Doctrine of equitable estoppel and the circumstances under which it arises

The doctrine of equitable estoppel was developed to mitigate the harshness of the common law rule of consideration where a promisee had relied upon a promise and changed his legal position to his detriment.

  • It is an equitable intervention. The doctrine often referred to as the rule in High trees case, was explained Lord Denning in Combe V. Combe as follows,” where parties have a legal relationship and one of them word of conduct makes a representation to the other intended to affect their legal position and to be acted upon the other, once the other has relied upon it and changed his legal position, the maker cannot be heard to say that their legal relations were different.
  • For the doctrine of promissory estoppel to apply, the following conditions must exist.
  • o A legal relationship between the parties
    o A representation word or conduct intended to be relied upon.
    o Reliance upon the representation
    o Change in legal position as a result of the reliance.
    o It would be unfair for the maker to act otherwise.

    In Central London Property Trust Ltd V. High Trees House Ltd: the plaintiff leased a block of flats to the defendant for 99 yeas at a ground rent of f2,500. The transaction took effect in 1937. However, the time the second world ward started most of the flats were unoccupied and the defendant could not make enough to pay the agreed rent. However, after some discussion the plaintiff agreed in writing to accept half of the rent as long as the conditions of war persisted. Between 1940 and 1945 the defendant paid half the rent. By 1945, all the flats were occupied but the defendant continued paying half the rent. The plaintiff sued for orders that the defendant pay:
    o The full rent
    o All the arrears

  • The court held that whereas it was fair for the defendant to pay the full rent it was unfair for the plaintiff to insist on the arrears. As they had made a representation which the defendant relied upon. They were estopped from insisting on the arrears.
  • A similar holding was made in Century Automobiles Ltd V. Hutchings Biemer Ltd.
  • The doctrine of promissory estoppel is defensive not offensive. It can only be used as a shield not as a sword.
  • This doctrine qualifies the common law rule of consideration. It enables a person who has not provided consideration to a promise to enforce it if he has relied upon it and changed his legal position to his detriment.

 

Business Law Revision Kit

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