Topic 6 : Promissory Estoppel
• The rule also known as quasi estoppel or equitable estoppel or the rule in High Tree’s
case.
• E.g. if A promises not to enforce his straight legal right against B, and B is intended,
acted on it, then the promise by A can be a defense for B in equity despite the lack of
consideration moving from B to A.
Case : Central London Property Trust Ltd v High Trees House Ltd
- Due to war and difficulties in letting the flat in year 1940, the pff agreed to reduced
the rent from 2500 to 1250 pound a year.
- The pff company went into liquidation and the receivers were appointed to look after
the pff’s company.
- In 1945, war ended
- Issue : can the pff (receivers) claim the original amount of 2500 pound after the war
ended
- Can the pff claim the original amount of 2500 pound from 1940-1945
- High court held that the reduction of the rent was temporary expedient only. When
flates became fully let early in 1945, the reduction ceased to apply. Rent payable at
full rate from the last 2 quarters of 1945 afterwards.
- Obiter : had the pffs sued for the full rent between 1940 and the 1st two quarter of
1945, they would have been estopped by their promise from doing so. (means that
the party who made the promise is legally prevented from acting in a way that
contradicts their promise, due to the principle of fairness and reliance) – the court
ruled that the landlord was “estopped” from going back on their promise, as the
tenants had relied on it paid reduced rent during the war.
- Court got the authority from Hughes v metropolitan rly co
- There was 6 months notice to repair premises by landlord to tenants. Then nego for
the reversion of lease to landlord, but failed. By then, 6 months notice expired.
Tenants not repair, llord claimed to evict tenant.
- Court held that by entering nego, llord implied promised to suspend the notice. It
only run after the breakdown of nego.
Two main critisicms have been levelled against the above dictum in high tree’s case
1. It offends rule in Jprden v Money
• E.g. X and Y wish to take loan from Bank Anda for the purposes of their partnership
business. Datuk A, a well known wealthy businessman, went to Bank Anda together
with X and Y to assist them in getting the loan. Datuk A represented to B, Bank Anda’s
loan officer, that he is a partner with X and Y in their business. Based upon Datuk A’s
representation, B agreen to grant the loan. When they defaulted on the loan, Bank
Anda sued X,Y and Datuk A as partners in the business. Although Datuk A is actually
not a partner in a business run by X and Y, he is estopped from denying the fact that
he is a partner with X and Y.
• The house of lord in case Jorden v Money decided that estoppel could operate only
on misrepresentation of existing fact. In the example above, Datuk A made a
statement of an existing fact, he is a partner with X and Y. in this case, estoppel was
applicable. They were representations of existing facts.
• But in high tree’s case, it was improper to apply estoppel because the representation
of an existing facts but a representation of a future conduct.
2. Inconsistent with Foakes v Beer rule
• A peomise to accept a smaller sum in discharged of full amount is not binding on the
promisor.
• In high tree’s case, estoppel must be specifically pleaded in order to ensure the
application successful. However, in the case of Foakes v Beer, a plea of estoppel was
never arise, therefore, the ct held that the payment of lesser sum does not discharge
the full amount