RELIANCE

The concept of reliance theory under English Law is commonly known as the doctrine of
estoppel. The word estoppel only means stopped. It is a part of Contract Law where a person is
stopped from turning back from his words or his actions. If the representation of one person
induces another to enter into a contractual relationship, then even though that representation was
false, the person misrepresenting will be compelled by law to honour the terms of the contract or
compensate the other person in the event of the failure. For example, where A makes a
representation or promise B to the effect that B has or shall have an interest in, or right over, As
property, then if A intends B to act in reliance on the representation or promise, and B does so act
in reliance, equity may intervene to prevent A from asserting his own strict legal rights to his
property.
Some important elements of this doctrine are Assumption of one party that a promise will be
fulfilled, inducement from the conduct of a party, reliance of a party on the assumption made by
the other and detriment by a party as a result of such reliance.

DISCLOSURE
When considering English law, it is important to bear in mind that it is a common law system,
based on a combination of legislation and case precedent. English law is not set out in a single
civil code. The effect of this is that the courts are constantly developing and shaping English law,
in order to fit its use with modern business circumstances and practices. The concept of
disclosure is good example of interpretation of court decisions which is an acceptable market
practice.
In many types of business transactions, say for example acquisition of a company by another,
several information needs to be exchanged before a deal could be struck. In such situations
generally warranties are given by the parties as to whatever they have stated is true and complete
and that in the event the buyers suffers any loss as a consequence of lying, one may have
remedies against the other. The party will be entitled to damages for its losses arising from the
breach of warranties. This warranty process usually involves a party seeking warranty from other
on the issues which raises concern in his mind. So the parties have to disclose specific details of

the matter which if not done, will result in the breach of warranty thereby protecting the innocent
parties.
Generally, such disclosures are made through disclosure letters and relevant bundles of
documents are sent with it. The preparation and assessment of such disclosures are very
important for both the parties. Several English cases have established that there has to be a
reasonable level of information disclosed for a reasonable person to clearly understand the nature
of the transaction. But certain situations demand full disclosure from the parties which means
that they have to give away the complete information which is even remotely related to the
transaction. If it is found out at a later date that any information was concealed, a heavy fine is
imposed on the concealing party. Ordinarily, full disclosure is made in real estate matters or
when a company is going public.
Case laws suggest that under English Law, the disclosure must be fair i.e. a seller is normally
required to disclose facts and circumstances sufficient in detail to identify the nature and scope of
the matter disclosed and to enable the purchaser to form a view whether to exercise any of the
rights conferred on him by the contract. However, this position must be measured against the
requirement of the business transaction in question and the particular circumstances of the case.