{"id":493,"date":"2019-02-28T12:00:46","date_gmt":"2019-02-28T12:00:46","guid":{"rendered":""},"modified":"2019-06-11T10:32:34","modified_gmt":"2019-06-11T10:32:34","slug":"doctrine-promissory-estoppel-issues-8954","status":"publish","type":"post","link":"https:\/\/www.lawteacher.net\/free-law-essays\/contract-law\/doctrine-promissory-estoppel-issues-8954.php","title":{"rendered":"Doctrine of Promissory Estoppel Issues"},"content":{"rendered":"<p>This essay will evaluate the statement \u201cThe doctrine of promissory estoppel prevents (estops) a claimant from going back on a promise and has been described as a \u2018shield and not a sword\u2019.\u201d It will be necessary to evaluate the <a href=\"https:\/\/www.lawteacher.net\/free-law-essays\/contract-law\/considering-the-doctrine-of-promissory-estoppel-contract-law-essay.php\">doctrine of promissory estoppel<\/a> through considering the judicial dicta of relevant case law and extracting the rules created by the judiciary. Through researching relevant cases and principles it is then possible to establish when the doctrine will be used and evaluate why it has been described as a \u2018shield not a sword\u2019. <\/p>\n<p>To establish this, Open University (OU) module<br \/>\nmaterials will be used, particularly Unit 3.2.2, Chapter 4, Section 4B of<br \/>\nFurmston \u2018Law of Contract\u2019 (2017) and judicial dicta (Judges\u2019 statements) in<br \/>\nthe relevant case law, particularly <em>Hughes<br \/>\nv Metropolitan Rly co <\/em>(1877) 2 App Cas 439, <em>Central London Property Ltd v High Trees House Ltd <\/em>[1947] KB 130<br \/>\nand Combe v Combe [1951] 2 KB 215. <\/p>\n<p>The foundation of promissory estoppel derives from the statement of Lord Cairns in <em>Hughes v Metropolitan Rly co <\/em>(1877) 2 App Cas 439<em>. <\/em>In October 1874, the landlord; <em>Hughes<\/em> gave notice to the tenant; <em>Metropolitan<\/em> to carry out repairs in the next six months, failure to do so would result in forfeiture of the lease. <a href=\"https:\/\/www.lawteacher.net\/free-law-essays\/administrative-law\/scope-of-promissory-estoppel-against-law-essays.php\">Negotiations<\/a> between the parties for the sale of the property took place the following month but closed without agreement in December 1874. While negotiations were ongoing the tenants did not commence repairs and six months from when the notice was received <em>Hughes <\/em>brought action for possession of the property. <\/p>\n<p>The House of Lords held the landlord\u2019s conduct was<br \/>\nan implied promise and led the tenants to<br \/>\nbelieve that the time limit for the repairs was suspended during negotiations.<br \/>\nTherefore, <em>Hughes<\/em> could not take<br \/>\nadvantage of the tenant\u2019s reliance on this suspension. In his statement, Lord<br \/>\nCairns explained that a promise can be only held to be binding where it would<br \/>\nbe inequitable if a party reneged their promise to not enforce their existing<br \/>\nlegal rights on the other party, who had acted on reliance of that promise.<\/p>\n<p>The use of promissory estoppel in this case meant<br \/>\nthat<em> Hughes<\/em> could not enforce his<br \/>\nstrict legal rights under the lease as these had been modified where he implied<br \/>\nthat such action would be suspended. As a result, the House of Lords suspended<br \/>\nhis right to have the premises repaired but did not extinguish them; it was<br \/>\nheld that the date of repairs would run again from the date of the breakdown of<br \/>\nnegotiations. <em>Metropolitan <\/em>was still<br \/>\nbound to carry out these repairs within the adjusted time limit and given<br \/>\nequitable relief against forfeiture of the lease.<\/p>\n<p>The principles Lord Cairns laid down in <em>Hughes <\/em>were re-instated by Denning J in <em>Central London Property Ltd v High Trees House Ltd <\/em>[1947] KB 130. In 1937, the claimants; <em>Central<\/em>, let a block of flats at an annual rate of \u00a32500 to the defendants, <em>High Trees<\/em>. In 1940, the claimant agreed to halve the rent due to war conditions causing evacuations and the inability for <em>High Trees <\/em>to reach the rent with reduced lettings. Once the war had ended in 1945 and the flats became fully let, <em>Central<\/em> requested <em>High Trees <\/em>to resume payment of \u00a32500 a year, <em>High Trees <\/em>refused. <\/p>\n<p>The court held that the rent for the last two quarters of 1945 were to be paid as the agreement was only valid while the war conditions were ongoing or until the flats were fully let, both requirements were fulfilled by this time. Denning J stated <em>obiter dicta<\/em> that had the claimant tried to claim for the arrears of the reduced rent between 1940 and 1945 it would have not been successful. The right to claim the rent in that time period will be extinguished. The legal right can only be reactivated when the conditions were fully met; last two quarters of 1945, but not with retrospective effect (OU, 2017a. 3.2.2). The promise not to pay full rent during such conditions was held to be legally binding. Denning J made the admission that it was time for a promise to be recognised as legally binding in spite of the absence of consideration and applied the following principles; A contracting party who makes a promise in which they intend to be binding will not be able to enforce their contractual right if the promisee acted on and relied on that promise.<\/p>\n<p>In Combe v Combe [1951] 2 KB 215, a husband and<br \/>\nhis wife were involved in divorce proceedings when he promised to pay \u00a3100 a<br \/>\nyear maintenance. He did not fulfil his promise and the claimant who was in a<br \/>\nbetter financial position did not bring court action until several years later<br \/>\nafter the divorce was finalised; in which she tried to use promissory estoppel<br \/>\nto sue him on a promise he made. The wife argued that her forbearance of not<br \/>\nexercising her right to claim maintenance was consideration enough for his<br \/>\npromise. <\/p>\n<p>The issue considered in this case was whether the<br \/>\nhusband could withdraw from his promise to pay the maintenance. The court<br \/>\ncontemplated whether the claimant had given consideration for the promise by<br \/>\nher ex-husband. In addition, whether she could claim for the total of \u00a3675 in<br \/>\narrears over the previous years regardless of no earlier claim for the money.<\/p>\n<p>However, the court could not find any consideration for the<br \/>\npromise and the ex-wife\u2019s forbearance could not be qualified as consideration<br \/>\nas she did not express she would forbear nor was she asked to. In common law,<br \/>\nthe element of consideration requires reciprocity; the promise must move from<br \/>\nthe promisee to the promisor\/third party (OU, 2017a, 1.3). <\/p>\n<p>Byrne J believed that the principle in <em>High <\/em>Trees would apply to the wife and<br \/>\nshe would succeed on the basis that the husband has made a clear promise to pay<br \/>\nthe maintenance intending for the wife to act upon it and that it could have<br \/>\nbeen believed she acted upon it in her forbearance. Nonetheless, the Court of<br \/>\nAppeal ruled that this judgment was incorrectly applied and reversed the<br \/>\ndecision. Denning LJ explained in the obiter that promissory estoppel cannot be<br \/>\nused as a cause of action as it is not meant to undermine contractual formation<br \/>\nand consideration. In addition, Denning LJ stated that while consideration is<br \/>\nnecessary in the formation of a contract, modification and discharge of a<br \/>\ncontract does not. The scope of promissory estoppel is limited to the<br \/>\nmodification of existing legal relationships rather than the creation of new<br \/>\nones. <\/p>\n<p>Denning LJ developed the principles of promissory estoppel<br \/>\nand applied that where a party by word or conduct, made a promise that is<br \/>\nintended to be acted upon and affect legal relations; was then acted upon, the<br \/>\npromisee can not renege from their promise. <\/p>\n<p>From the evaluation of <em>Hughes, High Trees <\/em>and<em> Combe<\/em>,<br \/>\npromissory estoppel can be described as an operation to suspend a party from enforcing their strict legal rights which<br \/>\nthey have already waived. The principles of promissory estoppel extracted from<br \/>\nthese cases are able to provide when the doctrine can be used;<\/p>\n<p>First, there must already be a pre-existing legal<br \/>\nrelationship between parties. This can be seen in the case of <em>Combe <\/em>where it was established that<br \/>\nthere must be an existing legal relationship as the scope of promissory<br \/>\nestoppel is limited to modification. <\/p>\n<p>Secondly, the promise must be clear and unambiguous. In <em>High Trees<\/em> the claimants had agreed in<br \/>\nwriting to halve rent due to war conditions and reduced lettings. Although<br \/>\nthere was no express time limit, the promise was clearly applied to last until<br \/>\nwar conditions ended and fully let. In contrast, in <em>Woodhouse<\/em>&nbsp;Israel<br \/>\nCocoa Ltd v Nigerian Produce Marketing Board [1972] AC 741, the House of Lords<br \/>\nrejected the application of promissory estoppel due to there being no \u201cclear<br \/>\nand unequivocal\u201d promise. <\/p>\n<p>Next, reliance; the promisee must have relied on the promise<br \/>\nand shown by it affecting their conduct. If the promisee cannot resume to his<br \/>\noriginal position due to reliance such as the tenant in <em>Hughes <\/em>as his reliance rested on forfeiture of the lease. If the<br \/>\npromisee can resume their original position or can do with reasonable notice<br \/>\nsuch as that in High Trees following war conditions they no longer rely on that<br \/>\npromise. <\/p>\n<p>Following this, is the principle of inequity which is extends<br \/>\non the principle of reliance. If the promisee is unable to resume their<br \/>\noriginal position due to reliance of that promise without reasonable notice; it<br \/>\nwould cause unjust circumstances for the promisee if the promisor was to go<br \/>\nback on that promise. In <em>D &amp; C<br \/>\nBuilders v Rees [1966] 2 QB 617<\/em>, the defendants had taken advantage of the<br \/>\nclaimant\u2019s financial position and threatened to break their promise of paying<br \/>\nthe original agreed amount. Due to this behaviour, Denning MR held that the<br \/>\npromisee cannot rely on the doctrine of promissory estoppel if they have not<br \/>\nacted equitably. <\/p>\n<p>Lastly, promissory estoppel is a shield not a sword. It cannot be used in English law as a cause of action, it<br \/>\ncan only be used as a defence mechanism to protect someone who may suffer<br \/>\nunjust enforcement of strict legal rights. As seen in <em>Combe<\/em> it cannot create new rights or extend the scope of existing<br \/>\nrights, it can only modify the original contract formed between parties. To<br \/>\ncreate a new cause of action could be described as a \u201csword\u201d where rights are<br \/>\nenforced where they did not previously exist. In other jurisdictions<br \/>\nsuch as Australia, it may be used as a cause of action; as seen in <em>Waltons Stores (Interstate) Ltd v&nbsp;Maher&nbsp;(1988)<br \/>\n76 ALR 513<\/em>. However, as Denning commented in <em>High Trees<\/em>, this may overstep the line into consideration and<br \/>\nundermine contract formation.<\/p>\n<p>An aspect of promissory estoppel which Furmston (2017,<br \/>\np.137) states remains unsettled is whether the doctrine extinguishes or<br \/>\nsuspends the strict legal rights of the promisor. As seen in <em>Hughes<\/em> the action was suspensory while<br \/>\nnegotiations were taking place, whereas in <em>High<br \/>\nTrees<\/em> the right of full payment of rent during the war would have been<br \/>\nextinguished had this been challenged by <em>Central.<\/em><br \/>\nOn the other hand, <em>High Trees<\/em> could<br \/>\nalso be seen as suspensory as it only suspended the legal rights of <em>Central<\/em> for so long.<\/p>\n<p>In<br \/>\nconclusion, the doctrine of promissory estoppel prevents a claimant from going<br \/>\nback on a promise in certain circumstances. For the doctrine to apply, there<br \/>\nmust be a pre-existing legal relationship in which there has been a clear and<br \/>\nunambiguous promise which the promisee has relied on and would be inequitable<br \/>\nfor the promisor to go back on. It can be used to extinguish and suspend strict<br \/>\nlegal rights and can only be used as a shield not a sword. The description of a<br \/>\n\u201cshield not a sword\u201d is valid for the doctrine of promissory estoppel as it can<br \/>\nonly be used in English law as a defence to an action to enforce rights that<br \/>\nhave been waived. <\/p>\n<h2>References<\/h2>\n<h3>Module Materials<\/h3>\n<p>The Open University (2017,a)<br \/>\nW202 <a href=\"https:\/\/learn2.open.ac.uk\/mod\/oucontent\/view.php?id=1177635\">Unit 3:<br \/>\nConsideration, intention to create legal relations, privity and capacity<\/a><br \/>\n[Online] Available at: <a href=\"https:\/\/learn2.open.ac.uk\/mod\/oucontent\/view.php?id=1177635\">https:\/\/learn2.open.ac.uk\/mod\/oucontent\/view.php?id=1177635<\/a><br \/>\n(Accessed 1<sup>st<\/sup> November 2017)<\/p>\n<h3>Books<\/h3>\n<p>Furmston,<br \/>\nM. (2017)&nbsp;<em>Cheshire, Fifoot &amp; Furmston\u2019s Law of Contract<\/em>, 17th<br \/>\nedn, Oxford, Oxford University Press.<\/p>\n<h3>Cases<\/h3>\n<p><em>Central London Property Ltd v High Trees House<br \/>\nLtd [1947] KB 130<\/em><\/p>\n<p><em>Combe v Combe [1951] 2 KB 215<\/em><\/p>\n<p><em>D &amp; C Builders v Rees [1966] 2 QB<\/em><\/p>\n<p><em>Hughes v Metropolitan Rly co (1877) 2 App Cas 439<\/em><\/p>\n<p><em>Woodhouse<\/em><em>&nbsp;Israel Cocoa Ltd v Nigerian Produce Marketing Board<br \/>\n[1972] AC 741<\/em><\/p>\n<p><em>Waltons Stores (Interstate) Ltd v&nbsp;Maher&nbsp;(1988)<br \/>\n76 ALR 513<\/em><em><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>This essay will evaluate the statement \u201cThe doctrine of promissory estoppel prevents (estops) a claimant from going back on a promise and has been described as a \u2018shield and not a sword\u2019.\u201d<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[85],"class_list":["post-493","post","type-post","status-publish","format-standard","hentry","category-free-law-essayscontract-law","tag-uk-law"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.6 (Yoast SEO v26.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Doctrine of Promissory Estoppel Issues | LawTeacher.net<\/title>\n<meta name=\"description\" content=\"This essay will evaluate the statement \u201cThe doctrine of promissory estoppel prevents (estops) a claimant from going back on a promise and has been described as a \u2018shield and not a sword\u2019.\u201d\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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