Contract Law

Promissory Estoppel:

•    There are 57 different types of estoppel under our legal system.
•    This is why it must be qualified as promissory estoppel.
o    Invented by Denning L. in 1940s.
o    Original formulation had in it ambiguitiy almost to the point of contradiction.
•    Para 2 on page 316
o    3 or 4 diff formulations just in that one paragraph.
o    Retreats later from “create” legal relations in regards to a promise
o    “Promise must be honoured” – is this retreated from?
o    Most succinct formulation:  “Promises intended to be binding, intended to be acted on, and in fact acted on.”
•    This is acceptable today…
•    “In each case the court held the promise to be binding on the parky parking it,e ven though under the old common law it might be difficult to find any consideration for it.”
•    The courts do not enforce the promise but do not allow the promisor to act inconsistently with it…?
•    Runs around Foakes v. Beer in this way.  Uses estoppel as a work-around.

Combe v. Combe
•    The text points out the absurdity of the fact of a matrimonial case becoming a contract precedent.
o    This is in fact what our legal tradition began doing in the 19th century.
o    The Victorial era began inventing contract law by abstracting out of all the contracts that had always existed and began to find common elements in them all.
•    Led to basic rules such as offer, acceptance, and consideration.
•    Divorced contract law from its particular situation and created a general-field theory – “The law of contracts”
•    The facts are remniscent of Balfour v. Balfour.
o    Here, the couple, during divorce, came to an agreement between them for him to pay her £100 / year.
o    After 6 ¾ years, she sues him for the arrears (he had paid nothing)
o    She wants to enforce a promise.
o    But our legal system doesn’t enforce promises.  We need consideration – a bargain.
o    What is it suggested that she swapped with him?
•    Forbearance – forebore to take him to Divorce Court.
•    This sounds like consideration.
o    Denning L. has 2 answers:
•    1)  Nothing to suggest that this was intended by either the husband or wife.  It was not a bargained-for forbearance.
•    Similar to Dalhousie v. Boutilier
•    2)  Even if she had promised to forebear, she would never lose the right to apply to the Divorce Court – there was (and still is, in a sense – in the sense that it now applies to either sex) a rule that a wife could not bar herself from getting court-ordered maintenance.
•    Denning L. says that she didn’t make this promise anyway, but even if she did, it would not be binding because it has no value.  She cannot contract herself out of this right.
•    This means that the rule, which appears to be solicitous to wives, can be read in a way to be beneficial to husbands (as in this case).
•    Normally, a bargained-for forbearance is consideration.  This is a special case because of this aforementioned rule.
•    Whenever one has a scenario where the enforceability of a promise is in dispute, then consideration must be considered first.
o    If consideration is found, then there is no need to go forth and talk about estoppel.
o    Estoppel is what makes this case famous.
•    Trial judge, having found that there was no consideration, went on and upheld the husband’s promise.
o    Did so because he believed the case fit neatly under the High Trees principle.
•    A promise relied on, and intended to be relied on, is binding.
o    Denning L. says that though it looks like it fits, he had been too broad with his wording in High Trees.
•    Combe v. Combe introduces a refinement on High Trees.
•    Page 318 – para 3:  “…lest it should be endangered.”   In other words, lest it be overruled by a higher court.
•    It is not a creative doctrine – it is a preventative doctrine.
•    “It only prevents a party from insisting on his strict legal rights when it would be unjust to allow him to do so, having regard to the dealings with have taken place between the parties.”
•    Though he says this, he immediately goes on to say that that is not to say that it is only available to defendants.
•    When one thinks of estoppel, naturally equates it with defendants.
•    Denning L. says that plaintiffs can use it just as readily, but it must always be a defensive doctrine.
•    Gives examples on top of 319.
•    Foakes v. Beer comes into play in these examples.
•    “Example 2 is breath-taking” – Bell
o    “Can even say that example #1 is breath-taking.” – Bell
o    Denning gives account of a gov. dept and the war-service disease.
•    There was a statute that said anyone whose disease was due to war service got a pension
•    Robertson made a claim as such.  Ministry accepted it, and Robertson stopped collecting evidence.
•    Then, the ministry changed its mind and said that they needed more evidence.
•    Robertson sues on his statutory entitlement to a pension.
o    Ministry says that they need evidence
o    Roberson claims they are estopped, because he put reasonable reliance on their word that they needed no more.
o    This is a case where the plaintiff estopps a defendant.
•    Robertson wasn’t suing the ministry saying, “You promised me.”  He sued on his statutory right for pension.
•    Then when they raised the inevitable defence, he put forth that they were estopped.
•    In none of these cases were the plaintiffs suing on the promise.
•    Estoppel is never part of the cause of action, but plays a key role in determining whether someone is going to win or lose.  Is a subsidiary feature of the case.
o    Denning gives a new formulation.  Less succinct than previous formulation.  Enormously wordy.  P 319 end of para 3.
•    Has inserted “conduct”
•    Could be relevant – case where a landlord allows rent to be late for 6 months, then on the 7th uses it ‘as an excuse’ to kick the pl. out.  The pl would argue that the conduct of the landlord had led them to believe it was okay.
•    “only by his word” is not accurate.  Should read, “by reasonable reliance”
•    Still has not given qulification.
o    Para 4
•    Says that if we took seriously the principle form high trees, (reasonable reliance), then why would we need consideration?
•    There is an answer…
•    Denning now accepts that this principle would overturn 9/10 of the doctrine of consideration…
•    “Its ill effecta have been largely mitigated of late, but it still remains a cardinal necessit of the formation of a contract, although not of its modification or discharge.  I fear that it was my failure to make this clear in High Trees which misled [the trial judge] in the present case.”
•    SO, cannot sue based on estoppel, but if have another issue, then can bring estopple into play.
•    Likewise, if one is being sued (and is therefore compelled into court), then can use estoppel
•    Unfortunately for Mrs. Combe, she is relying on estoppel.  This is why her action ends up being dismissed.
•    Aside:  There is no difference between variation and modification.
o    Denning says that one can use estoppel defensively, not offensively. (“to be used as a shield and not as a sword”. – Birkett L.J. page 321.  Famous disctinction created by Birkett here.)
•    WHY DIDN’T COMBE APPLY TO…[this is Bell’s favourite exam question.  Figure out what he said.  Was purposefully elusive.]  Wilbur?
•    High trees made it seem as though reasonable reliance alone would be enough to enforce a promise.
o    This would have revolutionized contracts – would have been just about fatal to doctrine of consideration.
o    To sue to enforce a promise requires consideration.
•    This is why the wife cannot win.
•    Promissory Estoppel goes from 2 factors to 3
•    1)  Promise and intention to be relied on
•    2)  And relied on by the promisee
•    3)  except that, a promisee cannot sue on the promise based on estoppel.  It cannot be the foundation of the case – the cause of action.
•    Each side can use estoppel, but the plaintiff can never sue successfully using estoppel as a cause of action.
o    This is for no good reason other than Denning L. says so
o    Denning L. made his career on making cases stand for things that judges could not foresee them standing for…
o    “Law is an awful lot like fairy tales… We often treat the past with as much profundity as a fairy tale.  …We make the wisdom of the past say something that it didn’t say yesterday.”
o    Everyone is happy to see Foakes v. Beer be defanged, so we all go along with it an pretend it makes sense.

Page 322 – Note 5.
•    Suggestion that estoppel principle might have been a substitute for consideration
Note 6
•    A) a profound question that we must eventually be able to think about…
o    The effect of the sword/shield distinction means that my promise to take less from you than I’m entitled to may be binding on me,
•    Suppose B owes A $100.  If A promises to take only $90, then the estoppel principle says that A can take the $90 (enforecable), but, if instead A owes B $100, and A promises to pay $110, then then law won’t enforce the promise.
•    This is despite that in both examples, B is $10 better off.
•    When estoppel works in high-trees, the land-lord is estopped from going back on his promise
•    When it doesn’t work in combe, the wife cannot enforce the husband’s promise that she will get money
•    6a asks us to thing about whether there is a sensible distinction between a promise to take less, versus a promise to pay more…
•    they both amount to one person being $10 richer than they otherwise would be.
•    This case did make its way to the JCPC – they gavem ultiple factors to come into an estoppel, but amounted to what Denning L. has already said.
o    “resile” – abandon a position or course of action.

D. & C. Builders Ltd. v. Rees.
•    15 years later
•    Denning L. by this time the most famous judge in the common-law world.
•    Had been promoted to house of lords, but found there was less influence here.
o    Arranged for his won demotion to chief justice of court of appeal
o    Assigned all good cases to himself.
o    M.R. – master of the roles.

Read this case for next day.  Read on to the two other decisions on pa 326 to think about where Denning’s decision stands in regards to the two others.
Also, go on to Waltons – a potentiall spectacular case from Aus. – goes back to High tress without Combe v. Combe.