Reliance-based estoppels (at English law) include: • by representation of fact, where one person asserts the truth of a set of facts to another; • promissory estoppel, where one person makes a promise to another, but there is no enforceable contract; and • proprietary estoppel, where the parties are litigating the title to land. Both ''Halsbury's'' and Spencer Bower (see below) describe these three estoppels collectively as
estoppels by representation. More simply, one party must say or do something and see the other party rely on what is said or done to change behavior. All reliance-based estoppels require the victimised party to show both
inducement and
detrimental reliance, i.e.: • there must be evidence to show that the representor actually intended the victim to act on the representation or promise, or • the victim must satisfy the court that it was reasonable for him or her to act on the relevant representation or promise, and • what the victim did must either have been reasonable, or • the victim did what the representor intended, and • the victim would suffer a loss or
detriment if the representor was allowed to deny what was said or done—detriment is measured at the time when the representor proposes to deny the representation or withdraw the promise, not at the time when either was made, and • in all the circumstances, the behavior of the representor is such that it would be "unconscionable" to allow him or her to resile. Simply put, promissory estoppel has four necessary elements which the plaintiff must prove: • there was a promise • that was reasonably relied upon • resulting in legal detriment to the promisee • justice requires enforcement of the promise Estoppel by representation of fact and promissory estoppel are mutually exclusive: the former is based on a representation of existing fact (or of mixed fact and law), while the latter is based on a promise not to enforce some pre-existing right (i.e. it expresses an intention as to the future). A promissory estoppel operates only between parties who, at the time of the representation, were in an existing relationship, while this is not a requirement for estoppel by representation of fact. The test for
unconscionability in the English and Australian courts takes many factors into account, including the behavior, state of mind and circumstances of the parties. Generally, the following eight factors are determinative: • how the promise/representation and reliance upon it were induced; • the content of the promise/representation; • the relative knowledge of the parties; • the parties' relative interest in the relevant activities in reliance; • the nature and context of the parties' relationship; • the parties' relative strength of position; • the history of the parties' relationship; and • the steps, if any, taken by the promisor/representor to ensure he has not caused preventable harm. But in ''
Cobbe v Yeoman's Row'', Lord Scott of Foscote stated the following:
England and Wales Estoppel by representation of fact In English law,
estoppel by representation of fact is a term coined by Spencer Bower. This species of estoppel is also referred to as "common law estoppel by representation" in ''
Halsbury's Laws of England'', vol 16(2), 2003 reissue. Spencer Bower defines estoppel by representation of fact as follows: A second definition comes from Sean Wilken and
Theresa Villiers: A representation can be made by words or conduct. Although the representation must be clear and unambiguous, a representation can be inferred from silence where there is a duty to speak or from negligence where a duty of care has arisen. Under English law, estoppel by representation of fact usually acts as a defence, though it may act in support of a cause of action or counterclaim.
Equitable estoppel Under English and Australian legal systems,
estoppel in equity includes promissory and proprietary estoppels, described below. (Contrast with estoppel by representation, which is a claim under the English system of law.)
Proprietary estoppel In English law,
proprietary estoppel is distinct from promissory estoppel. Proprietary estoppel is not a concept in American law, but a similar result is often reached under the general doctrine of promissory estoppel. Traditionally, proprietary estoppel arose in relation to rights to use the land of the owner, and possibly in connection with disputed transfers of ownership. Although proprietary estoppel was only traditionally available in disputes affecting title to
real property, it has now gained limited acceptance in other areas of law. Proprietary estoppel is closely related to the doctrine of constructive trust. • the claimant • made a mistake as to his legal rights (typically because the actual owner attempted to convey the property, but the transfer is invalid or ineffective for some reason); • did some act of reliance; • the defendant • knows of the existence of a legal right which he (the defendant) possesses, and which is inconsistent with the right claimed by the claimant; • knows of the claimant's mistaken belief; and • encouraged the claimant in his act of reliance.
Example: A father promised a house to his son who took possession and spent a large sum of money improving the property, but the father never actually transferred the house to the son. Upon the father's death, the son claimed to be the equitable owner. The court found the testamentary trustees (as representatives of the deceased father's estate) were
estopped from denying the son's proprietary interest, and ordered them to convey the land to the son.
Promissory estoppel The
doctrine of
promissory estoppel prevents one party from withdrawing a promise made to a second party if the latter has reasonably relied on that promise. A promise made without
consideration is generally not enforceable. It is known as a bare or gratuitous promise. Thus, if a car salesman promises a potential buyer not to sell a certain car over the weekend, but does so, the promise cannot be enforced. But should the car salesman accept from the potential buyer even one penny in consideration for the promise, the promise will be enforceable in court by the potential buyer. Estoppel extends the court's purview even to cases where there is no consideration, though it is generally not a 'sword': not a basis on which to initiate a lawsuit. In English jurisprudence, the doctrine of promissory estoppel was first developed in
Hughes v Metropolitan Railway Co [1877] but was lost for some time until it was resurrected by
Judge Denning in the controversial case of
Central London Property Trust Ltd v High Trees House Ltd. Promissory estoppel requires: • an unequivocal promise by words or conduct • evidence that there is a change in position of the promisee as a result of the promise (reliance but
not necessarily to their detriment) • inequity if the promisor were to go back on the promise In general, estoppel is "a shield not a sword"—it cannot be used as the basis of an action on its own. It also does not extinguish rights. In
High Trees the plaintiff company was able to restore payment of full rent from early 1945, and could have restored the full rent at any time after the initial promise was made provided a suitable period of notice had been given. In this case, the estoppel was applied to a "negative promise", that is, one where a party promises not to enforce full rights. Estoppel is an equitable (as opposed to common law) construct and its application is therefore discretionary. In the case of
D & C Builders v Rees the courts refused to recognise a promise to accept a part payment of £300 on a debt of £482 on the basis that it was extracted by duress. In
Combe v Combe Denning elaborated on the equitable nature of estoppel by refusing to allow its use as a "sword" by an ex-wife to extract funds from the destitute husband. The general rule is that when one party agrees to accept a lesser sum in full payment of a debt, the debtor has given no consideration, and so the creditor is still entitled to claim the debt in its entirety. This is not the case if the debtor offers payment at an earlier date than was previously agreed, because the benefit to the creditor of receiving payment early can be thought of as consideration for the promise to waive the rest of the debt. This is the rule formulated in ''
Pinnel's Case, and affirmed in Foakes v Beer''. The decision of the Court of Appeal in
Collier v P & MJ Wright (Holdings) Ltd suggests that the doctrine of promissory estoppel can now operate to mitigate the harshness of this common law rule. Moreover,
Lady Justice Arden held that allowing a creditor to renege on his promise to forebear seeking the balance of a debt in return for part payment would be, in and of itself, inequitable. Therefore, the only reliance that the promisee must demonstrate is the actual making of the part payment. This approach has been criticised as doing violence to the principle set down in
Hughes and the extent to which the other members of the Court, namely
Lord Justice Longmore, agreed with it is uncertain.
United States Equitable estoppel Equitable estoppel is the American counterpart to estoppel by representation. Its elements are summarized as: • Facts misrepresented or concealed • Knowledge of true facts • Fraudulent intent • Inducement and reliance • Injury to complainant • Clear, concise, unequivocal proof of actus (not by implication) For example, in
Aspex Eyewear v. Clariti Eyewear, eyeglass frame maker Aspex sued competitor Clariti for patent infringement. Aspex waited three years, without responding to a request that it list the infringed patent claims, before asserting its patent in litigation. During this period, Clariti expanded its marketing and sales of the products. The
Federal Circuit found that Aspex misled Clariti to believe it would not enforce its patent, and thus estopped Aspex from proceeding with the suit. Another example of equitable estoppel is the case of
Sakharam Ganesh Pandit, an Indian emigrant and lawyer who was granted American citizenship in 1914 due to his designation as "white". Subsequently, Pandit bought property, was admitted to the California bar, married a white woman, and renounced his rights to property and inheritance in
British India. Following the Supreme Court case
United States v. Thind, which found that Indians were considered non-white, and in which Pandit represented the applicant,
Bhagat Singh Thind, the US government moved to strip Pandit of his "illegally procured" citizenship. Pandit successfully challenged the
denaturalization, arguing that under equitable estoppel, he would be unjustly harmed by losing his citizenship, as it would cause him to become stateless, lose his profession as a lawyer, and make his marriage illegal. In
U.S. v. Pandit, the
U.S. Court of Appeals for the Ninth Circuit upheld Pandit's citizenship, ending denaturalization processes against him and other Indian-Americans.
Promissory estoppel In many jurisdictions of the United States,
promissory estoppel is an alternative to
consideration as a basis for enforcing a promise. It is also sometimes called
detrimental reliance. The
American Law Institute in 1932 included the principle of estoppel into § 90 of the
Restatement of Contracts, stating: The Restatement (Second) removed the requirement that the detriment be "substantial". However: Suppose that B goes to a store and sees a sign that the price of a radio is $10. B tells the shopkeeper that he will get the money and come back later that day to purchase it; there is no discussion of price. The shopkeeper says that when B returns, he will welcome B as a customer—unless he sells all three of his radios first. Hearing this, B goes and sells his watch for $10 (it was really worth $15, but since B wanted the money right away, he chose not to wait for the best price). When B returns, the sign says $11, and the owner tells B that he has raised the price. In equity, can it be argued that the shopkeeper is estopped by conduct? B relied upon the implied representation that a radio would be sold for $10 when he returned with the money; B has sold his watch at a discount, to his detriment. (This element would be absent if B sold the watch at the market price.) But the shopkeeper did not guarantee to hold one of the radios against the possibility of B's return nor did they agree a fixed price. In some common-law jurisdictions, a promise by the shopkeeper to hold a specific radio would create a binding contract, even if B had to go for the money. A
promise to pay the owner in the future is good consideration if it is made in exchange for a promise to sell a specific radio (one from three is probably sufficiently specific): one promise in exchange for a second promise creates equal value. So the shopkeeper's actual words and knowledge are critical to deciding whether either a contract or an estoppel arises. The drafters of the Second Restatement debated how to calculate the amount of damages flowing from a promissory estoppel, using the following example: a young man's uncle promises to give him $1,000 to buy a car. The young man buys a car for $500, but the uncle refuses to pay any money. Is the young man entitled to $1,000 (the amount promised), or merely $500 (the amount he actually lost)? The Restatement states that "The remedy granted for breach may be limited as justice requires", leaving quantification to the discretion of the court. == Other estoppels ==