Contract law lecture week 10 Promissory Estoppel Requirements: - There must be an existing legal relationship - The doctrine an only be used as a shield and not as a sword - A clear and unequivocal representation must have been made - There must have been reliance on the promise - It must be inequitable to go back on the promise (if going back on a promise is the fair thing to do - the court will do the fair thing) - The doctrine only suspends rights and original terms can be revived Existing Legal Relationship - The doctrine cannot exist in a vacuum - There has to be an existing legal relationship which has been varied and the variation is then allowed by the doctrine. - High trees case: variation of existing contractual obligations between landlord and tenant Combe v Combe 1951 - Husband and wife were getting divorced. - Husband agreed to pay wife £100 per annum between decree nisi and decree absolute. - Husband never paid the money. - After 7 years, wife (now ex) sued to enforce his promise. - Trial judge held that promissory estoppel could apply. - C of A overturned that decision, Lord Denning stated that consideration remained a cardinal necessity of the formation of a contract, but not of its modification or discharge. Shield and not a Sword: - The doctrine of promissory estoppel may not usually form the basis of a cause of action - It would generally be available to be used as a defence - This is correlated to the fact that the doctrine is used in modifying existing relationships and not in the creation/formation of new relationships (Combe v Combe) - Note: this dos not mean the doctrine can only be used by a defendant and never by a claimant, so it can be used by a claimant as well as by a defendant if it is applicable. A clear and unequivocal representation: - An ambiguous statement cannot form the basis of an argument for promissory estoppel (e.g. vague) - A definite representation must have been made to the effect that a party will not enforce his contractual rights Woodhouse AC Israel Cocoa SA v Nigerian Produce Marketing Co Ltd 1972 - He was ambiguous to support his variation of the contract, so it was equally ambiguous to enforce promissory estoppel Reliance on the promise:
- The party seeking to rely on the doctrine must have taken some action on the promise - This translated to actually doing something based on the reliance upon the promise - That party must have acted on the belief induced by the other party. - Example - paying the lower rent as was done by the defendants in High Trees Case. Detrimental Reliance? - Under the normal rules of contract, obligations may arise once the contract is formed and there is no need for either side to have relied on the other's promise in order to make it enforceable. - But, in