Promissory Estoppel
We must first remember the doctrine of promissory estoppel is an equity and when it arises will be determined by the facts and "the justice of a case". This paper will discuss when the doctrine will be used and what limits there are on its application. This paper will present differing opinions about the importance of it being used as a cause of action and whether it protects expectation or reliance interest.
An equitable doctrine known as promissory estoppel can, in certain circumstances, prevent a person from breaking a promise for which there was no consideration in exchange also known as equitable forbearance. In order words it is an equitable exception to the general rule that consideration is necessary. It has most often been used as an extension to the general rule that part payment of a debt with a smaller sum will never discharge a larger debt.[2] The notion of promissory estoppel was developed in the pivotal case of Central London Property Trust v. High Trees House[3] by Denning J. For Denning ‘estoppel is a principle of justice and of equity.’[4] It is uncertain whether there is a single unifying principle.[5]
To determine when estoppel will be available, first a pre-existing legal connection between the parties is required to establish promissory estoppel. This is usually contractual, but the theory may also apply to non-contractual interactions that give rise to rights and responsibilities between parties. Second a specific and unambiguous promise or representation that one of the contract's parties (B) will not demand to be treated exclusively according to the law against the other (A).[6] It is crucial that B intended for the promise or representation to have an impact on the parties' legal relationship, whether this is stated explicitly or impliedly. Furthermore it has to be unfair for B to break the promise since A altered its stance in reliance on that promise or representation. The preferable opinion is that this criterion will be met if the reliance would cause A to suffer harm if B were allowed to break the promise, notwithstanding contradicting authorities and scholarly discussion on the matter. However, this idea must be used flexibly; it need not, for instance, necessitate that A spend money. These criteria will usually be satisfied by A not performing repairs or abstaining from taking other actions in reliance on the promise.[7] In essence, it calls for A to be unable to return to the state s/he was in before to relying on the promise.[8] Due to these prerequisites, a party accused of using equitable forbearance may withdraw the commitment if it acts promptly enough. [9]
Similar to the vast majority of estoppels, it does not create a new cause of action.[10] However, it is not entirely correct to say that promissory estoppel functions as a shield and not a sword. For instance, it may prohibit B from using a defence that would have otherwise been accessible. As a result, it can enable a claimant to bring a claim that it would not have been able to otherwise, such as overcoming a limitation defence[11] or permitting a claimant to claim damages arising from a refusal to accept a late delivery.[12]
In PM Project Services Ltd v. Dairy Crest Ltd[13] the court considered the reliance requirement in the context of a promise to postpone submission of an invoice. The court determined that although a promise to delay payment may look advantageous to the promisee, the "detriment" in this sort of case often emerges when the promisor withdraws the promise before a given date or event without providing fair prior notice of his intention to do so.
Atiyah contends that the primary aspect of a contract is the exchange of a promise for a promise or a promise for an act. The promised consideration must be provided in exchange for the commitment. There is no question that the majority of contracts are bargains, but there are exceptions; one should not assume that the analysis applies to all circumstances. The theory of promissory estoppel is founded on an incorrect interpretation, as is the boundary between it and contract. Atiyah believes that consideration is only a term expressing whether there are valid grounds to enforce a commitment.[14]
According to Treitel, the distinction between contract and promissory estoppel, as defined by orthodox theory, lies between them.[15] In fact, Atiyah wonders whether there is really a discernible difference between the two. It would be helpful to have a restatement that addressed the flaws that consideration is not a single doctrine and that much depends on the "eyes of law," or whether the court finds that consideration is warranted in this case. However, simply stating that something will be enforced when there is a good reason to do so does not advance the conversation very far. In many of the complicated situations that occur, it is in fact not always obvious what "the justice of a case" requires. Saying that, relying on the justice of the case highlights the issue but does not provide a solution.
According to Burrows, a gratuitous promise that is not made under seal is not enforceable, but High Trees is an exception since there is disagreement regarding its specifics and whether it should be relied upon negatively or justly.[16] The idea that consideration guarantees that the promise as a bargain may be oversimplified; the courts have sometimes given certain gratuitous pledges some weight. In many situations, what was deemed consideration was really harmful reliance on a gratuitous promise; it may be more accurate to refer to these situations as promissory estoppel. Burrows claims that in the US, promissory estoppel is recognised as a cause of action. To preserve orthodoxy, we are going too far with bargain consideration.
He claims that, as in the US, promissory estoppel should be recognised as a cause of action. To preserve orthodoxy, we are going too far with bargain consideration. If it were a cause, what would be the cure? The authorities are murky, but this expectation vs. reliance issue at least partially contributes to the debate over whether it is extinctive or suspensory. On the basis of anticipated protection, those who claim it is extinct. Judges that favour the idea that expectation interest should be protected are those who claim that reliance, rather than detrimental reliance, is all that is required. According to Burrows, the expectancy interest has typically been safeguarded when promissory estoppel has been utilised as a basis for litigation under the disguise of proprietary estoppel.[17] For Burrows expectancy interest should be safeguarded in promissory estoppel since it is essential to the essence of estoppel. The use of estoppel is intended to satisfy expectations; hence the following are some reasons to be wary of adopting the reliance loss hypothesis. It would not be a proper way to complement the idea of consideration since it would conflict with the law of restitution. Cooke examines if estoppel guards against the claimant's loss of reliance rather than his expectation. According to the author, the courts are in reality defending the expectancy interest and they need to keep doing so. Cooke also acknowledges that the court's jurisdiction here is equitable and hence flexible, but believes that expectancy should be the default.[18]
Promissory estoppel's precise scope is up for controversy, and there are more general considerations to be resolved about whether it should be expanded beyond its conventional, narrow purpose to generate new responsibilities and give a cause of action for someone who relied on a promise without giving thought.[19] It is evident that the concept exists to guarantee justice in situations when a number of conditions must be met before the doctrine may be used. While the idea to expand the theory has not been rejected, it is possible that the judiciary has grown accustomed to the current role that promissory estoppel plays in the law. If the theory were to be expanded, the line between promissory estoppel and other equitable claims might become blurry, which could lead to unjust enrichment, which is the only thing the principle is used to defend against.
Bibliography
Table of Cases
Crabb v Arun DC [1976] Ch 179
Grundt v Great Boulder Proprietary Gold Mines Ltd (1938) 59 CLR 641 at 674
Hartley v Hymans [1920] 3 K.B. 475
Hughes v. Metropolitan Railway Co. (1877) 2 App Cas 614)
Central London Property Trust v. High Trees House [1947] KB 130
Maharaj v Chand [1986] A.C. 898
Nippon Yusen Kaisha v Pacifica Navegacion SA (The Ion) [1980] 2 Lloyd's Rep. 245
Pinnel's Case [1602] 5 Co. Rep. 117a
PM Project Services Ltd v. Dairy Crest Ltd [2016] EWHC 1235 (TCC)
Societe Italo-Belge pour le Commerce et l'Industrie v. Vegetable Oils (Malaysia) Sdn. Bhd. [1981] 2 Lloyds Rep. 695
Thorner v. Major, 2009 UKHL 18, 1 WLR 776 at 61
Woodhouse AC Israel Cocoa Ltd v Nigeria Produce Marketing Co Ltd [1972] AC 741
Books
Frances Quinn Elliott and Quinn’s Contract Law (12 th edition Pearson 2019) 89
Journals
Atiyah, “When is an Enforceable Agreement not a Contract? Answer: When it is an Equity” (1976) 92 LQR 174
Burrows, “Contract, Tort & Restitution – A Satisfactory Division or Not?” (1983) 99 LQR 217, 239 244
Cooke, “Estoppel and the Protection of Expectations” (1997) 17 Legal Studies 258
Fifoot, Cecil Herbert Stuart, and Geoffrey Chevalier Cheshir, "Central London Property Trust v. High Trees House" (1947) 63 Law Quarterly Review, 283
Lee, Rosa, "Promissory Estoppel and Proprietary Estoppel: A Response to the Myth of a Unifying Approach" (2015) 6 King's Student L. Rev., iii.
Thompson, M. P., “From representation to expectation: estoppel as a cause of action” [1983] 42(2) The Cambridge Law Journal, 257-278
Treitel, “Consideration: A Critical Analysis of Professor Atiyah’s Fundamental Restatement” (1976) 50 ALJ 439
Footnotes
[1] Frances Quinn Elliott and Quinn’s Contract Law (12 th edition Pearson 2019) 89
[2] Pinnel's Case [1602] 5 Co. Rep. 117a
[3] [1947] KB 130
[4] Fifoot, Cecil Herbert Stuart, and Geoffrey Chevalier Cheshir, "Central London Property Trust v. High Trees House" (1947) 63 Law Quarterly Review, 283
[5] Lee, Rosa, "Promissory Estoppel and Proprietary Estoppel: A Response to the Myth of a Unifying Approach" (2015) 6 King's Student L. Rev., iii.
[6] Woodhouse AC Israel Cocoa Ltd v Nigeria Produce Marketing Co Ltd [1972] AC 741
[7] Hughes v. Metropolitan Railway Co. (1877) 2 App Cas 614)
[8] Maharaj v Chand [1986] A.C. 898
[9] Societe Italo-Belge pour le Commerce et l'Industrie v. Vegetable Oils (Malaysia) Sdn. Bhd. [1981] 2 Lloyds Rep. 695
[10] Thorner v. Major, 2009 UKHL 18, 1 WLR 776 at 61
[11] Nippon Yusen Kaisha v Pacifica Navegacion SA (The Ion) [1980] 2 Lloyd's Rep. 245
[12] Hartley v Hymans [1920] 3 K.B. 475
[13] [2016] EWHC 1235 (TCC)
[14] Atiyah, “When is an Enforceable Agreement not a Contract? Answer: When it is an Equity” (1976) 92 LQR 174
[15] Treitel, “Consideration: A Critical Analysis of Professor Atiyah’s Fundamental Restatement” (1976) 50 ALJ 439
[16] Burrows, “Contract, Tort & Restitution – A Satisfactory Division or Not?” (1983) 99 LQR 217, 239 244
[17] Crabb v Arun DC [1976] Ch 179
[18] Cooke, “Estoppel and the Protection of Expectations” (1997) 17 Legal Studies 258
[19] Thompson, M. P., “From representation to expectation: estoppel as a cause of action” [1983] 42(2) The Cambridge Law Journal, 257-278
