Contract - Promissory estoppel

Part payment

Common law - part payment of a lesser sum does not discharge obligation to pay full amount - not good consideration

Foakes v Beer (1884) - confirmed in Re Selectmove (1995)

Judges don't like this rule - while has not been fully contradicted in case law, there are ways around it

Exceptions

Common law

Fresh consideration/new element

Pinnel's case (1602) - "a hawk, a horse or a robe"

Different thing, different place, and/or earlier

Lesser amount paid by third party

Welby v Drake (1825) per Lord Tenterden - "it is a bar to the plaintiff now recovering against the son because, by suing the son, he commits a fraud on the father, whom he induced to advance him money on the faith of such advance being a discharge of his son from further liability."

Extension of practical benefit test

Doesn't work if paid later

MWB Business Exchange Centres v Rock Advertising Ltd (2016) - accepted less and company stayed on premises - avoided a void period where no one was renting

Not a practical benefit if simply didn't think would get it otherwise - must be something more

Equity

Promissory estoppel

CLP Trust v High Trees House (1947) per Lord Denning - "when a man by his words or conduct, had led another to believe in a particular state of affairs, he will not be allowed to go back on it when it would be unjust or inequitable for him to do so"

"a promise intended to be binding, intended to be acted on and in fact acted on is binding in so far as its terms properly apply"

Hughes v Metropolitan Railway (1877) per Lord Cairns - "the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties."

Judicial reaction - D & C Builders Ltd v Rees (1966) per Lord Denning - "This principle caused some eyebrows to be raised in high places. But they have been lowered since."

Elements

Clear and unequivocal promise to suspend existing contractual rights

Change of position by promise in reliance on that promise

Reliance need not be detrimental

Inequitable for promisor to go back on promise

Shield not a sword

Either by express statement or by conduct which implies that promise

Woodhouse v Nigerian Produce (1972) - promise must be clear - expressed so will be understood in the sense required

Ajayi v Briscoe (1964)

Brikom Investments v Carr (1979)

Collier v P & MJ Wright (2007)

The Post Chaser (1982) per Goff LJ - "It is not necessary to show detriment; indeed, the representee may have benefitted from his representation, and yet it may be inequitable... for the representor to enforce his legal rights."

Alan & Co El Nasr (1972)

Normal equitable rules apply - "clean hands" etc. - must look at circumstances

The Post Chase (1982) per Goff LJ - "It does not follow that in every case in which the representee has acted, or failed to act, in reliance on the representation, it will be inequitable for the representor to enforce his rights."

D & C Builders v Rees - duressed into accepting less money

Acts as a defence to a claim - cannot be used to create new contract where no consideration in the first place

It is not a cause of action

Combe v Combe (1951) per Lord Denning - "the principle never stands alone as giving a cause of action in itself" - hadn't given up any rights in this case

Advancement of promissory estoppel

High Court of Australia has been flexible

Never mention in relation to variation promises to pay more - ongoing debate about where should apply in certain contexts

Waltons Stores (Interstate) Ltd v Maher (1988)

English Court of Appeal has been inflexible

Baird textile Holdings Ltd v Marks & Spencer (2001)

Effect of promissory estoppel

Generally only suspends rights rather than extinguishing - resumed either on...

Cessation of circumstances giving rise to estoppel

C.L.P Trust v High Trees (1947)

"Reasonable notice"

Tool Metal v Tungsten Electric (1955)

Came before idea of practical benefit

Blackburn LJ - "All men of business, whether merchants or tradesmen, do every day recognise and act on the ground that prompt payment of a part of their demand may be more beneficial to them than it would be to insist on their rights and enforce payment of the whole"

Tender of a different chattel

Sibree v Tripp (1846) per Baron Alderson - "A man may give, in satisfaction of a debt of £100, a horse of the value of £5, but not £5. Again, if the time or place of payment be different, the one sum may be in satisfaction of another."

Doesn't have to be adequate aka of an equivalent monetary value

Here also established that promissory note of sufficient novelty to constitute fresh consideration, because of peculiar obligation inherent in a negotiable security.

legal consensus that Lord denning developed original doctrine beyond its established parameters - but now part of English contract law

Principle should not be stretched - "it does not create new causes of action where none existed before"

Because of this, it can never do away with the necessity of consideration completely

Denning - consideration "remains a cardinal necessity of the formation of a contract"

Allowed it to act as a sword and provide an alternative basis to consideration for enforcing a promise

Confirmation that cannot be used as a cause of action - confirmed again in Smithkline Beecham plc v Apotex Europe Ltd

Hughes v Metropolitan Railway Co - can be implied

Lord Hailsham LC - "it would really be an astonishing thing if, in the case of a genuine misunderstanding as to the meaning of an offer, the offeree could obtain by means of the doctrine of promissory estoppel something that he must fail to obtain under the conventional law of contract."

But inequity is harder to prove with no detriment - Goff said proof of detriment is evidential as to the inequity of going back on a promise