Contract law notes fully updated for recent exams at Oxford and Cambridge. These notes cover all the LLB contract law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Hong Kong or Malaysia (University of London).
These were the best Contract Law notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LLB samples from outstanding law students with the highest...
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Promissory Estoppel
Reasons for Estoppel
In contractual setting, parties can do/say things which induce the other to act to their detriment
E.g. If Bank pays money into your account by mistake, it can be estopped from demanding repayment later if it previously had assured you the money was yours and you went on to spend it relying on this representation.
Should the party inducing reliance be held accountable for his words or conduct?
Origins of Promissory Estoppel
Hughes v Metropolitan Railway Co (1877): H gave notice to M to carry out certain repairs within 6 months. M asked H whether he wanted to purchase M’s interests and defer negotiations on the repairs until then. When the interest negotiations broke down, H tried to forfeit M’s lease under the original time frame.
Lord Cairns LC:
Parties who have entered into definite terms
And then afterwards by their own act or with their consent enter upon a course of negotiation
which has the effect of leading the other party to suppose that strict rights will not be enforced/suspended
should not be able to renege from this if it is inequitable for them to do so.
Central London Property Ltd v High Trees House Ltd [1947]:
Denning J:
Where there is a promise intended to create legal relations
And the promisor knew it would be acted on
And it was in fact acted on by the promisee
Then these are binding
Can’t make a cause in action yet, but can be used as a defence.
Where conditions which gave rise to the promise are no longer relevant
Then if notice is given, the terms can revert back to that of the original strict contract.
Requirements of Promissory Estoppel
Clear Promise
Clear and unequivocal promise as to future conduct
which indicates promisor’s intention not to insist upon his strict legal rights against the promisee
Can’t generally be silence or “I think it will be alright but I’ll have to seek instructions”
Unless amount of silence (e.g. 6 years) indicates wish to abandon contract
Woodhouse v Nigerian Produce [1972]:Sellers (N) and claimant buyers (W) agreed cocoa contract. W asked whether N would use (devalued) sterling instead of Nigerian pounds. N sent letter back saying “payment can be made in sterling”. W argued were entitled to 1 sterling for 1 Nigerian pound, meaning N would shoulder the loss through value of currency. N disagreed.
Lord Hailsham LC:
Ambiguous statement does not amount to promissory estoppel
If a letter which isn’t good enough to vary the agreement in contract is allowed in estoppel,
then would have same effect as variation – which would be extraordinary.
Isn’t clear that “sterling” means the measurement of amount rather than the currency in which payment should be made
Chen Wishart: Reliance here only shows evidence of acceptance of a contract in which each gave consideration,
does not create a course of action in absence thereof
B acts in reliance
Promisee must act in reliance on promise or representation.
Generally is detrimental reliance, so if promise revoked, promisee will be worse off than if it had never been made
Central London Property LTd v High Trees House Ltd [1947]:
Denning J: Where there is a promise intended to create legal relations
And the promisor knew it would be acted on
And it was in fact acted on by the promisee
Then these are binding
Goff J in different judgement: BUT no need to show detriment
Merely that X has committed himself to a course of action it can be presumed he wouldn’t otherwise have taken
And that it would be inequitable without reasonable notice for representor to enforce his legal rights
Chen Wishart: Q = whether promisee can resume his original position despite agreement that need not resume original position
If can resume position with reasonable notice, then not inequitable to disappoint, so must resume original position.
Inequitable to go back on the promise
Not inequitable to go back when
Time lag means easy for promisee to resume position
Such as when promise is rescinded two days after being offered, whereby promisee can likely be restored.
Circumstances surrounding giving of promise mean equitable to rescind
D and C Builders v Reese [1965]: B did a job for R worth 480, but R failed to pay. B got into financial difficulties, and asked for the outstanding sum. R, knowing of the financial difficulties, offered 300 or nothing. B was forced to accept. B sued for the balance.
Lord Denning MR:
Principles of estoppel only applicable when inequitable to rescind promise.
When Z has forced X to promise something owing to intimidation
Then it would not be inequitable to set aside that agreement and force Z to pay.
No person can insist on a settlement procured by intimidation.
Danckwerts LJ: Mr and Mrs R really did behave rather badly.
Events subsequent to promise change the situation promisee is in
High Trees
Denning J:
Arrangement was only owing to war-time conditions
Once war was over, clear that conditions leading to suspension of full rent over
Therefore, original rent can resume with notice and sufficient time to readjust.
Effects of Promissory Estoppel
Chen Wishart: Generally only suspends strict rights
Relief promised may be temporary or terminated by notice if promisee can resume original position
TMMC v TEC [1955]TMMC owned patents to alloys. Allowed TEC to use on contractual licence but if exceeded amount per month produced, have to pay TMMC compensation. During War, TMMC...
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Contract law notes fully updated for recent exams at Oxford and Cambridge. These notes cover all the LLB contract law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Hong Kong or Malaysia (University of London).
These were the best Contract Law notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LLB samples from outstanding law students with the highest...
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