CONTRACT LECTURES TRANSCRIPTS C STRICKLAND
LECTURE 5 Total time = 59 mins and 41 seconds
Track/slide 13
04.48
First, it is a good idea to make a few early points
1. The reason we are studying promissory estoppel is because it has the POTENTIAL to
REPLACE CONSIDERATION as a key requirement for the FORMATION of a contact.
As it stands, Promissory Estoppel has NOT replaced the requirement for consideration in the
FORMATION of contracts BUT it has been used as a device to
ENFORCE PROMISES MADE IN RELATION TO EXISTING CONTRACTS – when these
new promises are NOT supported by NEW consideration.
It is thus a way of AVOIDING the need to find consideration in order to make a promise
legally enforceable.
2. Promissory Estoppel is just one type or strand of a broader equitable principle of estoppel.
In Williams v Roffey Brothers Limited 1991, Russel LJ quoted a passage from the
Amalgamated Investment and Property Co case 1982 in which Lord Denning MR stated:
‘The doctrine of estoppel is one of the most flexible and useful in the armoury of the law.
But it has become overloaded with cases. That is why I have not gone through them all in
this judgment. It has evolved during the last 150 years in a sequence of separate
developments: proprietary estoppel, estoppel by representation of fact, estoppel by
acquiescence and promissory estoppel.
At the same time it has been sought to be limited by a series of maxims: estoppel is only a
rule of evidence: estoppel cannot give rise to a cause of action: estoppel cannot do away with
the need for consideration, and so forth. All these can now be seen to merge into one general
principle shorn of limitations. When the parties to a transaction proceed on the basis of an
underlying assumption (either of fact or of law, and whether due to misrepresentation or
mistake, makes no difference), on which they have conducted the dealings between them,
neither of them will be allowed to go back on that assumption when it would be unfair or
unjust to allow him to do so.
If one of them does seek to go back on it, the courts will give the other such remedy as the
equity of the case demands’.
Here we can see the hallmarks of promissory estoppel that will be revealed in our study of
key cases below.
3. A contract (based on Offer, Acceptance, Consideration and Intention to create legal
relations ) gives both parties to it a CAUSE OF ACTION – the right to take the other side to
court for breach of contract.
Promissory Estoppel does NOT give the aggrieved person a cause of action – the aggrieved
person cannot take the other person to court for breach of a promise not supported by
consideration. See the case of Combe v Combe 1951.
4. The essential difference between contracts supported by consideration and LATER
PROMISES based on the original contract is that:
When there is a CONTRACT - this protects the parties’ FUTURE EXPECTATIONS
as most contracts are EXECUTORY – to be
fulfilled in the future. Thus, there might be a cause
of action without actual reliance on the contents of
the contract by either side.
However, Promissory estoppel -
only protects people who have ACTUALLY
RELIED on the promise, usually, though not
always, to their detriment. Thus, the scope of
application of promissory estoppel is narrower
than the scope of application for contracts.