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Law Notes Contract Law Notes

Promissory Estoppel Notes

Updated Promissory Estoppel Notes

Contract Law Notes

Contract Law

Approximately 65 pages

This class was co-taught by Dr. Ian Kerr, Canada Research Chair in Ethics, Law and Technology Dr. Anne Uteck at the University of Ottawa. Professor Kerr taught Part I of the course, and Professor Uteck completed Part II of the course pertinent to remedies....

The following is a more accessible plain text extract of the PDF sample above, taken from our Contract Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

THEME 14: PROMISSORY ESTOPPEL

Promissory Estoppel (PE) is a tool of equity (discretionary acceptance of the courts). It is used to get around the need for consideration (gets around the harshness of Stilk requiring fresh consideration for any consideration). It was first articulated in the Jordan v Money (1854) HL:

  • The idea is that the wife of the person who received the bond told Jordan not to worry about the funds he owed them and to marry

  • 5 years after he married, she sought the money

  • the court says that you are estopped from making a truthful allegation after there’s been a lie

  • the judge basically says “I will not hear of this” – will not allow evidentiary information to come through after a lie has been heard

The idea is that you can only seek an equitable remedy like PE if you have done equity (need to come to the court with clean hands). Estoppel historically only applied in cases about misrepresentations re: present or past (lies). Today it is more expansive and applies to the future representations.

TIMELINE

  • at T1, there is a contract or a debt of some sort

  • at T2, there is a new promise on the table

  • at T3, someone reneges that promise

  • at T4 the case goes trial where we ask if promissory estoppel is applicable

THREE ELEMENTS OF A PROMISE THAT CAN GIVE RISE TO ESTOPPEL (ACCORDING TO LORD DENNING):

  1. nature of the promise must be made with an intention to be bound

  2. the promise must be intended to be acted upon by the person to whom the promise is made (other party came to rely on the promise)

  3. the promise was in fact acted upon (can be negative or positive in terms of the actions/consequences)

PURPOSE OF ESTOPPEL

  1. shield from the original contract because you’ve reneged on a promise subsequent to the contract

    1. cannot be used as a sword (cause of action), but only as a defence

  2. takes the place of consideration to prevent the assertion of a previous contract

  3. used so that the court will not consider the original contract, but just hone in on the promise (Original contract does not disappear)

  4. DEFENCE for the promisee or the Defendant

  5. Founded upon detrimental reliance: I relied on your promise to my detriment because you’ve now sued me

COMPONENTS OF PROMISSORY ESTOPPEL

  1. Must be an existing relationship between the parties at the time estoppel is used

  2. Must be a clear promise at T2 or representation about the future made by the party against whom the estoppel is raised

  3. There must be an reliance by the party raising the estoppel

  4. Party to whom the representation was made must be acting in detrimental reliance (I relied on something you promised me and I relied on it to my detriment. Because you promised me, I changed my situation, but you didn’t uphold it so now I’m worse off)

  5. The promisee must have acted equitably in order to use the defence of promissory estoppel (she who seeks equity must do equity)

CASE RULE FACTS REASONS

Hughes v Metropolitan Railway Company (1877) HL

RAILWAY REPAIRS - 6 MO.

I: Was the promise to stop the clock during negotiations binding?

D: appeal dismissed (appellants not in breach

When a negotiation leads to one party supposing that the strict rights of a contract will not be enforced, trying to enforce strict rights would be inequitable.

*Case really gave rise to consideration even though it’s difficult to find

- Hughes (landlord) appealing; respondent leased property from him -Hughes demanded repairs within 6 months

-tenant asked for deferral until sale agreement works – landlord agrees to stop clock for repairs during negotiations -negotiations ensue until Dec when they break down and then agrees to repair (3 days before notice of repair expires in Dec– repairs completed by June, but served with eviction

- promise to stop clock was binding in estoppel, but not consideration

- even though there was no final ok to agreement, court indicates that parties didn’t disagree to stop the clock

- tenant suffered detrimental reliance

- repairs were in fact made within 6 months

- equity could not prevail because there was an exact time frame given

Central London Property Trust Ltd v High Trees House Ltd [1947]

LESS RENT DURING WAR

I: Did estoppel waive rights of PL to bring actionable claim?

D: judgment for PL

Promissory estoppel cannot be used as a sword; it cannot be used to obtain something from the original contract that you didn’t promise to change. ...

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