on his promise