1842244
Description
Mind Map by beth.monks, updated more than 1 year ago
|
Created by beth.monks
almost 10 years ago
|
|
Promissory Estoppel
- an equitable doctrine which in some instances
can stop a person going back on a promise
which is not supported by consideration
- a contracting party who promises not to enforce a
contractual right will not be able to enforce that
right later if it would be inequitable to do so, and the
promise has been relied upon by the other party.
- Central London Property Trust v High Trees House [1947]
Defendants were a tenant company renting a block of
flats from the plaintiff (landlord company). Defendants
had a 99 year lease for rent of £2500 per year. At the
outbreak of WWII many flats remained empty and
tenant company remained unable to pay the full rent.
Plaintiffs agreed to half the rent, and the tenant
company paid half from 1940 onwards. By the beginning
of 1945, the flats were fully let again. The landlord
company was in receivership and believed that the
company was entitled to arrears of rent for the whole
period of the war, but brought a test case claiming full
rent for the last two quarters of 1945. Held: the full rent
was payable for the two quarters in question, and from
then on but not for the whole period of the war.
- Denning J said (OBITER
DICTUM) that as a result of
the equitable doctrine of
estoppel,’ a promise to
accept a smaller sum in
discharge of a larger sum,
if acted upon, is binding
notwithstanding the
absence of consideration.’
- Central London Property Trust v High Trees House [1947]
Defendants were a tenant company renting a block of
flats from the plaintiff (landlord company). Defendants
had a 99 year lease for rent of £2500 per year. At the
outbreak of WWII many flats remained empty and
tenant company remained unable to pay the full rent.
Plaintiffs agreed to half the rent, and the tenant
company paid half from 1940 onwards. By the beginning
of 1945, the flats were fully let again. The landlord
company was in receivership and believed that the
company was entitled to arrears of rent for the whole
period of the war, but brought a test case claiming full
rent for the last two quarters of 1945. Held: the full rent
was payable for the two quarters in question, and from
then on but not for the whole period of the war.
- must have an
existing legal
relationship
- a contracting party who promises not to enforce a
contractual right will not be able to enforce that
right later if it would be inequitable to do so, and the
promise has been relied upon by the other party.
- operates as a
defence and
not as a cause
of action
- cannot be used in legal proceedings
brought to force someone to uphold a
promise. can only be used to prevent
someone going back on their promise
- Combe v Combe [1951] A
husband promised to make
maintenance payments to his
estranged wife but failed to do
so. The wife brought an action
to enforce the promise
invoking promissory estoppel.
Held: Her action failed. There
was no pre-existing agreement
which was later modified by a
promise. Promissory estoppel
can only be used as 'a shield
not a sword' (Birkett LJ)
- cannot be used in legal proceedings
brought to force someone to uphold a
promise. can only be used to prevent
someone going back on their promise
- It must be inequitable to
allow the promisor to go back
on their promise: clean hands
- D & C Builders v Rees (1966) Debtor exploited the
strained circumstances of the creditor to extort a
promise to accept immediate part payment of the
debt in final settlement (the evidence was that the
debtors wife was aware of the creditor’s
circumstances). The P creditor then claimed the
balance, and the question facing the Court of Appeal
was whether there was a binding promise to accept
less than the debt owed in full satisfaction of the
debt. Lord denning MR found for the P: ‘The creditor is
only barred from his legal rights when it would be
inequitable for him to insist upon them…Where there
had been a true accord…then it is inequitable for the
creditor afterwards to insist on the balance…in the
present case, on the facts as found by the judge, it
seems to me that there was no true accord. The
debtor’s wife held the creditor to ransom.’
- Lord Denning stated obiter that if the
party claiming promissory estoppel
has acted in such a way that it would
be inequitable to allow him or her to
take advantage of the doctrine, then
the doctrine will not be applied.
- North Ocean Shipping v Hyundai Construction (The
Atlantic Baron) [1979] The defendants agreed to
build a ship for the claimants for a certain price
specified in US dollars. After entering the contract
the US dollar was devalued by 10%. The defendants
threatened not to complete unless the claimants
paid an additional 10% on the contractually agreed
price. The claimants had a valuable charter lined up
so agreed to pay the additional sums and did pay
them without protest. 8 months after delivery of the
ship the claimants brought an action to recover the
additional sums paid. Held: The contract was
voidable for duress, however, since the claimants
had left it so long in bringing their claim they had
affirmed the contract and lost their right to rescind.
- North Ocean Shipping v Hyundai Construction (The
Atlantic Baron) [1979] The defendants agreed to
build a ship for the claimants for a certain price
specified in US dollars. After entering the contract
the US dollar was devalued by 10%. The defendants
threatened not to complete unless the claimants
paid an additional 10% on the contractually agreed
price. The claimants had a valuable charter lined up
so agreed to pay the additional sums and did pay
them without protest. 8 months after delivery of the
ship the claimants brought an action to recover the
additional sums paid. Held: The contract was
voidable for duress, however, since the claimants
had left it so long in bringing their claim they had
affirmed the contract and lost their right to rescind.
- Lord Denning stated obiter that if the
party claiming promissory estoppel
has acted in such a way that it would
be inequitable to allow him or her to
take advantage of the doctrine, then
the doctrine will not be applied.
- Duress against Creditors
- Economic Duress
- Economic Duress
- Re Selectmove Ltd (1995) Selectmove
tried to rely on equitable estoppel to
prevent the Inland Revenue reneging
on an alleged agreement for the
payment of unpaid tax by instalments.
The Court of Appeal rejected this
argument as, even if the agreement
had existed, Selectmove had failed to
make certain payments required by it.
As a result of this failure, it would be
perfectly equitable to allow the Inland
Revenue to enforce its strict legal
rights.
- D & C Builders v Rees (1966) Debtor exploited the
strained circumstances of the creditor to extort a
promise to accept immediate part payment of the
debt in final settlement (the evidence was that the
debtors wife was aware of the creditor’s
circumstances). The P creditor then claimed the
balance, and the question facing the Court of Appeal
was whether there was a binding promise to accept
less than the debt owed in full satisfaction of the
debt. Lord denning MR found for the P: ‘The creditor is
only barred from his legal rights when it would be
inequitable for him to insist upon them…Where there
had been a true accord…then it is inequitable for the
creditor afterwards to insist on the balance…in the
present case, on the facts as found by the judge, it
seems to me that there was no true accord. The
debtor’s wife held the creditor to ransom.’
- must be based
on a clear and
unambiguous
promise
- Woodhouse AC Israel Cocoa SA v.
Nigerian Produce Marketing Co [1972]
Lord Hailsham said ‘the meaning is to
exclude far-fetched or strained, but still
possible, interpretations, while still
insisting on a sufficient precision and
freedom from ambiguity to ensure that
the representation will…be reasonably
understood in the particular sense
required.’
- Baird Textile Holdings Ltd v
Marks & Spencer plc [2001]
a claim based on estoppel
failed because the alleged
representation was
considered to be no more
than a bare assurance and
insufficiently certain
- Woodhouse AC Israel Cocoa SA v.
Nigerian Produce Marketing Co [1972]
Lord Hailsham said ‘the meaning is to
exclude far-fetched or strained, but still
possible, interpretations, while still
insisting on a sufficient precision and
freedom from ambiguity to ensure that
the representation will…be reasonably
understood in the particular sense
required.’
- Promissory estoppel can
usually only be used to prevent
rights being exercised for a
period of time; it cannot
destroy them for ever.
- Tool Metal Manufacturing Co Ltd v Tungsten
Electric Co Ltd [1955] The respondents were
bound to pay royalties to the appellants under
an agreement made in 1938 for the import,
manufacture, use ,and sale of hard metal
alloys. They were also to pay compensation if
the material manufactured were to exceed a
stated volume. At the outbreak of WWII, the
appellants agreed to suspend the right to
compensation. In 1945, the appellants claimed
to have revoked that suspension and to be
entitled once more to receive it. HoL held that
sufficient notice was given for termination of
the suspension of the right to compensation.
- Tool Metal Manufacturing Co Ltd v Tungsten
Electric Co Ltd [1955] The respondents were
bound to pay royalties to the appellants under
an agreement made in 1938 for the import,
manufacture, use ,and sale of hard metal
alloys. They were also to pay compensation if
the material manufactured were to exceed a
stated volume. At the outbreak of WWII, the
appellants agreed to suspend the right to
compensation. In 1945, the appellants claimed
to have revoked that suspension and to be
entitled once more to receive it. HoL held that
sufficient notice was given for termination of
the suspension of the right to compensation.
Want to create your own Mind Maps for free with GoConqr? Learn more.