Issue of Promissory Estoppel in the Doctrine of Consideration

In this essay I will discuss how the doctrine of consideration is too firmly fixed to be conquered by promissory estoppel. The doctrine of cconsideration has been a necessary component in contract law for the last number of years. Without its presence within a case, agreement or settlement it will be deemed not legally enforceable. Consideration is to contact law as Elvis is to rock and roll: the King”.[1]Over the years many individuals have brought cases to court on the basis of using promissory estoppel as a tool to attack the defendant. This essay discusses how promissory estoppel can only be used to protect the appellant and not as a form of attack.

The general role of the doctrine of consideration is to enforce promises that have been made. “In which a promise was made which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made and which was in fact so acted on”[2]. The purpose of consideration is as follow “the law feels that someone who has provided consideration for a promise is more deserving of relief than one who has not.”[3]One may even go as far to say that the doctrine is a detrimental reliance. The doctrine has been heavily criticised in the past by many judges and legal experts. It’s been described as too rigid and unnecessary. Russel LJ stated “ the courts nowadays should be more ready to find its existence so as to reflect the intention of the parties to the contract where the bargaining powers are not unequal and where the finding of consideration reflects the intention of the parties.”[4]

The main problem with consideration is its inability to focus directly on rational interpretation of the intention of the parties rather than on the rules of consideration. therefore, many existing obligations cannot be legally enforced. In the famous case of “Central London Property Ltd V High Trees”[5] the concept of promissory estoppel and consideration created a lot of legal uncertainty. Originally promissory estoppel was based on the interchange of promises, however in this case it was grounded on the dependence we create in others.

Promissory estoppel goes hand in hand with the doctrine of consideration as it allows the courts to impose promises that have been depended on even if the promise was not part of an exchange. Lord denning stated that “the doctrine of consideration is too firmly fixed to be overthrown by a side wind[6]” indicates that it is the core method in enforcing the creation of contracts. Promissory estoppel is viewed by some as complementary to consideration as it allows promises that have been trusted to be applied without consideration. However, estoppel has a limited role in as it cannot guarantee the enforcement of all promises unsupported by the doctrine of consideration. Estoppel cannot be used offensively e.g. as a sword, if promissory estoppel is to coincide with consideration. There have been times that the use of estoppel has led to irreconcilability with binding laws of consideration. Occurrences like this highlight how estoppel can possibly contradict the doctrine consideration altogether.

In the case of “D&C Builders V Rees”[7] the law regarding promissory estoppel could not be used offensively reiterating its range bound capacity in enforcing such promises. The defendant’s argument was that the plaintiff was “estopped from regening on a promise to accept a smaller sum in full satisfaction of a larger debt.” [8]Promissory estoppel could only be used in defence to stop the promisor from enforcing his original rights. This ties back to the case of “Combe V Combe^[9]” where Denning held that could not create a cause of action where there was none.The law on the doctrine of promissory estoppel is arguably still an accurate representation of law. Lord Denning’s views expressed in “D & C Builders Ltd v Rees”[10] is one of fairness and justice. He recognised the importance for all parties to be able to rely on the law of contract and the doctrine of promissory estoppel when conducting a business. The protection offered by the doctrine and the law in general, ensures that each party’s considerations, or promises, are respected and fully binding. It would be deemed as unfair if parties to the contract were allowed to escape liability or fail to honour their promises. There would be no certainty and no guarantee that each party will provide consideration for the other party’s act.

In the case of “Central London Prop Ltd V High Trees” [11] the defendant argued that the lower rate of £1250 was owing to the 99 year lease and that the plaintiff were estopped from demanding rent at a higher rate. The results of this case essential created the idea of promissory estoppel. Denning held that the plaintiff would need to pay the full rent from when the flats became fully occupied in 1945. If central London had tried to claim the full rent from 1940 the court would have held in favour of the plaintiff as the law states that if a particular party leads the opposing party to believe they are not going to enforce their legal rights or obligations, consequently the courts will prevent them from doing do in the future.

In the case of “Combe V Combe” [12]the wife sued her ex-husband for arrears. This cases became quite prevalent because of its outcome. This case occurred only four years after the well-known case of “Central London Property Trust LD v High Trees House LD”[13]. This case held that a party could not revisit a promise previously made. Therefore, in the case of Combe the court had to decide if they would disregard the husband’s original promises to pay with wife the agreed sum. The main question was if the wife had granted consideration in return for the promise made by the husband or if the wife could claim the money that husband had promised to pay even though she had not claimed money in many years.

The court decided that the wife would be unable to claim the money that the husband had promised to pay as she had not given consideration. The court held that no consideration was given by the wife as she hadn’t applied for the maintenance that the husband had promised. The husband did not demand the wife to stop taking the maintenance payment and therefore the wife could not receive the money in court. Lord Denning decided that she did not give consideration , as there is no evidence the husband ever requested the wife not to go to court. Even if she had sworn not to do so, there would still be no cause of action as one is unable to strike out a statutory right. In the result, her case was unsuccessful.

Denning stated how the principles in high trees “only prevents a party from relying on his strict legal rights when it would be unjust to allow him to do so, having regard to the dealings which have taken place between the parties[14]”.

This case highlighted how promissory estoppel could only be used as a shield or in other words to protect a party. It can only be used in situations to prevent a party on depending on her legal rights to enforce a promise. The wife in this case tried to use it as a sword in order to force and extort money out of her husband as a result of the promises he had made in the past. There the claim that doctrine of consideration is too firmly fixed to be conquered by promissory estoppel is true, as promises must be supported by consideration in order to be allowed.

In the case of “Revenue Commissioners v Moroney [1972]” [15]Kenny J held that it would be adequate if it were intended that a contract would come into existence between the parties in the future. On appeal the Supreme Court did not find it necessary to address the issue despite the fact that the decision may have been unlawful. The comment on promissory estoppel was obiter and it runs counter to the then-modern authority, which differed from the High Trees decision, and why it was cautious to return to the High Trees position. Kenny J’s main holding, with which Walsh J in the Supreme Court agreed did not concern promissory estoppel: this was that there could be no basis for the Revenue’s claim and thus no liability to estate duty as the father, had he been alive at that moment, would not have succeeded in a hypothetical action against the sons for payment of the purchase price. However, Kenny J, noting that counsel had not engaged with this point, went on to note that he believed the sons would have succeeded in the hypothetical action on the basis of promissory estoppel.

The case of “Kenny v Kelly”[16]y is a very prevalent case in terms of promissory estoppel. The plaintiff in the case wished to defer her course in University College Dublin until the following year. There was a misunderstanding and the plaintiff was informed to complete her deferral in writing. The plaintiff later discovered that her request to defer had been rejected. Justice Barron held that UCD had made a promise to the plaintiff that she would be allowed to register the following year. As required by the High Trees decision, this was “a promise intended to be binding, intended to be acted upon and in fact acted upon[17].”

The vital condition of detriment was recognized, as Barron J explained, on the basis that the plaintiff had gave up her opportunity to accept her place in UCD in 1986 and, if denied her place in 1987, would also lose her deposit. Moreover, given that the deposit was already paid to UCD, the plaintiff and the university were already in an existing contractual agreement. The main factor of this case that creates a sense on uneasiness among legal experts is the fact that Barron used promissory estoppel as a cause of action. This allowed the plaintiff in question to enforce a promise that she would be given a place in UCD the following year. The result of this case may be justified on the grounds of consideration for the grant of deferral “giving it contractual status[18]“.

Promissory estoppel is extremely broad, as a result of this it threatens to undermine the doctrine of consideration. Therefore, over the years many rules have evolved to restrict the range of its application. The most prominent rule is the facts that promissory estoppel cannot be used as a sword only a shield. “Promissory estoppel can be relied on only if it would be inequitable for the promisor to renege, and only to access such remedy as justice requires, rather than the expectation”[19]

Promissory Estoppel is an expansion doctrine to prevent person from retrieving his right that “he already promises to waive or let go, or a failure to make a true representation or failure to tell the other party when the changes happen that influence his ability to fulfil his promise fully or partially”[20]. Promissory estoppel has the ability to enforce promises which result in reasonable reliable to occur. The main rule regarding promissory estoppel is that it cannot not be enforce against the promisor.

Bibliography

1. Gordon, ‘A dialogue about the doctrine of consideration’ [1990] (75) Cornell law review 987
2. Central London Property Trust Limited V High Trees House Limited [1946] 1 135 (High Court) (Denning LJ)
3. Mairead Enright, Principles of Irish contract law (1st edn, Clarus Press LTD 2007) 76
4. Andrew Burrows, A casebook on contract (6th edn, Bloomsbury 2018) 11
5. Combe v combe [1951] 1 219 (court of appeal) (Denning LJ)
6. D & C Builders Ltd v Rees [1965] EWCA Civ 3
7. Revenue Commissioners v Moroney [1972] IR 372
8. Kenny v Kelly [1988] IR 457
9. Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130
10. MINDY chen–wishart*, ‘IN DEFENCE OF CONSIDERATION’ [.] 209(,) Oxford University Commonwealth Law Journal 230
11. Ester Liole, ‘Promissory Estoppel Serves as a Shield and a Swords Guarding Unconscionable’ (Academia,) <https://www.academia.edu/1086989/Promissory_Estoppel_Serves_as_a_Shield_and_a_Swords_Guarding_Unconscionable> accessed 13 November 2018

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[1] Gordon, ‘A dialogue about the doctrine of consideration’ [1990] (75) Cornell law review 987

[2] Central London Property Trust Limited V High Trees House Limited [1946] 1 135 (High Court) (Denning LJ)

[3] Mairead Enright, Principles of Irish contract law (1st edn, Clarus Press LTD 2007) 76

[4] Andrew Burrows, A casebook on contract (6th edn, Bloomsbury 2018) 114

[5] Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130

[6] Combe v combe [1951] 1 219 (court of appeal) (Denning LJ)

[7] D & C Builders Ltd v Rees [1965] EWCA Civ 3

[8] Mairead Enright, Principles of Irish contract law (1st edn, Clarus Press LTD 2007) 98

[9] Combe v combe [1951] 1 219 (court of appeal) (Denning LJ)

[10] D & C Builders Ltd v Rees [1965] EWCA 

[11] Central London Property Trust Ltd v High Trees {1947} KB 130

[12] Combe v combe [1951] 1 219 (court of appeal) (Denning LJ)

[13] Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130

[14] Combe v combe [1951] 1 219 (court of appeal) (Denning LJ)

[15] Revenue Commissioners v Moroney [1972] IR 372

[16] Kenny v Kelly [1988] IR 457

[17] Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130

[18] Kenny v Kelly [1988] IR 457

[19] MINDY chen–wishart*, ‘IN DEFENCE OF CONSIDERATION’ [.] 209(,) Oxford University Commonwealth Law Journal 230

[20] Ester Liole, ‘Promissory Estoppel Serves as a Shield and a Swords Guarding Unconscionable’ (Academia,) <https://www.academia.edu/1086989/Promissory_Estoppel_Serves_as_a_Shield_and_a_Swords_Guarding_Unconscionable> accessed 13 November 2018