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Introduction PE: The doctrine of promissory estoppel is concerned with the modification of existing contracts.

. Common law rule: modification would only be binding if consideration was supplied and a new contract formed. o Thus in a contract to supply 50 tons of grain per month at 00 per ton for 5 years! if the "uyer wanted to negotiate a reduction in the price to #0 per ton! "ecause of falling grain prices! this could only "e made "inding if the "uyer ga$e something in exchange %for example! agreeing to contri"ute to the costs of transportation&. o 'lternati$ely the two parties could agree to terminate their original agreement entirely! and enter into a new one. The gi$ing up of rights under the first agreement "y "oth sides would ha$e sufficient mutuality a"out it to satisfy the doctrine of consideration. (ut if they want to continue contract wish to modify their obligations in the light of changed circumstances) It is not surprising! therefore! that the e*uita"le doctrine of promissory estoppel has de$eloped to supplement the common law rules. This allows! in certain circumstances! promises to accept a modified performance of a contract to be binding, even in the absence of consideration. Promisor is estopped %pre$ented& from going "ac+ to his promise. If this principle applied in the Foakes v Beer: o Creditor promise the de"tor to accept part payment o If later creditor sue for full payment! de"tor can raise promissory estoppel as a defence and creditor,s action will failed. o The important point in this case is that! de"tor had not gi$en any consideration! that is the reason! no ctt formed to discharge the de"t. o -owe$er! PE has no consideration needed. o PE has many other conditions to fulfilled "efore can "e raise as defence.

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Origin of PE
The origin of the modern doctrine of promissory estoppel is to "e found in the .udgment of /enning 0 %as he then was& in the case of: entral !ondon Property "rust !td v #igh "rees -ouse 1td % #23& 4: o #5#! C let a "loc+ of flat to / at a rental at 67500 under ##8year lease . o That time is the period of the 9econd :orld :ar. o There is a su"8let o ;nly few flat rented to tenants. o 9o! o"$iously / cannot pay the full rental fee. o 'fter discussion! C promised to reduce the fee. o / had no pro$ided consideration. o 't the "eginning #25! all flat su"8rent. o C claim for full rental fee from #25. -: C claim successful as condition of agreement %war time& was no more present. discuss later&

Importance of this case! lies in the statement %o"iter& of principle which /enning: If let said! C want to claim full rent from year #208 #25! then C estopped from doing that., ommentary -owe$er! "efore this case! there is -;1 decision in 0orden $ <oney =52 $orden v %oney =52 4: o /8creditor8promisor always told C8de"tor8promisee that she will not enforce the de"t o C relied on the statement! and he got married. o C sought a declaration against / that the de"t had "een a"andoned -: o C argued that he had relied on /,s representation and so! / estopped from insisting on the de"t. o Court held that estoppel "y representation only co$er existing fact "ut not the future. Estoppel by representation: esta"lished in "oth e*uity and common law that a person who made the representation of an existing fact is not allowed to deny its truth o 4or eg! in this case is the promise not to enforce the de"t. % / only stated that she will no enforce during the time of spea+ing "ut not the future (ut in High Trees case! C8landlord still the same in accept reduction of rent in the future during the war time % #20 onwards&. 1ord /enning distinguish the case "etween High Trees and Jorden "y stating there is no intention to create legal relationship in Jorden. (ut in High Trees! he stated 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,. 'pplying this principle! /enning held that a promise to accept a lower rent during the war years was "inding on the landlord! even though tenant had supplied no consideration for it.

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Promissory estoppel principle must formed now E$en though there is no cause of action for "reach of such promise %as there may no consideration in$ol$ed&! "ut the court will estopped the promise made "y the party. 9o! the promise gi$e rise to estoppel. 1ord /enning %in High Trees case&: o Promise to accept smaller sum if acted upon will "inding e$en a"sence of consideration o This is fusion law and e*uity o In Foakes v Beer %almost 00 years ago&! there is ne$er considered. o (ut today! law and e*uity ha$e "een .oined for so long! this com"ination of principle must "e formed. 1ord /enning relied on #ughes v %etropolitan &ailway o. come to this conclusion: #ughes v %etropolitan &ailway o. =33 4: o /8tenant! C8landlord. o C ga$e / six month notice to repair. o If / failed to repair! C may e.ect / o / suggest C might wish to "uy /,s property and propose to defer the repairing. o 'fter a month! C negotiate with / for sale of freehold %If you ha$e the freehold of a "uilding or piece of land! it is yours for life and there are no conditions regarding your ownership.& o C did not response to /,s suggestion to defer the repairing. o 'fter further 7 months! negotiation "ro+e down. o 't the end of ? months! C want to e.ect /. -: o C cannot do so! the ? months had to run from the "ro+e down of the negotiation o In the negotiation! C clearly stated that as long as the negotiation continues then C will not enforce the notice. o / relied on this for not carry out the repairs. o C,s right will "e suspended. o If C can enforce the rights! then it will ine*uita"le to / who relied on the promise. Commentary8 Criticism st point8 "reach of contract issue o In Hughes! landlord clearly stated that he will not entitled to forfeiture the lease as the conse*uence of "reach of ctt for failing to repair while in negotiation o In High Trees, landlord did not allege that tenant "reach of ctt! as under ctt! landlord entitled to claim full rental fee. o -e see+ing for reco$ering the full rental fee. 7nd point8 suspend or extinguish %discussed later& o In -ughes! landlord,s right is suspended temporary o In -igh Trees! go further and stated that landlord,s contractual right is extinguish. o This is the most contro$ersial part which will discussed later. 5rd point8 why -ughes not *uote in 4oa+es $ (eer %part payment issue& o 4oa+es $ (eer %-;1& decided 3 years afters. o E$en in Foakes, they felt that Pinnel case principle too rigid "ut they ne$er mentioned a"out Hughes /espite there are criticisms! principle of P9 of 1ord /enning in High Trees firmly esta"lished.

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onditions

& 7& 5& 2& 5& ?& 3&

Clear and @ne*ui$ocal promise Aeed for existing legal relationship ' >shield not a sword, Aeed for reliance <ust "e ine*uita"le for the promisor to go "ac+ on the promise /octrine is generally suspensory :here >promise, is prohi"ited "y legislation

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lear and une(uivocal promise

)ntroduction (efore this! we can see in Jorden case! the common law recognises the concept of >estoppel "y representation,. 9uch an estoppel only arises! "ut only in relation to a statement of existing fact! rather than a promise as to future action. Promise stated payment can be made in pound and other currency *ot a valid promise

+oodhouse v *igerian #37 4: o ' sale ctt formed. o (uyer as+ed whether seller prepared to accept Aigerian Pound. o 9eller letter: payment can "e made in pound and in 1agoes %Aigerian Pound& o Pound de$alued o (uyer insist seller estopped from going "ac+ his promise -: o ;ne of the issue: The letter cannot amount to promise. o Promissory estoppel! the representation must "e clear. o <ust "e free from am"iguity to ensure the representation will "e reasonably understood. *ot a valid promise

Promise lack of clear (uantity and price

Baird "e,tile #oldings !td v %arks - .pencer plc 700 4: o C B supplier for / for 50 years o / cancelled the arrangement from end of season o C sue for damage "ased on arrangement only can terminated on reasona"le notice for 5 years o This is "ased on implied o"ligation as there is no express contract -: o "he crucial issue was certainty! and the .udge was right that the alleged o"ligation on < C 9 to ac*uire garments from (aird was insufficiently certain to found any contractual o"ligation "ecause there were no o".ecti$e criteria "y which the court could assess what would "e reasona"le either as to (uantity or price. /therefore proved there is no )" !& also0

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Promise from conduct but not e,press it 1alid Promise +$ 2lan v El *asr #37 4: o 9eller8C ctt with "uyer8/ using Denyan shilling %currency& o (uyer8/ pay using sterling %other currency& o 9eller8C still accept "y presenting in$oice using sterling o 9terling de$alue later. o 9eller claim for increase payment to ma+e sure it same $alue in Denyan -: o "here is promise, clear une(uivocal, can be implied from 3s conduct. o 1ord /enning gi$e example on sale of goods: 9eller may "y his conduct! lead "uyer "elie$e that he is not insisting on terms in ctt (uyer may "y his conduct! re*uest deli$er! lead the seller to "elie$e that he is not insisting the contractual time for deli$ery o the sellers "y accepting payment in sterling had irre$oca"ly wai$ed their right to "e paid in Denyan currency or had accepted a $ariation of the sale contract! and that a party who has waived his rights cannot afterwards insist on them if the other party has acted on that belief differently from the way in which he would otherwise have acted

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*eed for e,isting legal relationship

)ntroduction It is generally! though not uni$ersally! accepted that promissory estoppel operates to modify existing legal relationships! rather than to create new ones. In High Trees! there is landlord and tenant relationship. Contrast Evenden v 4uildford ity F % #35& !ord 5enning himself who! in! held that promissory estoppel could apply in a situation where there appeared to "e no existing legal relationship at all "etween the parties. -owe$er! if applied e$en in no relationship case! then it will contra$ene with "elow: >a shield "ut not a sword,. o P9 cannot "e "rought as new cause of action! it is only defence for promisee. o If there is no legal relationship! then of course! no cause of action. o Ao cause of action then how to "ring the case up to court. If no in$ol$e the court! then P9 cannot raise as defence for promisee.

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5&

2 6shield not a sword3

)ntroduction This is related to the second point %concerning the need for an existing relationship&. 9ue for -us"and not +eeping his promise Ao PE

ombe v ombe % #5 &. 4: o C8promisee8wife was trying to sue /8promisor8former hus"and for a promise to pay her maintenance. -: o st instance8 'lthough she had pro$ided no consideration for this promise! she succeeded on the "asis of promissory estoppel. o The Court of 'ppeal! howe$er! including 1ord /enning! held that promissory estoppel could not "e used as the "asis of a cause of action in this way. o P. does not create new cause of action where none e,ist before. o It is only pre$ent promisor from insist his original strict legal right. o Its principal use was to pro$ide protection for the promisee %as in -igh Trees B pro$iding the lessees with protection against an action for the payment of the full rent&. Consideration vs PS? o E$en though consideration is not needed in the P9! "ut it is necessary in formation of a ctt! and therefore! only then P9 can "e raise as defence for promisee since P9 itself cannot used as new cause of action. o Consideration still needed as a whole formation of contract. o -owe$er! it is no needed in modification in ctt %such as P9& or discharge of ctt.

ommentary o English courts ha$e resisted attempts to found an action on a promissory estoppel. o If not! there will "e formation of a ctt without consideration. o P9 only used to alter the existing ctt o P9 only used as defence for promisee "ut not used to enforce promisor,s promise o This explain why in :illian $ Eoffey! P%promisee& cannot raise P9 to sue promisor o In :illiams! it is *uote 1ord /enning statement: estoppel cannot give rise to a cause of action

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Contrast-Aus Case Promisee used PE to sue Promisor without pre7legal relationship

1alid PE

+altons .tores v %aher % #==& o 4: o Aegotiation ta+e place "etween the parties o C8Promisee thought the agreement only needed to "e executed! so he "egan the wor+ of demolition. o (ut /8promisor failed to execute the agreement o / did not inform C immediately o / only inform when C done a considera"le amount of wor+s. o C sought for declaration that / estopped from going "ac+ to implied promise to execute the agreement. o 't this point! they are ne$er in any >legal, relationship yet. o / argue there is no legal relationship and therefore ps cannot "e used as cause of action o -: o / +new that C exposed to detriment in acting exposed to detriment which C relied on the representation from / that agreement would "e executed. o It is unfair to act to encourage detriment o 9o! / estopped from denying it was "ound ommentary Baird "# v %-. C;' %700 & o Ee.ect relied on Walton Stores! and stated that any type of estoppel or P9 cannot create cause of action in English 1aw o (ut it held that it will lea$e to -;1 in future to ma+e decision.

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80 *eed for reliance


Introduction 't the heart of the concept of promissory estoppel is the fact that the promisee has relied on the promise. It pro$ides the principal .ustification for enforcing the promise. The lessees of the property in High Trees had paid the reduced rent in reliance on the promise from the owners that this would "e accepta"le. o >'s a result of the reduction the "usiness was carried on and the defendants arranged their affairs on the "asis of the reduced rent with the result that the plaintiffs are estopped from claiming any rent, They had no dou"t organised the rest of their affair on the "asis that they would not "e expected to pay the full rent. It would therefore ha$e "een unfair and unreasona"le to ha$e forced them to comply with the original terms of their contract.

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9. %ust be ine(uitable for the promisor to go back on the promise


)ntroduction The doctrine of promissory estoppel has its origins in e*uita"le >wai$er,. It is thus regarded as an e*uita"le doctrine. The importance of this is that a .udge is not o"liged to apply the principle automatically! as soon as it is pro$ed that there was a promise modifying an existing contract which has "een relied on. There is a residual discretion where"y the .udge can decide whether it is fair to allow the promise to "e enforced. The way that this is usually stated is that it must "e ine*uita"le for the promisor to withdraw the promise. +hat does 6ine(uitable3 mean: If promisee has extracted the promise "y ta+ing ad$antage of the promisor! then it is e*uita"le for promisor go "ac+ to his promise PE not applied

Promisee forced promisor to make a promise 54: o o o o -: o o o o o Builders v &ees % #??&

Promisor8creditor8claimant8firm of "uilder! promisee8de"tor8/ /e"tor +new that creditor under financial pro"lem! and offered part payment. Creditor promise to accept part payment Creditor "ring action Promise of a firm of "uilders to accept part payment as fully discharging a de"t owed for wor+ done was held not to give rise to a promissory estoppel! "ecause the de"tor had ta+en ad$antage of the fact that she +new that the "uilders were desperate for cash. 5ebtor said that; ) will paid you nothing unless you accept <=>> in full settlement. 5ebtor compelled the creditor to do what he was unwilling to do. Court "ased case on 4oa+es $ (eer and Pinnels, Case that de"tor had no pro$ide consideration in part payment. 9o creditor8claimant allowed to claim.

1ord /enning further explain there is possi"le to the promisee %de"tor& to raise the defence of P9 if promisor %creditor& will "e regarded as ine*uita"le to go "ac+ to the promise. #owever, this is not in this case Promisee in this case said: :e will pay you nothing unless accept part payment Promisee put pressure on the promisor and compel them to do what they unwilling to do.

ommentary If this fact today! e$en consideration can "e found! it will "e regarded $oida"le on the ground of economic duress %next few chapters&

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&ule 8 ? 9 Promisee relied on the promise suffer no detriment but benefit

PE applied

+ $ 2lan - o v El *asr % #37& 4: o 9eller8C ctt with "uyer8/ using Denyan shilling %currency& o (uyer8/ pay using sterling %other currency& o 9eller8C still accept "y presenting in$oice using sterling o 9terling de$alue later. o 9eller claim for increase payment to ma+e sure it same $alue in Denyan -: o /enning consistently re.ected this $iew and it now seems to "e accepted that reliance itself is sufficient. o In High Trees, promisee suffer no detriment on the promise from promisor to reduce the rental fee. o There is e$en "enefit for promisee. o .o, if promisee act upon the promise and has that benefit, then it would be ine(uitable for promisor to go back to the promise. o In Tool Metal cases! reliance "y promisee only need to show that he had led "y the promise to act different from what otherwise he would ha$e done.

ommentary 'lthough it may not "e detriment to promisee! "ut if pro$e there is detriment suffer "y promisee! then it is easier way to esta"lish it is ine*uita"le for promisor go "ac+ to his promise. Promisee relied on promise but no detriment PE not applied

"he Post haser % #=7& 4: o (uyer8promisor! seller8promisee o (uyer ctt with su"8"uyer. o 9eller had the pro"lem on its own side. o (uyer .ustified to refuse to ta+e o$er the pro"lem "ut he not re.ected in the first place %in this point! it loo+ li+e "uyer is promising not re.ecting&. o Instead! "uyer as+ed the seller hand o$er to su"8"uyer. o 7 days later! 9u"8"uyer re.ected. o 'fter that! "uyer re.ecting. o (ut seller claim loss from "uyer. o Fuestion in this point is whether "uyer had wai$ed their right to re.ect in the first place %a promise& -: o (uyer had promised to wai$ed their right to re.ect o 'lthough seller %promisee& had act on the promise %"y hand o$er to su"8"uyer&! "ut they had no any detriment due to $ery short time "etween the date of promise! reliance and re.ection %only within 7 days&. o 9o! it is e*uita"le for "uyer%promisor& go "ac+ to his promise and re.ect the pro"lems. o Aot e$ery case that showed promisee relied on promise! and therefore promisor cannot go "ac+

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to his promise. o )f it is not ine(uitable, then promisor is allowed to go back to his promise ?&

5octrine is generally suspensory

)ntroduction :hereas a contract modification which is supported "y consideration will generally "e of permanent effect! lasting for the duration of the contract! the same is not true of promissory estoppel. PE disapplied after reasonable time 9ometimes the promise itself will "e time limited. Thus in #igh "rees #23! it was accepted that the promise to ta+e the reduced rent was only to "e applica"le while the .econd +orld +ar continued. ;nce it came to an end! the original terms of the contract re$i$ed. PE disapplied after reasonable notice "ool %etal %anufacturing v "ungsten Electric % #55&. 4: o #5=! / "ound to pay royalties to C and compensation to C if material manufactured exceed a stated $olume o ;ut"rea+ of world war! C agreed %promise& to suspend the right to compensation. o #25 %after war&! C claimed the suspension had "een re$o+ed. -: o Claim failed as there no reasona"le notice to resume C "ring second action %second court cases& to claim again -: o (y -;1! the first action regarded as sufficient notice to /. o 9o! C had right to claim

ommentary In "oth #igh "rees and the "ool %etal %anufacturing case it was accepted that the reduced payments made while the estoppel was in operation stood and the promisor could not reco$er the "alance that would ha$e "een due under the original contract terms. To this extent! therefore! the doctrine is suspensory in its effect. -owe$er! it is not easy to see why right to enforce strict right cannot re$i$e automatically in Tool <etal while it can "e done in #igh "rees. (oth in$ol$e war time issue. The "etter explanation is reasona"le notice is a "etter mechanism to ensure therefore it is no more ine*uita"le to go "ac+ to promise.

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Contrast Promisee had acted upon the promise and suffer detriment

PE applied, right e,tinguished

E2 2@ayi v &" Briscoe !td #?2 %Pri$y Council8 Persuasi$e "ut not "inding& -: E*uity in promissory estoppel must satisfied 5 *ualification o Promisee has altered their position o Promisor can resile from promise on gi$ing reasona"le notice which no need formal notice o Promise only become irrevocable if promisee having alter their position which cannot restore to original position.

ommentary 9o in %5& is that promissory can extinguish right "ut only promisee suffer detriment on relied the promise %such as promisee enter into "urden commitment&

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Promisor agreed to received part payment

PE applied, e,tinguish right

ollier v +right 7003 2rden !$; The facts of this case demonstrate that! if % & a debtor offers to pay part only of the amount he owesG %7& the creditor voluntarily accepts that offer! and %5& in reliance on the creditorHs acceptance the de"tor pays that part of the amount he owes in full! the creditor will! "y $irtue of the doctrine of promissory estoppel! "e "ound to accept that sum in full and final satisfaction of the whole de"t. 4or him to resile will of itself "e ine*uita"le. In addition! in these circumstances! the promissory estoppel has the effect of e,tinguishing the creditors right to the balance of the debt. This part of our law originated in the "rilliant o"iter dictum of /enning 0! as he was! in the -igh Trees case. Commentary Prof. "reitel ' nota"le feature of this statement of principle is that there is nothing exceptional! "eyond the actual payment of part of the de"t! which would seem to merit gi$ing to the defendants promise an extincti$e effect. 9uch a result may well achie$e the recommendation of the 1aw Ee$ision Committee! "ut it is also inconsistent with 4oa+es $ (eer If that ruling is no longer to pre$ail! it would "e prefera"le if that was achie$ed "y a ruling of the 9upreme Court! or "y legislation! at the earliest opportunity and along the lines suggested a"o$e! rather than an e*uita"le e$asion of uncertain scope

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A. PE not applied to promise prohibited by law


Promisor ma+e a promise of what prohi"ited "y law PE not applied Evans v 2micus #ealthcare !td %7005& 4: o concerned the use of em"ryos created "y II4 prior to the "rea+down of the couple,s relationship. o 'fter they separated! the man wished the em"ryos to "e destroyed! the woman want to ha$e the em"ryos. -: o In this context it was found! inter alia! that the man had not gi$en such assurances to the woman as to create a promissory estoppel "ecause the rele$ant legislation allowed him to withdraw his consent to the storage of the em"ryos at any time. o 9o! if such promise is prohi"ited "y law! then ps cannot "e raised.

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onsideration v Promissory Estoppel


onsideration :hen promisor promise to pay more! there must "e consideration pro$ided "y promisee! li+e in the case +illiam v &offey Promisee will sue promisor in this type of case if promisor do not want to pay later. Promisee cannot use P9 as P9 only used as defence "ut not an offence PE :hen promisor promise to accept less! there is no need consideration. If later promisor claim for full payment! then promisee can raise the P9 as defence. -owe$er! that can "e another situation li+e in 4oa+es $ (eer held that no consideration from de"tor! so creditor allowed to claim full amount. It depend on situation li+e what happen in /CC (uilders $ Eees.

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