⇒ Promissory estoppel is an equitable principle

⇒ Estoppel is something that stops person X from doing something after person Y has relied upon the promise given to them.

⇒ Thus, promissory estoppel is a situation where a promise is made, which is intended to bind and be acted upon, and has been acted upon (Bingham from the case of Central London Property v High Trees (1947)) – in such a situation the person who made the promise cannot go back on that promise.

• In other words, in very rough terms, if Emily promise to Tom that he can have a chocolate bar if he did something for her, and Tom only acted in reliance of the promise of a chocolate bar, Emily would be estopped from refusing to give Tom the chocolate bar at a later date.

⇒ Some people have criticised the doctrine of promissory estoppel as undermining the requirement for consideration in contracts

• Woodhouse A.C. Israel Cocoa Ltd S.A v Nigerian Produce Marketing Co. Ltd [1972]: Lord Hailsham said the doctrine of promissory estoppel is not coherent and lacks systematic exposition

⇒ Consideration can be quite harsh in the sense that where a promise has been made, and the other party has relied on that promise, at common law this is unenforceable e.g. in Foakes v Beer, the promise made to waive full payment was not enforceable because the promise was for doing nothing extra than what he/she is already contractually obliged to do

• As a result of the harshness of consideration the court of equity developed promissory estoppel to make certain promises enforceable if there is reliance on that promise

⇒ Thus, the difference is: at common law, the enforceability of a promise needs CONSIDERATION; whereas in equity, the enforceability of a promise needs RELIANCE

⇒ However, the equitable principle of promissory estoppel was not adopted by the common law until the case of Central London Property v High Trees (1947) - this is an important case!

⇒ Denning thought he was not bound by Foakes v Beer in the case of High Trees because he believed Foakes v Beer did not take into account the law of equity in its decision

• The common law originated 1066 but many thought that it was not very flexible
• The equity court was later created to produce more flexibility and provide a solution where the common law could not
• So there were 2 courts and 2 bodies of law in operation
• The Judicature Acts of 1873 and 1875 combined the common law and equity, which meant common law and equity principles had to be considered and remedies from both were available in the same court
• In other words, then, Denning in Central London Property v High Trees argued that the Judicature Acts had been ignored in Foakes v Beer i.e. Foakes v Beer relied purely on the common law and did not take into account equitable principles, such as promissory estoppel

⇒ Hughes v Metropolitan Railway (1876) gave authority on the principle of enforcing promises in equity. Denning therefore relied on this case in his judgement in High Trees, instead of Foakes v Beer

Facts:  The defendant has a house leased from the plaintiff (i.e. claimant). In the lease there was a clause requiring the defendant to make repairs to the property if the plaintiff asks for them to be done. The plaintiff wanted some repairs done and gave the defendant six months to do so. The defendant and plaintiff then negotiated about the possibility of the sale of the house from the plaintiff to the defendant, but these negotiations later broke down. The repairs had not been made because the defendant thought he would be able to buy the house. The plaintiff then, because of this, wanted to take possession of the property back.

Held:  The plaintiff "waived" the requirement for the repairs during the negotiation for the sale of the property due to an implied promise that this would be the case. So, the House of Lords called this “equitable waiver” – where a promise is binding even without consideration

⇒ Denning in Central London Property v High Trees seemed to say that we should move away from consideration and more towards reliance as a method of testing enforceability. However, there are a few limitations to promissory estoppel which leads one to say promissory estoppel simply aids (rather than replaces) consideration:

1. There has to be an existing legal relationship between the parties
2. Must have been (detrimental) reliance on the promise
3. Cannot be inequitable for promisor to go back on the promise
4. A "shield not a sword"
5. It suspends rights and does not get rid of them

⇒ So, promissory estoppel cannot apply to all promises → for a party to rely on promissory estoppel against another party there must be an existing legal relationship between them

⇒ Usually this existing legal relationship arises because of an existing contract - so, consideration will still be needed for when the original agreement is formed (to create the existing legal relationship), and then promissory estoppel will usually only be used when the parties wish to change/vary the contract between them

• Denning LJ in Combe v Combe [1951]: it is "a cardinal necessity" to have consideration when contracts are formed "but not of its modification or discharge"

⇒ However, potentially, no legal relationhip is needed at all for the parties to rely on promissory estoppel (Evenden v Guildford City FC [1975] per Denning)

⇒ In other words, for there to be promissory estoppel a promise must have been made by one party and the other party must have acted in reliance of that promise (to their detriment)

⇒ There is uncertainty as to whether the person who relied on the promise has to suffer a detriment

• Denning said detriment is NOT needed in WJ Alan v El Nasr [1972]: "I know that it has been suggested in some quarters that there must be detriment. But I can find no support for it in the authorities cited by the judge"

⇒ BUT, Lord Hodson in E.A. Ajayi v R.T. Briscoe (Nigeria) Ltd [1964] said a detriment IS needed

⇒ However:

• It does appear that the rule stands that detriment is not required as seen in Collier v P and MJ Wright [2007]
• Goff J in The Post Chaser [1982] said “[I]t is not necessary to show detriment”

⇒ Promissory estoppel is all about promoting fairness → so the court will enforce the promise only if it would be unfair/inequitable for the other party to go back on that promise

• For example, in Central London Property v High Trees (1947) it would have been inequitable for the party to claim the unpaid rent from the war years

⇒ The court when deciding whether it would be inequitable for the party to go back on their promise will look at the conduct of both parties

• So if the person receiving the promise acted unfairly/inequitably then promissory estoppel cannot be used as a defence

⇒ Promissory Estoppel can only be used as a defence and not a cause of action i.e. you defend yourself against a party who goes against their promise

⇒ In Syros Shipping Co SA v Elaghill Trading Co [1981], the claimant tried to sue based on promissory estoppel, but the court held that they could not do this as promissory estoppel is a defence (and not a cause of action)

⇒ Promissory estoppel is said to suspend the legal rights given in the contract and not eradicate them. For example, in Central London Property v High Trees (1947), promissory estoppel meant the contractual right to pay full rent throughout the war was suspended

⇒ Also, where periodic payments are involved and a promise has been made to reduce the payments because of pressing circumstances which are likely to persist, promissory estoppel can be used to extinguish legal rights e.g. Tool Metal Manufacturing Co. Ltd v Tungsten Electric Co. Ltd [1955]