Promissory Estoppel

green909

I know that Promissory Estoppel cannot be used as a cause of action in contract law, but what is the reasoning behind this?

If A is in a pre-existing contractual relationship with his landlord, B. B lowers rent because of the recession. A pays lower rent then after the recession is over (whenever that may be) the landlord seeks to get the money lost during the recession years, why can't A bring a cause of action estopping the landlord from doing so as A relied upon the promise which was made by the landlord during the recession years?

Any help would be greatly appreciated!!

MagicSean

Because it would be premature. The landlord hasn't brought the case yet so what would you be estopping?

Maximilian

I'm not sure that's the case anymore. There was a recent Supreme Court case, where PE was allowed to be used as a sword rather than a shield as they say. Can't for the life of me remember the name.

It involved a specific performance action in the docklands where a bank withdrew funding from a purchaser after he or she had signed the contracts. The lending agreement was enforced I think - which was interesting in its own right.

Tom Young

Please use search, I covered this off in detail and continue to do so when it comes up.

Maximilian

Tom Young wrote: »

Please use search, I covered this off in detail and continue to do so when it comes up.

lol that's obviously where I read it

green909

Tom Young wrote: »

Please use search, I covered this off in detail and continue to do so when it comes up.

I did a search but couldn't find any direct discussion on the rationale behind the whole ' sheild not a sword' concept

could you please point me to what thread you have in mind?

Thank you

Tom Young

green909 wrote: »

I did a search but couldn't find any direct discussion on the rationale behind the whole ' sheild not a sword' concept

could you please point me to what thread you have in mind?

Thank you

This is the Super Court Case Maxi refers to.

CF v. JDF [2005] 4 IR 154 - I'd read it.

I can only find the Estoppel for Dummies thread, which actually could be edited to give the sword and shield analogies. I will post up here in a bit and explain.

green909

Thanks a million for your help

Tom Young

Promissory estoppel: may be seen as an exception to the doctrine of consideration. The doctrine essentially provides that where a person makes a promise which he reasonably expects will be acted upon by the promisee, then such a promise will be enforceable if non-enforcement would lead to injustice.

Central London Properties Trust v High Trees Ltd [1947] KB 130, is instructive in this matter. This case concerned a variation of the terms of a contract. In general a variation of an agreement which is unsupported by consideration is unenforceable unless one of the parties relied on it to his detriment or alters his position.

This principle will only apply where the promise of a waiver is given voluntary, D&C Builders v Rees [1965] 3 All ER. 261. The debtor owed £482 to a small firm of builders. Y agreed to accept £300 in full settlement as they had financial difficulties of which the Debtor was aware of. The Court held that the debt had to be paid in full. Promissory estoppel only applies to a promise voluntarily given.

The principle only applies to a waiver of existing rights, Coombe v Combe [1951] 1 All ER. 768. A promise which creates new obligations is not binding unless supported by consideration in the usual way i.e. the principle is a shield and not a sword. Therefore, the promise could only be used as a defence and not as a cause of action in itself.

Can the doctrine be used as a sword rather than as a shield? - It is unsettled, but see the above mentioned case.

Coombe v Combe [1951] 1 All ER. 768, held that the promise could only be used as a defence and not as a cause of action in itself. Chitty states that “The equitable doctrine makes it possible for a party to rely on a promise for which there was no consideration, so as to excuse his non-performance of an existing obligation.” Proprietary estoppel (which arises where a person has done an act in reliance on the belief that he has, or will acquire right in or over another’s land) on the other hand, can create new rights if real property is involved.

I hope this helps.