Contract Law

Introduction

Promissory estoppel is used as a shield and not a sword. We trace back this assertion to the arguments of the council in Combe v Combe 3. The true meaning of the maxim is that the doctrine of promissory estoppel can be used as a way of defense to protect an individual who is likely to suffer from the unmet promises pronounced by another party[1]. Its fundamental purpose can now be seen to be protecting and not attacking. From the definition, we can see that a shield is used to protect while on the other hand a sword is something that is used to destroy and attack.

“One ought not to take advantage of his own wrong” these are the words of a wise French man. This is partly in our context of the discussion. When one makes a promise, people tend to look forward to such promises, act on those promises and at the end the day those people fail to accomplish as they promised. In the contemporary society, when that happens, many people will put that behind their back and only resort to taking caution to avoid making the same mistake. This might not be the same case in law. In law, when one party promises another party and fails to come through after the other party had acted on the promise, then an action can be brought against them. Remember this can be done even in the absence of a legally binding contract and that’s when the doctrine of promissory estoppel arises[2]. This doctrine will help the injured party to recover claims for his losses.

For example, consider that you are a director of a school. A gym instructor approaches you with the idea of initiating a fitness program within the school. Excited about the health benefits, this will provide to your students you begin preparing for the program. You order for the construction of a modern gym and buy all the equipment needed for training. You even go to an extent of hiring a manager who oversees the maintenance of the facility. Then all over sudden, the gym instructor retracts the promise of coming around to help your students. The doctrine of promissory estoppel will help you to recover your losses.

Literature review

Promissory estoppel is, therefore, a legal axiom that is enforceable by the law when a person promises another person who depends on the promise to their detriment. This principle is therefore intended to stop the person promising from denying the fact that he did promise. It is popular in almost every other legal system in the world.

When there is a relationship bound by a contract between two people, then the promissory estoppel exists. For example, a relationship that is legal between the promised and the promising party. The law also remains silent whether principle can apply in pre-contractual relationships. The idea that the promissory estoppel may come up with a promise made by two parties was the view of Lord Denning in the case of Brinkom investment limited vs. Carr in 1979. This, therefore, connects us directly to the requirements of a promissory estoppel.

To start with the first requirement, the promising party must provide a clear statement that he/she has no intentions to enforce the legal rights as the promise may be implied or express. The second requirement, in this case, is that the promised party must have acted upon the promise made. From our first example, you as the director of a school acts towards the promise of a gym instructor to initiate physical fitness program in your school and later suffers damages when he changes his mind about these. However in the case of Alan Co. Ltd v El Nasr and Import Co., it was declared that detriment is not an element of the promissory estoppel by Lord Denning. Therefore for a request of promissory estoppel to see the light of the day as a shield, then a change must occur in the circumstances of the promise.

The third requirement is that it is unfair for the promising party to go back on his statements and claim his legal rights as well after the promised party relied on the promise. This requirement later got some alterations Guildford City AFC case where it was declared that an action can also be caused by a promissory of estoppel. Certain promises like threats would not lead to a promissory of estoppel where the court can declare that there was inadequate reliance on the promise[3]. This can be further explained that, if the promised party didn’t rely on the promise, then it would be very valid to argue that it was equitable to get back to the promise.

The promissory estoppel also has effects on both the promisee and the promisor’s position. On the promisee’s position, they have no capacity to sue in a case that they haven’t given enough considerations on the promisor’s promise. The principle of promissory estoppel in this case, cannot be used to bring an action as it doesn’t operate in that way that it gives rights to the promisee. It will only operate in this case by barring the promising party from enforcing their rights on the promised party; that’s the act of a shield. The legal effect of this doctrine on the promisor is also a matter to be looked at; it partially suspends the promising party’s legal rights thus enabling those rights to resumed after establishment. The above can only be executed after a notice has been provided to the promisee with statements regarding the promisor’s intention and also allows for the promising party to back on their initial positions. This ensures that the promised party is protected and shielded from the unjust operations of the promisor who is not at risk of being sued[4].

Other than the promissory estoppel, there are also other types of estoppels that need to be given great considerations. First, we have got the proprietary estoppel which applies where a person intends to do something but fails to relay interest in an asset to another party with the perfect knowledge that the latter will use up money or can as well operate to their detriment in reliance on the gift that has been promised. An example case study of this kind of estoppel is the Crabb v Arun district council of 1976, where the plaintiff was assured that the local council of his area will partition his land into portions and sell the whole of it without leaving a space for a way. To show a little seriousness in what they intended to do, the local council constructed a perimeter fence with space for the way that was assured. The plaintiff relied on the promise to sell his portion and leaving it landlocked. Later on, the local council blocked the gap and demanded a payment of 3000 pounds to construct right of a way. The local council was estopped from demanding payment before building right of a way. It was held that where a claim of proprietary estoppel is established, the court has the power to examine the limit of equity and how to satisfy it properly.

The other type of estoppel is estoppel by representation of fact where a representer presents facts to representee by conduct or in words. For instance, if there is litigation in court between person X and person Y, person X intends to deny that some particular information is true, he or she will be barred from doing that if X had previously informed that the particular information is true. Under this rule, X cannot say a thing to Y  outside the court with the claim that Y relied on what X said, then after that get into the court of law to refuse the fact that he said to Y was true.

The other element of estoppel to be looked at is estoppel by convention. In estoppel by convention, one party is stropped from presenting a point on account on how the disputing parties act. It normally comes into existence when an assumed law is acted upon by the parties binding to a contract. This kind of estoppel has some key requirements as well. The assumption made in the contract must be fully shared by the parties involved. Similarly, we can also say that one party must inevitably make an assumption then the other party simply seconds that. Another requirement is that there should be reliance on assumptions by the party that claims to acquire the favor of convention estoppel. In this case, an argument can only be used as a shield and not a sword. The estoppel then comes to an end once the assumptions are brought to the knowledge of the other party[5]. A good example to be used in this case is the Mears Limited v Shoreline housing partnership limited.  The court held that estoppel existed both by the representation of facts and convention and thus rendering the estoppel argument null.

The differences in the estoppels are also brought about by some other factors. The first factor is the representation which changes from estoppel to estoppel. In some instances, a passive act of silence can be employed while in the other instances wording of facts goes along way. The extent with which one relies upon some information also differs from one estoppel to another, and these further affects the extent of loss among promisee in different cases. The promissory estoppel is also further divided into other estoppels that are used as a shield to protect the promised party from any uncalled for conducts from the promising party. One, there is the estoppel by judgment, which helps the two litigating parties to shun recycling and repeating legal facts that had at one point been declared in some other court sessions. Estoppel by lashes is also another significant form of promissory estoppel. This kind of estoppel operates as a shield and not a sword in the sense that it prevents a party from suing the other as a result of being unable to impose the legal rights at the required time frame. It is also significant to consider reliance based estoppel whereby, one party to some extent relies on information given by another party, acting upon it and after that accruing to injuries. In this case, estoppel acts as a shield for it prevents the promising person from denying his utterances in the event of a loss. Lastly, there is the promissory estoppel by deed. Consider a case where John gives a land that doesn’t belong to him to Mark by deed. John then later gets into possession of the title of that land. The court may declare Mark the rightful owner of the land because of the conveyance that wasn’t done at an appropriate time.

It is also of much significance to look at some of the case studies or previous court declarations where the doctrine of promissory estoppel is justified to be used as a shield to protect and not a sword.  Let us consider the Central property Trust v High-trees House case. In this instance, a block of the apartment from Central London Property Trust was leased to High-trees at 2500 dollars rent. In 1937 when the lease was taken, the apartment was still new and in good shape. High-trees encountered a problem of finding tenants to rent the house, and this made them run into losses. In the 1940’s the apartment remained with no occupants and the instability caused by war during that time made it even worse because there were no certainties that the building could be later occupied. During the years of instability, rent was reduced to 1250 dollars with the consent of Central London Property Trust that had to put this in writing. When the situation later stabilized with the ending of the war, the apartment got occupied fully, and the companies agreed to embark on the amount of rent that was paid originally. In this case, it was held that the rent would only be taken back to the originally agreed amount for future purposes only. The Central London Property Trust could not all the balances that were accumulated during the years of instability. Lord Denning used the principle of promissory estoppel to determine this case. The doctrine has been used to shield the High-tree from unfairly paying the amount that was accrued during the war.

Another relevant example is the Combe v Combe case law. In this case law, Mrs. Radhika Combe is promised by her husband Mr. Yasser Combe that she would receive a yearly maintenance. Later on, they divorced, and their marriage was torn apart. Mr. Combe then retracted from paying the promised annual maintenance. After seven years, an action was brought against Mr. Combe by Ms. Combe in a bid to compel him to pay the annual maintenance that he had initially promised. No considerations were involved when making the promise and, therefore, it wasn’t a contract. Ms. Combe used the doctrine of promissory estoppel to present her grievances that she had acted on the promise to her loss. In the first ruling, the court sided with Mrs. Combe and imposed Mr. Combe’s statement under the promissory estoppel. This ruling was later appealed, and Lord Denning contrary to the previous court’s ruling made a declaration for Mr. Combe. He used the case of High-trees to expand and elaborate the doctrine of promissory estoppel. He was of the thought that this doctrine could not be used as a sword but a shield instead. Like in the case of High-tree, the cause of action wasn’t within the promise made. In Combe’s case, the doctrine is used to create a cause of action that never existed, for Lord Denning couldn’t establish the considerations made for the promise to be enforced. While it is very true that Ms. Combe could not gain from suing Mr. Combe on the seven years areas, it wasn’t her husband’s request. Denning, therefore, held that without an implied or definitive evidence from Mr. Combe that Mrs. Combe should forbear from pushing for maintenance, consideration wouldn’t have existed because none is allowed to apply for compensations through wavering and defying the statutory rights.

As stated in Salsbury v Northwestern Telephone company case, the complainant took part in the establishment of a city college and employed a fundraiser to raise funds for the telephone company subscription. One of the employees of Salsbury negotiated with the fundraiser for the latter. The employee then gave out a letter confirming the defendant’s subscription to the fundraiser since he wasn’t allowed to sign a pledge form. Later, the corporation failed to acknowledge its subscription, as well as the plaintiff’s college[6]. An action was then brought against the defendant to declare that they were both bound by an agreement to the letter written by the defendant. The court declared that the letter was a move that is promissory. The court further declared a promisor should be subjected to walk his talk since the subscription was undeniable. In our case, an undeniable subscription is evidenced by the letter from the defendant. The doctrine of promissory estoppel has been used here to shield the plaintiff college from the unreasonable undertakings of the defendant.

Finally, we can also focus on McIntosh v. Murphy case law, the complainant who is McIntosh entered into an a one-year employment contract orally using his phone with Murphy Limited to fill the position of the deputy sales manager on 25th April 1964. He began working at the company on 27th April 1964. McIntosh moved some of his property to Hawaii since he had some reliance on the offer for the job. He turned down some other employment opportunities and sold some of his personal belonging to rent a house. On 16th July 1964, he was indefinitely fired and sent packing. The court established that the contract didn’t last one year that they initially agreed on and, as a result, McIntosh was awarded damages. The doctrine of promissory estoppel has been used as a shield, in this case, to compensate the plaintiff for the damages he had incurred upon acting on the promise of a contract for one year that was awarded to him by the Murphy Motors.

As I conclude, I will refer to the words of Lord Coke, who said that an estoppel is when someone is concluded by his undertakings to speak the truth. It is therefore beyond any reasonable doubt that the doctrine of promissory estoppel is very significant in the law of contracts. It should, therefore, remain a shield and not a sword to prevent it from outflanking the requirements of consideration.

 

[1] Chen-Wishart, Mindy. Contract Law. 2015

[2] McKendrick, Ewan. Contract Law: Text, Cases, and Materials. 2014,pg.210

 

[3] McKendrick, Ewan. Contract Law: Text, Cases, and Materials. 2014

 

[4] Chen-Wishart, Mindy. Contract Law. 2015.pg.106

 

[5] McKendrick, Ewan. Contract Law: Text, Cases, and Materials. Oxford, U.K.: Oxford University Press, 2012.pg 222

 

[6] Poole, Jill. Casebook on Contract Law. Oxford: Oxford University Press, 2014.

 

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