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Promissory Estoppel Notes

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This is an extract of our Promissory Estoppel document, which we sell as part of our Contract Law Notes collection written by the top tier of Oxford students.

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Promissory Estoppel Reasons for Estoppel

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In contractual setting, parties can do/say things which induce the other to act to their detriment o 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.

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Should the party inducing reliance be held accountable for his words or conduct?
Origins of Promissory Estoppel

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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. o Lord Cairns LC:
? Parties who have entered into definite terms

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And then afterwards by their own act or with their consent enter upon a course of negotiation o 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.

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Central London Property Ltd v High Trees House Ltd [1947]: o Denning J:
? Where there is a promise intended to create legal relations

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And the promisor knew it would be acted on

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And it was in fact acted on by the promisee o Then these are binding
? Can't make a cause in action yet, but can be used as a defence.

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Where conditions which gave rise to the promise are no longer relevant o Then if notice is given, the terms can revert back to that of the original strict contract. Requirements of Promissory Estoppel

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Clear Promise o Clear and unequivocal promise as to future conduct
? which indicates promisor's intention not to insist upon his strict legal rights against the promisee o 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 o 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:

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