Promissory Estoppel Cases: Everything You Need to Know
Promissory estoppel aids the party who relies on a promise of another party and experiences loss because the promise wasn't honored. 3 min read
2. How a Promise Is Recognized By the Courts
3. Landmark Promissory Estoppel Cases
4. Questions About Promissory Estoppel Cases
Updated November 5, 2020:
Promissory estoppel cases arise from a doctrine of contract law, enabling a damaged party to recover compensation due to the consequences of a promise that wasn't kept. Promissory estoppel aids the party who relies on a promise of another party and experiences loss because the promise wasn't honored. The purpose of promissory estoppel is to prevent the promisor from reneging on a promise they made, so they are unable to claim that the original promise should not be legally enforced. Promissory estoppel deters the promisor from disputing the promise, which the promisee depended on.
Promissory Estoppel Is Correlated to Equitable Estoppel
Promissory estoppel is a type of equitable estoppel. Equitable estoppel prevents one party from taking unfair advantage of another by protecting the party from damages due to the other party's deceptive behavior, like silence, a detrimental action, acquiescence, or suppression of evidence. A defining case of equitable estoppel comes from Crabb v. Arun DC (1976) 1 Ch 179 asserting when equity is present, it eases the rigidity of enforced law. It stops the adherence of legal rights when it would be unfair for the promisor to pursue them with regards to the transaction that transpired between the parties involved.
Equitable estoppel comes from the principles of fraud, so when promissory estoppel occurs, there is a contractual relationship between parties, and it often happens where the promisee in reliance on a promise has suffered detriment as in Ajayi v. Briscoe (1964) 1 WLR 1326; or where there are changes in the promisee's position as a result of relying on a promise even though he suffers no detriment. Promissory estoppel gives assistance to an injured party, helping them recover on a promise.
How a Promise Is Recognized By the Courts
The courts use a practical test to decide whether there was justification for the promisee to rely on a promise made to them to ascertain if legal action is necessary.
- Particular promises, like threats, are not considered relevant for promissory estoppel because the court cannot discern whether it is reliable or enforceable.
- There would have to be evidence that the promisee had relied on the promise made to them otherwise, there would be a legal reason for the promisor to go back on their promise.
Landmark Promissory Estoppel Cases
An early case documented in 1877 involving Hughes v. Metropolitan Railway (1877) 2 App Case 439 is notable because it's part of the origin of promissory estoppel. The property owner gave his tenant the option of repairing the property in six months or face forfeiture. Under the lease, Hughes, the owner, could make the tenant, Metropolitan Railway, do repairs on the building, so the tenant had six months to complete the repairs. Before the six months had transpired, the tenant proposed to the owner to buy the property. There were negotiations for the purchase of the property, but it wasn't settled.
After the six months expired, the owner sued the tenant for breach of contract and attempted to evict the tenant. The tenant had completed the agreed-upon repairs past the six-month deadline. The owner was successful in suing the tenant, however, the appellate court overruled the decision. It was originally believed that the plaintiffs were trying to take advantage of the defendants by negotiating with them and then stalling, causing the six months to expire and then suing them. But that wasn't true. They sued them because the six months had expired.
The ruling was that through their dealings, both parties made it inequitable to count the time of the negotiations as a part of the six months. The defendants relied on this promise, and therefore, it would be unfair to make them liable in this case. The implied promise is enough to allow estoppel to apply. Further evolving of the promissory estoppel doctrine has transpired with the cases of Total Metal Manufacturing Ltd v. Tungsten Electric Co Ltd. (1955) 1 WLR 761 and Central London Property Trust Ltd v. High Tree House Ltd. (1974)1 KB 130.
Questions About Promissory Estoppel Cases
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