Promissory Estoppel Promissory Estoppel The legal doctrine known as promissory estoppel describes the process whereby a party to an agreement or contract is barred from revisiting a part of the agreement that is already settled, whether it be part of an original agreement or after the fact. It stops someone from reneging on an agreement agreed to in good faith. As it relates to short payment of a debt, it is generally held that partial payment allows the person owed the money to turn around and sue for the balance at their discretion but this is not always the case based on case history. It used to be that a balance was a balance and consideration must be paid for a person owed a debt to forsake their legal rights under the original agreement but that has changed over time. Now, if a person owed a debt agrees to a reduced payment in a binding way and the person owing the debt reacts based on that revised agreement, the revised agreement generally is enforced and the original terms under the original agreement are amended or disregarded. Loss of Legal Rights The concept of promissory estoppel can lead to legal rights being limited for a party to an agreement simply because a contract or other agreement seemingly settle a matter before to the extent that it cannot be altered later even if one of the parties insists on it. Once an agreement is in place, especially if it is written down, potential litigants will have a hard time going against that contract to execute a
For example, “If a man has borrowed money to plant his fields and a storm has flooded his field or carried away the crop… in that year he does not have to pay his creditor.” [Law 48]. The law for this is not harsh at all. All that would happen is the creditor wouldn’t get paid for that time because of the flood. Personally, if I were to that creditor I would want to get paid for that piece of land. But if the storm had come through and flooded his crops and land then I would understand that I wouldn’t be getting paid for that month or whatever it is because the farmer probably wouldn’t have the money to pay
Thus far, case law denotes that the doctrine of privty conjured up many criticisms. Prior to the contracts (Rights of Third Parties) Act 1999 a great array of problems with the docterne was evident. This could largely be broken down into four key issues . Firstly , the doctrine provided many examples of failing to honour intentions of parties. In Tweedle, the DoP obstructed the intentions of the contracting parties and agreements were frustrated by the DoP . Secondly, When courts tried to divert the DoP around its obstacles for third parties, issues arose as it was very complex, artificial and as seen in the case of New Zealand Shipping Company - doubt was placed as to whether it was even possible. It was found far too complex a task to give effect to the parties intentions.Thirdly, it was thought outrageous in circumstances were a person who had suffered no loss was eligible to sue whereas an individual at loss could not. Particularly in commercial issues as stated in Scruttons and most notably the difficulties of The Eurymedon, whereby commercial transactions had to seek other forms of protection, such as statutory footing in order to avoid the unfavourable outcomes of privity. Furthermore, the great Injustice of privity was widely acknowledged. when a third party controlled his affairs, he did so on the basis that he will be exempt unless benefitting from the promise of the promisee, as noted in
Proprietary estoppel, on the other hand, is a “legal bar preventing a (first) party from denying another (second) party's right in first party's property where the second party has incurred costs in that property to its detriment”. Proprietary estoppel, like other types of estoppel, is not a remedy in itself but a tool to raise “estoppel equity”, on the basis of which the court is able to decide on the type of remedy that this equity will satisfy. Similarly to the need for the element of common intention for the purpose of establishing a constructive trust, there is a need for the establishment of an active or passive assurance on the part of the defendant that leads to some form of consequential detriment on the part of the claimant when acting in reliance on that assurance. Thus, there must be a causal connection between the actions undertaken by the claimant and the initial assurance on the part of the defendant. The extent and the nature of the detriment suffered by the claimant, however, appears to be substantially more flexible than that necessary to find the existence of a constructive trust. For example, in Inwards v Baker [1965], such detriment amounted to the improvement of the defendant’s land, while in Gillett v Holt [2001] it was manifested in both financial and personal detriment. Yet unlike in most cases involving common intention constructive trusts, in neither of
In the case of Sam vs. Quinn, his landlord, and the national chain store. Sam is who is working on a great innovation, a device that sounds like a barking dog that will help assist in the safety and welfare of others. Several months ago, Sam hit the jackpot that would change his life and landed in a verbal contract to sell 1000 units to a national chain store. However, this young inventor has been mass producing this product from his place of residence, his apartment, own by Mr. Quinn. Sam arrives home one day to find two letters, one from the chain store demanding the 1000 units be delivered immediately. The other was an eviction notice from Mr. Quinn stating that his barking machine has been pestering the other tenants and that Sam was not supposed to be conducting business from his apartment. Sam is furious at both situations and decides to pro-sue the matters. Therefore, before the court can rule on these cases, the court should determine the various elements whether there is a valid contract, a quasi-contract exists, a promissory estoppel, and the rights an obligation of a tenant would prevail on Sam’s claims.
breach of express and implied contracts based on the theory of promoter liability. The courts
Promisee must incur a detriment or confer a benefit on the promisor (Currie v Misa).
The principle of law is that for a valid contract to be formed there must be an agreement reached by both parties.
It is agreed by many, if not all, that the compensatory principle is the ruling principle in breach of contract
Promissory Estopped is when one person might rely on a promise made by another, even though the promise and the relevant circumstances are not sufficient to justify the conclusion that a contract exists (Mallor, Barnes, Langvardt, Prenkert, & McCrory, 2016, p. 332). Investopedia states that a Promissory Estoppel is a legal principle that a promise is enforceable by law, even if made without formal consideration, when a promisor has made a promise to a promise, who then relies on that promise to his subsequent detriment (Promissory Estoppel, 2017). Paul’s subsequent detriment is that he relied on the Eagle Scholarship to go to
t. P1) An agreement cannot bind unless both parties to the agreement know what they are doing and freely choose to do it.
The following case American Agricultural Chemical Co. v. Kennedy & Crawford, 103 Va. 171 (Va.1904) it is expressed that; where the consideration for the promise of one party is the promise of the other party, there must be absolute mutuality of engagement, so that each party has the right to hold the other to a positive agreement. Both parties must be bound or neither is bound. A party making a promise is bound to nothing until a promisee, within a reasonable time, engages to do, or else do or begins to do, the thing which is the condition of the first promise. Until such engagement or such doing, the promisor may withdraw his promise, because there is no mutuality, and therefore no consideration for it.
be able to repay but he promises to do so anyway. This action is not consistent
1. to preclude the company from trading out of its temporary insolvency, thus resulting in creditors not being fully paid in respect of their debt; and
In the article “Consideration - in Acceptance of Contract”, this support Robert’s (2015) evidence that if an act is performed then a subsequent promise to pay by reference to that act is not enforceable as the consideration was past. Other that, he also noted that if there was an implication; the past promise to pay is enforceable.
Doctrine of privity - contract cannot enforce liability or obligation nor can grant rights to any person who is not a party to the contract.