NAME : SYAZA ATHIRAH BINTI ZULKEPLI

MATRIC NO : 272696

GROUP : C

ONLINE LEARNING TASK : PROMISSORY

ESTOPPEL

PREPARED FOR : MADAM WAN IZZAT BINTI

WAN AHMAD
DATE OF SUBMISSION : 3RD NOVEMBER 2019
Introduction

In common law countries, the doctrine of promissory estoppel (also known as

“quasi estoppel”, “equitable estoppel” or the rule in High Trees’s case) can be
used as a defence mechanism to protect the innocent parties of a contract from an act
of injustice done. In another meaning, promissory estoppel is a doctrine in contract
law that stops a person from going back on a promise even if a legal contract does not
exist. It states that an aggrieved party can recover damages from a promisor if the
damages happened were the result of a promise made by the promisor, which he
relied on to his subsequent detriment.

Origin

The modern concept of promissory estoppel was developed in the case of

Central London Property Trust Ltd V High Trees House Ltd (1974) KB 130. The
defendants, High Trees, leased a block of flat from the plaintiffs, Central London
Property Trust. The property suffered from falling occupancy rates due to the
outbreak of World War II in 1940, so the parties agreed to reduce the rent by half
(from 2500 pound to 1250 pound a year). However, it was not expressly agreed how
long this would last for. The defendants continued to pay the rent at this new rate. By
1945 the war had ended and the flats were at full occupancy. The plaintiffs sued High
Trees for the full rent from 1945 and onwards.

The issue arises in this case was when the defendants argued that the agreement
to pay the rent at a reduced rate applied to the whole term of the lease. They argued
that the plaintiffs were estopped from claiming that the rent should be higher. In a
obiter statement, Denning J then proceeded to explain that if the plaintiff had claimed
full rent of 2500 pound from 1940 onwards, they would have been prevented from
doing so.

The court reviewed the past case law, especially Hughes v Metropolitan
Railway Co (1877) 2 App Cas 439, where the House of Lords held that parties
should be prevented from going back on a promise to claim certain rights. Denning J
stated that the cases showed that a promise which the promisor knew was going to be
acted on by the person to whom it was made was enforceable despite a lack of
consideration. The time had come for this to be recognized as giving rise to an
estoppel. Here, the plaintiffs had made a binding promise. However, the evidence
showed this only applied during the war. Therefore, after the war the defendants were
liable for the full rent.
 Since the observation by Denning J was obiter dicta, it did not form part of a
binding precedent. Despite that, it is widely accepted that the obiter dicta statement by
Denning J in this case was responsible for the creation of what is known today as the
doctrine of promissory estoppel.
Criticisms

However, there were some criticisms against High Trees’ judgment as it was
inconsistent in the case of Jorden v Money and Foakes v Beer. It offends the rule in
Jorden v Money whereby in that case, the court held that estoppel can only be
applied when there is a misrepresentation of existing fact not on a future conduct as
applied in the case of High Trees. It is also inconsistent with the case of Foakes v
Beer a promise to accept a smaller sum in discharge of full amount is not binding on
the promisor.

Requirements of Promissory Estoppel

To apply the principle of promissory estoppel, the following elements must be

present. Firstly, promisor made a significant promise to cause the promisee to act on it.
A promise made by a promisor, must be significant enough so that a reasonable
person which is a promisee would rely on it. Secondly, promisee must relied on the
promise. A promisee must have fulfilled the promise made by the promisor, even if it
was not upheld by a certain amount of consideration.

Thirdly, promisee must suffered significant damage for relying on the promise.
The third element expained that the party relying on the promise suffered an actual
detriment in the form of an economic loss. The loss results from the promisor failing
to deliver on the promise made at the start of the relationship. In simple terms, the
promisee is in a worse position for having acted on the promise. Last but not least,
fulfillment of the promise is the only way the promisee can be compensated. The
promise becomes enforceable if the court determines that the only way the injustice
committed to the promisee can be avoided is by enforcing the promise. However, the
court has discretion in choosing what to do in such a case, and it will take an action
that relieves the promisee of the detriment suffered.

Application of Promissory Estoppel in Malaysia

Promissory Estoppel is not a foreign law in Malaysia. This doctrine has often
been applied by the Malaysian courts to do justice whenever needed. In addition, by
freeing it from its traditional requirements and not simply classifying estoppel into
any of its subcategories, the courts have given the principle of promissory estoppel a
completely new dimension. One of the most cited Malaysian cases on the subject of
promissory estoppel is the Federal Court decision in Boustead Trading (1985) Sdn
Bhd v Arab-Malaysian Merchant Bank Berhad. Strictly speaking, in the way it was
defined and distinguished from other types of estoppel in English law, the case did not
involve promissory estoppel.

The issue was in relation to estoppel by conduct. In this case it was stated that
“the doctrine of estoppel is a flexible principle by which justice is done according to
the circumstances of the case. It is a doctrine of wide utility and has been resorted to
in varying fact patterns to achieve justice indeed, the circumstances in which the
doctrine may operate are endless”. Therefore, it is submitted that the term estoppel,
loosely used in the Malaysian context, is inclusive of all different types of equitable
estoppel, including promissory and proprietary estoppel.

Conclusion

As conclusion, the doctrine of promissory estoppel has always been welcomed by

the courts to do justice whenever required. The courts have allowed this equitable
doctrine to realize its true potential. It is true that not all jurisdictions have treated it
the same way. As far as Malaysia is concerned, however, the doctrine has been given
the attention it deserves. It has become one of the most easily available tools for the
courts to do justice when conventional contract law rules provide none.
References
Central London Property Trust v High Trees House – 1947. (n.d.). Retrieved from
https://www.lawteacher.net/cases/london-property-trust-v-high-trees.php.

FAROUQ Follow. (2013, July 11). Legislating Promissory Estoppel IN Malaysia.

Retrieved from
https://www.slideshare.net/AhmadFarouqAmir/legislating-promissory-estoppel-i.

Promissory Estoppel - Definition, Types, and Practical Examples. (n.d.). Retrieved

from https://corporatefinanceinstitute.com/resources/knowledge/other
/promissory-estoppel.

Promissory Estoppel and Its Relevance to Malaysian ... (n.d.). Retrieved from
https://www.researchgate.net/publication/324773865_Promissory_Estoppel_and_
Its_Relevance_to_Malaysian_Contract_Law_2018_34_JCL_240.