estoppel by representation

10 Dec estoppel by representation

In June 2008 the House of Lords re-visited the doctrine of proprietary estoppel, and in the process was quite fierce in describing its limits. 5 Proprietary estoppel. The defense of equitable estoppel, therefore, seeks to establish that Plaintiff either made a false representation to, or concealed a material fact from, the Defendant. A representation can be made by statement or conduct. A representation can be made either by words or conduct in equitable estoppel. No transfer of land was made in the father's will when he died. Promissory estoppel relates to a form of future conduct. Paterson, Robertson & Duke, Principles of Contract Law(Lawbook Co, 3rd ed, 2009), pp. However, this requirement seemed changed in light of the decisions in Evenden v Guildford City AFC [1975] QB 917, here the courts held "that promissory estoppel can be a cause of action." Where parties express an agreement of that kind in a contractual document neither can subsequently deny the existence of the facts and matters upon which they have agreed, at least so far as concerns those aspects of their relationship to which the agreement was directed. The contract itself gives rise to an estoppel: ...[15]. Estoppel in English law is a doctrine that may be used in certain situations to prevent a person from relying upon certain rights, or upon a set of facts (e.g. In English law, a promise made without consideration is generally not enforceable, and is known as a gratuitous promise. It is similar to the concept of deterimental reliance. It only prevents a party from insisting on his strict legal rights when it would be unjust to allow him to enforce them". It is similar to the concept of deterimental reliance. This essay has defined with the use of cases to demonstrate the successful attempts to depart from the traditional approach set by the Hughes and the High Trees cases. Denning J held that they were entitled to this from the last two quarters of 1945. At the end of the war the flats became fully let, and the claimants demanded the return to payment of full rent. In The Law relating to Estoppel Representation, 4th edition, 2004 at para I.2.2, Spencer Bower defines estoppel by representation of fact as follows: where one person (‘the representor’) has made a representation of fact to another person (‘the representee’) in words or by acts or conduct, or (being under a duty to the representee to speak or act) by silence or inaction, with the intention (actual or presumptive) and with the result of inducing the representee on the faith of such representation to alter his position to his detriment, the representor, in any litigation which may afterwards take place between him and the representee, is estopped, as against the representee, from making, or attempting to establish by evidence, any averment substantially at variance with his former representation, if the representee at the proper time, and in proper manner, objects thereto. This principle is generally used in common law against any breach of contract between parties. Lord Justice Denning is a leading figure in the field of promissory estoppel in the case of Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 (the High Trees case), was concerned with the modification of the rent payable on a block of flats during the Second World War. Estoppel when invoked in such a manner is often considered a rival or alternative to the doctrine of consideration under contract law. This concept was evolved by equity to bring or render justice even in any strict position of law. However, promissory estoppel may permanently extinguish the rights of the promisor to claim lump sum after part-payment. What is estoppel by representation? In order for estoppel to be raised, it must be shown that a party made a promise or representation intended to be relied upon by the other and that the other did rely upon it to his or her detriment. A legally binding contract occurs when one party makes an offer and receives an acceptance from the other party. Estoppel by representation: Section 115 Following Muthiah v Lee Kor Fan [1966] 1 MLJ 105 one of the necessary elements of a valid estoppel by representation is that the representation should be of a nature to induce, i.e. But to understand and apply this concept there shall be some conditions precedent or existence of some salient features before applying the doctrine of estoppel. For example, it may be desirable to settle a disagreement as to an existing state of affairs in order to establish a clear basis for the contract itself and its subsequent performance. Estoppel literally means- ‘to stop’. While the courts will generally uphold the expectations of parties, if the parties are themselves not clear about their expectations the court's starting point will be the detriment incurred by the parties (per Robert Walker LJ Jennings v Rice[8]). This is the rule formulated in Pinnel's Case,[12] and affirmed in Foakes v Beer. Although the representation must be clear and unambiguous, a representation can be inferred from silence where there is a duty to speak or from negligence where a duty of care arises. 4 Estoppel by representation. [17], The doctrine can only be used as a ‘shield not a sword’, Detrimental reliance on the representation, Temporary suspension of contractual obligations and rights, Taylor Fashions v Liverpool Victoria Trustees, Central London Property Trust Ltd v High Trees House Ltd, Hunter v Chief Constable of the West Midlands Police, http://www.bailii.org/ew/cases/EWCA/Civ/2018/936.html, https://en.wikipedia.org/w/index.php?title=Estoppel_in_English_law&oldid=922844726, Creative Commons Attribution-ShareAlike License. Representation. According to it- “When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true by his act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between … Estoppel by representation is sometimes used to enforce a promise for which no consideration was provided. words said or actions performed) which is different from an earlier set of facts. 1. The court held that promissory estoppel does not create a cause of action and as such the requirement of consideration in formation of contract is still relevant. There are a huge array of different types of estoppel which can arise under English law. These estoppels can be invoked when a promisee/representee wishes to enforce a promise/representation when no consideration was provided by him. In Tool Metal Manufacturing v Tungsten [1955] 1 WLR 761 HL, The courts held that generally promissory estoppel will merely suspend legal rights rather than extinguish them. Promissory estoppel is the doctrine that prevents a party from acting in a certain way because the first party promised not to, and the second party relied on that promise and acted upon it. Reliance and detriment. A landlord may tell his tenant that he is not required to pay rent for a period of time ("you don't need to pay rent until the war is over"). Therefore, the application of the modern promissory estoppel replaces the traditionally limitations set in the landmark cases. The classic definition of consideration was given by the court in the case of Currie v Misa (1875) LR 10 Ex 153, referred to consideration as consisting of a detriment to the promisee or a benefit to the promisor, Lush J: “A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other". In the recent case mentioned above, which was Mears Limited –v- Shoreline Housing Partnership Limited, the court held that there was an estoppel both by convention and representation, as a result of which the employer to the NEC3 contract could not retain the deduction it had made of £300,000.00. The full force application of the equitable maxim estoppel only allows a litigant to “use it as a shield and not as a sword” restricts the application of this doctrine to as far as only to provide a defence to a party and not to be used as a cause of action against another. Relief. These consequences have caused the parameters of promissory estoppel to be no longer an established and well-settled area, which may interpret a huge problem to the development of contract law. At the time the value of sterling and Nigerian pounds was equal. The Court, however, ruled that the Plaintiff’s claim would be dismissed for being filed beyond the limitation period. Estoppel and waiver: Estoppel is a legal mechanism which prevents a party from departing from a promise or representation they have made to another party where to do so would be unfair, unjust or unconscionable.The concept of estoppel embraces notions of fairness and reasonableness that results in reliance upon strict legal rights being otherwise overridden. See more. This promise to accept a lesser rent was unsupported by consideration. Note that Promissory Estoppel should not be confused with Estoppel for Non-disclosure of Knowledge, colloquially known as 'Nolissory Estoppel'. In the case of D & C Builders v Rees the courts refused to recognise a promise to accept a part payment of £300 on a debt of £482 on the basis that it was extracted by duress. Similar views was expressed in Durham Fancy Goods v Michael Jackson [1969] 2 QB 839, where Donaldson J. held that contractual relationship is irrelevant provided that there is “a pre-existing legal relationship which could, in certain circumstances, give rise to liabilities and penalties”. Estoppel by representation. First, A makes a false representation of fact to B or to a group of which B was a member. Estoppel is a judicial device in common law legal systems whereby a court may prevent or "estop" a person from making assertions or from going back on his or her word; the person being sanctioned is "estopped". The tenants refused to pay because of the promise made. The principle of doctrine of Estoppel is stated under Section 115 of the Indian Evidence Act, 1892. The origins of estoppels . The importance of promissory estoppel in contract law is that it has enabled legal obligations, which fall into the category of contract law but fail to show any consideration, to be argued for. A party who has a duty to make a statement but fails to make one is in effect making a statement by its silence. It is also a concept in international law. After his death the son, claiming to be the equitable owner, obtained a court judgment forcing the trustees to convey the land to him. Legal doctrines of estoppel are based in both common law and equity. A form of Estoppel in which one party acts to his detriment on a misrepresentation of fact by another. (1837) 6 Ad. There must be a clear promise intended to alter the contracted obligation. Both Halsbury's and Spencer Bower (see below) describe all three estoppels collectively as estoppels by representation. Lord Scott of Foscote, with whom the other Lords agreed, described at length that someone who seeks to rely on proprietary estoppel must establish an actual or certain interest in the property to which he claimed a right. The court assesses intention objectively rather than taking evidence on the party's state of mind. Estoppel by representation is sometimes used to enforce a promise for which no consideration was provided. Estoppel is an equitable (as opposed to common law) construct and is therefore discretionary. Proprietary estoppel claims, therefore do not necessarily result in the transfer of the property to the claimant; in Jennings v Rice itself, there was a monetary award. This phenomenon is … In the case Brikom Investments Ltd v Carr [1979] 2 All ER 753 CA, a landlord made an oral promise to his tenants that if they bought a 99 year lease to their flats he would repair the roofs of the flats at his own expense. Yet proprietary estoppel has also arisen by acquiescence. Promissory estoppel is a term used in contract law that applies where there may not otherwise be an enforceable contract. According to it, when any person says one thing at one time and another thing at another time, then he is prevented from doing so. Second, in making the representation, A intended or [in the alternatively,] knew that it was likely to be acted upon. A contract must consist of an offer and acceptance, the intention to create legal relations and consideration all must be present to make the contract legally enforceable. 3. The civil law use of issue estoppel or res judicata (literally translated as "the fact has been decided") is relatively uncontroversial. In Cobbe v Yeoman's Row Management Ltd[9] the House overturned the decision of a fairly heavy-weight Court of Appeal on the very issue of estoppel, thereby illustrating the level of confusion about the meaning of the doctrine. The wife brought an action to enforce the promise invoking promissory estoppel. The specific facts in the case must actually establish the elements of promissory estoppel before the contract becomes enforceable in law. This is sometimes referred to as an evidential rule, and its principles are used when a case is brought to court. The buyers then sought to revert to pound sterling as stated in the contract. give rise to a permanent modification of the rights of the parties (inter se). It can be used to prevent a plaintiff denying that a statement or set of facts are true where they had previously represented that they were. In Hughes v Metropolitan Railway Co. (1877) 2 App. The two types of estoppel that are usually relied on in pensions cases are estoppel by representation and estoppel by convention. 2. I start with a case called Pickard v Sears, in 1837. The law relating to contractual estoppel was summarised in Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd [2006] EWCA Civ 386: There is no reason in principle why parties to a contract should not agree that a certain state of affairs should form the basis for the transaction, whether it be the case or not. This case was the one on which Denning placed considerable reliance in the High Trees case. Intention. The buyers accepted the delivery and invoice without objection. In Combe v Combe Denning elaborated on the equitable nature of estoppel by refusing to allow its use as a "sword" by an ex-wife to extract funds from the destitute husband. There are limitations which must be satisfied to this doctrine which derived from both Lord Cairns in the case Hughes v Metropolitan Railway Co. (1877) 2 AC 439 and Denning LJ in the High Trees case. 469 at p. 474. The main intention of this doctrine is to avoid injustice to anyone like the other laws. steps, if any, taken by the promisor/representor to ensure he has not caused preventible harm. This is one of the earliest cases of estoppel by representation, and demonstrates its origins and underlying principle. The threats to the limitations of promissory estoppel, manifested from the continuing evolution of promissory estoppel, may pose turbulence in contract law and open the flood gate to litigation. Detrimental reliance. In this case, the claimants let a block of flats to the defendants at an annual rent of £2500. Similarly in Inwards v Baker [1965] 2 QB 29, a father encouraged his son to build a house on his own land, promising to leave that land to the son in his will. In Alan Co. Ltd V El Nasr & Import Co. (1972) 2 QB 18, Denning detained that detriment is not an essential element of promissory estoppel. Estoppel is "a shield not a sword" – it cannot be used as the basis of an action on its own. Without that, he is not off the starting blocks. It also does not extinguish rights. For example, a car salesman promises not to sell a car over the weekend, but does so, the promise cannot be enforced. Does not give rise to a new cause of action. This is an estoppel. The importance of the case, however, lies in an obiter statement of principle which Denning LJ set out, “a promise intended to be binding, intended to be acted on, and in fact acted on, is binding so far as its terms properly apply”. 141-176 (chapter 9). Detriment is measured at the time when the promisor proposes to withdraw his promise, not at the time when the promise is made. But they nevertheless have "separate requirements and different terrains of application. Fifth, no defence to the estoppel can be raised by A. Therefore, for a plea of promissory estoppel to succeed, there must be a change in circumstances of the promisee. The landlord then claimed a contribution from the tenants towards the cost of the repairs. This is because the plaintiff represented that he would accept half the rent and the defendant acted upon this. In 1937 the Law Revision Committee published its Report on the Doctrine of Consideration. It does not refer to misrepresentations of points of law, not to promises of future action (see: Promissory estoppel). It remains unsettled whether promissory estoppel may arise in pre-contractual relationships. Browse US Legal Forms’ largest database of 85k state and industry-specific legal forms. pp. The promise or representation must be “precise” and “unambiguous” although it does not mean that such promise or representation must be expressly made. Under American jurisprudence, equitable estoppel is available only as a defence, while promissory estoppel can be used as the basis of a cause of action. Representation, promise or assurance. "You have an excellent service and I will be sure to pass the word.". Generally, the following eight factors are determinative (Michael Spence, Protecting Reliance: The Emergent Doctrine of Equitable Estoppel, Oxford: 1999, pp60–66): Estoppel by representation of fact is a term coined by Spencer Bower. The Doctrine of estoppel is an equitable doctrine in law. So clearly, the estoppel argument does matter. The principle of estoppel has developed over the years. In D & C Builders v Rees [1965] 2 QB 617, Lord Denning expressed that the: Promisor would not be allowed to revert to his strict legal rights and that the promissory estoppel will be final if promisee understood the promise to mean final extinguishing of promisor's strict legal rights. The party making the representation intends for the other party to rely upon such a representation. how the promise/representation and reliance upon it were induced, the content of the promise/representation, parties' relative interest in the relevant activities in reliance, nature and context of the parties' relationship. One was that, for ‘estoppel’ to work, someone had to make ‘a representation of fact – not one of intention’. 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