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Legal Issues In Estoppel: Promissory Estoppel In Relation To The Law Of Contracts

1591 words - 7 pages

It is commonly accepted that an estoppel is a legal doctrine which prevents a person from negating or claiming a fact due to that person’s prior conduct. The doctrine of estoppel has been applied for years and different forms of estoppel have been established. For the purpose of this essay, I will predominantly concentrate on promissory estoppel in relation to the law of contracts. This essay will be approached by discussing the issues of pre-contractual liability, consideration, reliance and the doctrine as a cause of action or defence and a slight comparison of the standpoints that various jurisdictions hold towards these issues. These arguments would conclude the uncertainty of the doctrine and thus, the difficulty and issues that would be faced with the codification of the estoppel.
Promissory Estoppel
In the 19th century, promissory estoppel was first introduced in Hughes v Metropolitan Railway Co , where Lord Cairns ruled that parties who have entered into fixed terms and then afterwards, by their own act or will, enter negotiations which influence the other party to assume that the stringent rights that were originally imposed will not be enforced or will be deferred, should be unable to reverse from this if it is inequitable for them to do so. This doctrine was resurrected by Lord Denning in Central London Property Ltd v High Trees House Ltd , where he expanded on the doctrine of promissory estoppel and ruled that where there is a promise intended to form legal relations and the promisor knew it would be acted upon and it was acted upon by the promisee then the promise made would be binding even with a lack of consideration.
Conditions of Promissory Estoppel
Promissory estoppel has now developed to require three main conditions. Firstly, an explicit promise by words or conduct, secondly, a change in position of the promisee as an effect of the promise and finally, inequity if the promisor were to renege on the promise. The main issues with promissory estoppel are the necessity of a pre-existing contractual duty, the requirement of consideration, the need or lack thereof for reliance to be detrimental and whether promissory estoppel can be used as a cause of action or only as a form of defence.
(i) English law does not recognise pre-contractual liability. Parties are free to withdraw from detailed negotiations at their advanced stage. As Lord Ackner in Walford v. Miles states that either party should be enabled to withdraw from further negotiations if it is in his interest to do so or if he deems that he might attain improved terms by threatening to withdraw. Thus, no principle has been established for a party to satisfy or recompense the other party’s unfulfilled expectations, except in the cases of misrepresentation. This is unlike cases in Australia where the doctrine of promissory estoppel has been applied to inflict liability in damages to parties that withdraw from negotiations. In the Waltons v Maher case, the court held that...

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