Maclaine v Gatty [1921] 1 AC 376

Lord Birkenhead explained the doctrine of estoppel: .. 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....

Jorden v Money (1854) LR 5 HL 185

Facts:

The plaintiff owed £1200 and gave a bond to the creditor for this amount. The bond was inherited by the defendant. The plaintiff was considering getting married but was concerned about his finances. The defendant stated that she would never enforce the debt. In reliance on her statement the plaintiff married. The plaintiff sought a declaration that the debt had been abandoned and a release from the bond. This was granted in the first instance but then the defendant appealed.

Issue:

Had the defendant made a representation of fact which the plaintiff had then relied upon?

Held:

The House of Lords found that there could be no estoppel on the basis that the defendant's representation was one 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....

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

Facts:

The plaintiff let a block of flats to the defendant on a 99-year lease for £2 500 per year. The evacuation of people from London during the war meant that the defendant was unable to sublet enough flats to cover the rent. The plaintiff agreed to halve the rent. After the war the property market stabilised and the defendant was able to sublet all the flats. The plaintiff asked that the defendant resume paying the original rent but the defendant refused.

Issue:

Could the promise be enforced despite the lack of consideration?

Held:

The statement was a representation as to the future, a promise to suspend the plaintiff's right to full rent during the period of the war. The plaintiff knew that their promise would be acted upon and the defendant had acted upon the promise. It was enforceable, despite the lack of consideration, but only while the conditions which led to the promise (wartime lack of demand for accommodation) prevailed. These conditions ceased in 1945 and from this point the plaintiff could claim the original rent.

The decision outlined some key elements of the doctrine of promissory estoppel: There must be a promise to waive strict legal rights, the promise must be intended to create legal relations and intended to be acted on by the other party. There must be an act in reliance on the promise, but not necessarily detrimental reliance. The doctrine operates as a shield not a sword. Therefore, the promise does not give rise to a cause of action but the courts will prevent the promisor acting inconsistently with the 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, or it also might be said that it would only come to an end on notice. In either case, it is only a way of ascertaining what is the scope of the representation....

Obiter, Denning J, discussed the position if the plaintiff had tried to claim the full rent for the entire wartime period, he suggested the claim would have failed: .. I prefer to apply the principle that a promise intended to be binding, intended to be acted on and, in fact acted on is binding so far as its terms properly apply. Here it was binding as covering the period down to the early part of 1945, and as from that time full rent is payable....

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

Facts:

The plaintiffs owned a patent which entitled them to royalties if the defendant manufactured items using the patent. The plaintiffs agreed to waive their rights to royalties after the outbreak of war. After the war was over, the plaintiffs sought to resume their right to the royalties.

Issue:

Could the plaintiffs revive their original legal rights?

Held:

The plaintiffs promise was enforceable during the war period. However, the plaintiff could revive their legal entitlement to royalties by giving reasonable notice.

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

Facts:

The defendant gave notice to the plaintiff, his tenant, to carry out certain repairs within six months, if he did not comply the lease could be forfeited. During the six month period negoitaions between the parties commenced about the sale of the lease. It was suggested that repairs be deferred pending negotiations. The negotiations broke down. The plaintiff had not made the repairs within the six months and the defendant wished to treat the lease as forfeited.

Issue:

Could the plaintiff seek equitable relief from forfeiture?

Held:

The plaintiff was entitled to equitable relief. The negotiations had the effect of suspending the notice and the six month period should run from the end of negotiations.

The decision highlighted the importance of the principle of equity. The promisor will only be prevented from enforcing his strict legal rights if would be inequitable in light of the dealing between the parties.

Lord Cairns LC: .. 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 have been inequitable having regard to the dealings which have thus taken place between the parties....

Combe v Combe [1951] 2 KB 215

Facts:

During divorce proceedings, the defendant promised to pay the plaintiff, his ex-wife, £100 per year maintenance. The defendant failed to pay. The plaintiff was in a better financial situation and did not pursue court proceedings for the money. However, several years after the divorce was finalised the plaintiff brought an action for the arrears of £675.

Issue:

Was the promise enforceable?

Held:

The plaintiff could not use promissory estoppel to create a cause of action for as it can only be used as a defence to an action to enforce legal rights which have been waived.

Therefore, the plaintiff would only be able to sue if she provided consideration for the promise. The plaintiff argued that the court held that she had provided consideration by not applying to the court to enforce the promise. However, the court found that her forbearance was not done at the defendant's request and therefore, it was not consideration for his promise.

Denning LJ: ..[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....

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

Facts:

The defendants owed the plaintiff £482. Aware that the plaintiff was in financial difficulties, the defendants offered £300 in full settlement indicating that if the plaintiff did not accept the money would not be repaid. The plaintiff begrudgingly agreed but then later sued for the balance.

Issue:

Could the defendant use the principle of promissory estoppel as a defence?

Held:

Promissory estoppel did not provide a defence to the claim. It was not inequitable for the plaintiff to go back on their 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....

Foakes v Beer (1884) 9 App Cas 605

Facts:

The plaintiff, had a High Court judgment for payment of a debt of £2 090 19s against the defendant. The plaintiff agreed that if the defendant paid off the debt, by making a £500 lump sum payment followed by six monthly instalments of £150, so that the debt was paid within five years then she would not take any proceedings whatever on the said judgment. The defendant complied and paid off the judgment debt in full. However, the plaintiff 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:

The House of Lords accepted that the plaintiff had agreed not to sue on the judgement at all, even for interest but that this was not enforceable as the defendant did not provide good consideration for this promise.