1

CQUniversity Division of Higher Education School of Business and Law

LAWS11062 Contract Law B Topic 3 Estoppel Term 2, 2014 Anthony Marinac

© CQUniversity 2014

2

Table of Contents

1.0 Introduction ...................................................................................... 3

1.1 Objectives ......................................................................................... 4

1.2 Prescribed Reading .......................................................................... 5

1.3 Key Terms ........................................................................................ 5

2.0 Promissory estoppel .......................................................................... 5

2.1 Remember Pinnel’s Case?............................................................... 8

2.2 Hughes v Metropolitan Railway .................................................... 9

2.3 Birmingham & District Land Co v London and North Western

Railway Co ........................................................................................... 11

2.4 High Trees ..................................................................................... 12

2.5 Waltons v Maher ........................................................................... 14

2.6 Review questions ........................................................................... 16

3.0 Elements of promissory estoppel .................................................... 18

3.1 There must be a representation .................................................... 20

3.2 The representor must induce reliance upon the representation .. 20

3.3 The representee must rely upon the representation ..................... 21

3.4 The representor must know that the representee is relying upon

the representation ............................................................................... 21

3.5 The representee must suffer some detriment if the representation

is departed from .................................................................................. 22

3.6 The remedy .................................................................................... 23

3.7 Review questions ........................................................................... 23

4.0 Review ............................................................................................. 25

4.1 Concluding Summary .................................................................... 25

5.0 Tutorial Problems ........................................................................... 26

6.0 Debrief ............................................................................................ 26

3

Topic 3: Estoppel

1.0 Introduction

In the first two weeks of this course, we have examined

circumstances in which either one party or both parties come to

the contract formation with a misunderstanding; either as a

result of a mistake or as a result of either misrepresentation, or

misleading and deceptive conduct. This week, we continue that

theme, with one slight difference.

For misrepresentation or mistake to apply, there must actually

be a contract at the end of the day. Misrepresentation and

mistake affect whether and how parties will be able to rely upon

rights and obligations established under contracts. Neither

misrepresentation nor mistake will be of any assistance to an

innocent party in circumstances where either there is no

contract at all, or where the misrepresentation or mistake

relates to a promise which is given gratuitously, or which is

nudum pactum.

However under some circumstances, it may be that one party

misleads another party in a way that causes grave harm to that

second, misled party. What if, for instance, one party misleads

the other into thinking there is no need for a contract whereas

in fact a contract would be necessary to protect the rights of

both parties? Isn’t it the case that under some circumstances,

there may be promises made in the context of a contractual

relationship, but which are not part of the contract itself; and

4

yet might it not be the case that the law would be acting

properly to enforce those promises anyway?

The law of estoppel has this effect. It comes to us from the law

of equity, which by now you know arose from the law of

conscience; it tends to ask simply “what is the right thing to

do?” This week, we will look at the rules of the estoppel as they

apply in Australia.

Previously, estoppel was not given a week to itself in Contracts

B. However it is a difficult concept and many students struggle

to understand it. Our approach will be to begin by looking at

the elements of the estoppel briefly, begin tracing its

development through a series of cases, before returning to those

elements at the end of these notes. The elements may not make

a great deal of sense on first reading, but it is important that

you’re exposed to them so that you know what you’re looking

for when you read the rest of the material.

1.1 Objectives

After studying Topic 3 you should be able to demonstrate:

An understanding of the development of the laws relating

to reliance, through a series of cases commencing with

Pinnel’s Case and leading to Waltons v Maher;

An understanding that estoppel is a concept arising from

equity law, rather than from the common law or from

statute; and

An understanding and application of the five elements of

estoppel established in Waltons v Maher.

5

1.2 Prescribed Reading

Lindy Willmott, Sharon Christensen, Des Butler and Bill

Dixon, Contract Law (Australia Oxford University Press,

4th ed, 2013) Ch 7.

Birmingham & District Land Co v London & North

Western Railway Co (1888) 40 Ch D 268

Central London Property Trust v High Trees House

[1947] KB 130

Hughes v Metropolitan Railway (1877) 2 App Cas 439

Pinnel’s Case (1602) 5 Co Rep 117a

Waltons Stores (Interstate) v Maher (1988) 164 CLR 387

1.3 Key Terms

Estoppel: A general category of legal circumstances in which

people are prevented from departing from statements which

they, or the courts, have previously made.

Promissory Estoppel: A form of estoppel in which a party

which has made a representation in the form of a promise, is

prevented from resiling from that representation.

Representation: A statement made by one party, usually in

the course of pre-contractual discussions, which the

representing party claims as true.

2.0 Promissory estoppel

6

The word ‘estoppel’ comes from the old French word ‘estoupail’,

meaning plug or stopper. It is used as a general legal term for a

number of legal principles in which one party is “estopped” (or

just “stopped”) from doing something they may wish to do.

There are three general types:

Estoppel by record, which stops a party from

attempting to re-litigate a matter which has already been

decided by the courts;

Common-law estoppel, which is essentially a rule of

evidence preventing a party from leading their opponent

to understand that one set of facts existed, then instead

presenting evidence of an alternative state of facts;

Equitable, or promissory estoppel, which enforces

gratuitous promises. Our attention, in Contracts B, will be

almost entirely upon equitable estoppel.

686470

7

So how does equitable estoppel work? There are in essence the

five elements, which we will briefly consider now and then

return to in more detail at the end of these notes:

First, there must be a representation. Usually the

representation will be by words, although it is not strictly

necessary that this be so. You will remember, of course,

that a representation (in the contract law sense) is a pre-

contractual statement which does not actually become part

of the contract.

Second, the person making the representation (the

representor) must induce the other person to rely upon the

representation.

Third the person to whom the representation was made

(the representee) must actually rely upon the

representation.

Fourth, the representor must know that the representee is

relying upon the representation.

Finally, the representee’s reliance upon the representation

must result in them incurring some detriment.

What happens in circumstances where all five elements occur?

Generally speaking, the approach of the law will be to estop the

representor from resiling from their representation. In other

words, the dispute between the parties will be sorted out as

though the representation made by the representor was true.

The usual effect of this presumption will be that the representor

will be required to compensate the representee for any losses

incurred as a result of their reliance upon the representation;

Alternatively, the representor may be required to take action to

actually bring about whatever circumstances formed the

representation.

8

Okay, I recognize that that was a lot to take in, in just a few

paragraphs! It will make much more sense at the end of this

lecture; however it is important that you have something of an

overview of this area of law so that the cases we’re about to

discuss makes sense. Let’s begin!

14692378

2.1 Remember Pinnel’s Case?

The jumping-off point for our exploration of estoppel is a case

we’ve already come across, way back in the dim dark past that

was Contract A: Pinnel’s Case (1602) 5 Co Rep 117a. For those

of you who have shut Contracts A away into a small, quiet

corner of your mind, let me give you a quick reminder: Pinnel’s

Case stands as authority for the proposition that a smaller sum

cannot be good consideration for the discharge of a debt.

In other words, if you owe me $1000, then you can’t make a

subsequent contract with me where you pay me $800, and in

return I forgive the $1000 debt.

When I introduced this case to you in Contract A, many

students expressed concern about whether Pinnel’s Case was

really fair. After all, if I want to forgive you $200 worth of the

9

debt, why shouldn’t I be able to? The answer to this, of course,

is that the $200 forgiven would essentially be a gift – and you

can’t sue for a gift, because you have not given consideration.

Despite this neat piece of logic, many students quite correctly

felt that it would have been unfair of me to accept the $800 as

full discharge of the debt, but then subsequently to go after the

debtor for the remaining $200, on the basis that the $800

contract (and therefore forgiveness of the debt) was not valid,

on the basis of the rule in Pinnel’s Case. Those students felt

that, having forgiven the debt, I should be bound to that

forgiveness.

That’s a very strong argument. Pretty clearly, Pinnel’s Case

could be used to work injustice. A debtor might pretend to

accept part payment of a debt, all the while intending to rely on

Pinnel’s Case and go after the balance. You can see how equity,

as the law of conscience, might have found this a little difficult

to bear. The court first began to do something about it in a case

called Hughes v Metropolitan Railway.

2.2 Hughes v Metropolitan Railway

In Hughes v Metropolitan Railway (1877) 2 App Cas 439,

Hughes was the owner of a house on Euston Road in London

(yes, before anyone asks, the Euston Road which is one of the

light blue properties on an old-school monopoly board). He

leased the property to a tenant, who then sublet the property to

the Metropolitan Railway Company.

One of the conditions of the lease (which was a 99 year lease)

was that the tenants must complete repairs and maintenance

on the building within six months of being informed by the

owners of the need for such work. On this occasion, Hughes

informed the Metropolitan Railway Company of the need for

10

repairs on the 22nd of October, 1874. In the ordinary course of

events, this would have required the Metropolitan Railway

Company to complete the repairs by the 22nd of April, 1875.

In this case, however, the Metropolitan Railway Company

responded to the notice by offering to purchase the house

outright from Hughes. Naturally, if the company became the

owners of the property, they would no longer be under any

requirement to meet the April 22 deadline.

Negotiations between the two parties continued until

December, and then broke down. In the meanwhile, the

company had taken no steps to have the repairs and

maintenance undertaken; they now found that they had

insufficient time to do so. April 22 arrived, and the owners

sought a writ of ejectment (essentially evicting the tenant).

The matter went through several appeals and was ultimately

decided in the House of Lords. The leading judgment was given

by the Lord Chancellor, Lord Cairns, who found that the six

month period should be considered to have been suspended

during the period of negotiations, so that it was inequitable for

the owner now to rely upon the original deadline.

Can you see the relationship between this decision and the rule

Pinnel’s Case? Pinnel’s Case allows one party to lull the other

party into believing that they will not rely upon their full legal

entitlement (by, for instance, saying “even though you owe me

$1000, I won’t see you for it if you pay me $800); having lulled

the other party, Pinnel’s Case allows them to later insist upon

their full legal entitlement.

Hughes v Metropolitan Railway changed all that. In essence,

Lord Cairns promulgated a new rule which stated that if a party

acted in a way which led another party to believe that the first

11

party would not rely upon its full legal rights, then it would be

inequitable to allow them to later change their mind.

So, let’s go back to our example of a $1000 loan. If we apply the

new rule in Hughes v Metropolitan Railway to this situation,

then the reasoning goes like this: If I tell you that in return for

the payment of $800, I will not take action to recover the debt

of $1000, then I should be bound to that statement. You can

see that this is the opposite outcome to that in Pinnel’s Case.

As you can see, this was essentially a revolution in contract law,

overturning a precedent established over 250 years beforehand.

It showed that under some circumstances, equity would be

prepared to enforce representations made by one party to

another, even if those representations were not supported by

good consideration. But the story is far from finished. The next

case, another railways case, came just a decade later.

2.3 Birmingham & District Land Co v London and

North Western Railway Co

In Birmingham v North Western, a man by the name of

Boulton had a contract with the land company to develop

houses upon the land. The houses were to be completed within

a specified timeframe. While that contract was underway,

Boulton became aware that there was a proposal for a railway

which may affect the land subject to the contract. He therefore

directed the land company to suspend building while

negotiations were underway with the railway company. Perhaps

unwisely, this direction was not embodied in an amendment to

the contract. Eventually a deal was done, but one outstanding

question was whether the original completion date still applied

to the houses to be built upon the land. After all, the direction

12

to cease building had never been reflected in the contract. So

the terms of the contract remained as they were at the outset.

In the Court of Appeal, Bowen LJ applied Lord Cairns’ principle

in Hughes v Metropolitan Railway, and found that by directing

the land company to suspend building, Boulton had effectively

given them an undertaking that he would suspend the lapse of

time under the contract. The effect of this decision was to make

it clear that Hughes was not mearly one of those curious

exceptions which come along from time to time; rather, it was

now established within equity law that some representations

would be enforced by the court even if they were not

contractual in nature, if this is what equity demanded.

The next step in this series of cases is the really crucial one. It

came 50 years after the Birmingham case; it is usually regarded

as the basis for the modern law of equitable, or promissory,

estoppel.

2.4 High Trees

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

130 was another case about rents (anyone else noticing a

pattern here?). In this case, in 1937 the property trust rented a

block of flats to High Trees, who intended to let out the flats

and pay the trust from the rents. Unfortunately history shows

that two years later the Second World War broke out. As a

result of the war, High Trees found it very difficult to let out any

of the premises. They negotiated with the property trust, which

agreed to accept rent at half the original rate. This agreement

was reduced to writing but was not an amendment to the

original contract and was not separately supported by any

consideration by High Trees.

13

5313716

Following the end of the war, High Trees found it much easier

to secure tenants for the block of flats. That trust sought to

resume the collection of rent at the original rate (which seems

fair enough to me), but then they went one step further and

saw to collect arrears from the period when High Trees had

only been paying half the rent.

Denning J (later Lord Denning) drew on both Hughes and

Birmingham in his decision, but he developed the underlying

rationale. Denning J stated in effect that the property trust had

made a promise in circumstances which made it clear that

intended the promise to be legally binding. High Trees had

relied on this promise, and the property trust new high trees

would do so. On this basis, it would be inequitable to allow the

trust to resile from its promise.

You can see the development which Lord Denning contributed

to the state of the law. After this case, the rule was no longer

based upon some general notion of equity and fairness; rather,

14

there were now criteria to be applied to give more clarity as to

which noncontractual promises might be enforced.

Finally, this brings us to the classic Australian estoppel case, in

which the five elements of equitable estoppel were set out

definitively.

2.5 Waltons v Maher

In Waltons Stores (Interstate) v Maher (1988) 164 CLR 387,

the High Court went to some lengths to outline not only the

rules for equitable estoppel, but also the rationale in law for

those rules. In this case, Waltons proposed to purchase land for

its business. As part of the purchase, the seller agreed to knock

down an existing building and build in its place another

building, to Waltons’ specifications. Timing was an important

aspect of the operation; for the sellers to meet their obligations

under the contract, they could not afford any delays in the

transfer of the land. When time began to run short, they sought

reassurance that Waltons would complete the purchase as

scheduled. They received an indication that the approval would

“be forthcoming.”

On that basis, the sellers submitted their necessary

documentation and commenced the destruction of the old

building without waiting for Waltons to complete the purchase.

In the meanwhile, Waltons underwent a restructure. At this

stage it was not clear to Waltons whether it would be in their

interests to continue with the purchase; they therefore

instructed their solicitors to delay the completion of the sale.

Waltons did so despite knowing that the demolition of the old

building had already commenced.

Two months later, Waltons informed the seller that they did not

wish to proceed with the purchase. As you can imagine, by this

15

time the seller had invested great deal of money in attempting

to demolish and commence rebuilding according to the

schedule which Waltons had initially demanded.

As a matter of strict contract law, the seller had no recourse

against Waltons (other than perhaps the retention of any

deposit). After all, the contract for the sale of the land had

never been completed; the seller’s obligation to demolish the

old building and commence construction of the new one was

therefore not in response to any contractual obligation, but

rather it was in anticipation of such an obligation.

www.museumvictoria.com

In such circumstances, what should the court do? On the one

hand, it does seem unfair that the seller should suffer such

great financial consequences simply because Waltons changed

their mind; and yet on the other hand, if the law began to

impose legal obligations on representations which were not part

of a contract and were not supported by consideration, the

entire law of contract may collapse.

16

The High Court walked a fine line between these two opposite

poles. The majority judges began their logic with the notion of

unconscionability (which we will learn more about next week).

In essence, however, the concept of their ruling was that

promises made in the form of noncontractual representations

may be binding on the representor if it would be

unconscionable for the representor to go back on their word.

In other words, if the representor’s action in going against their

word was so contrary to the requirements of good conscience

that the court simply could not permit it, then equity would

intervene. The next question, of course, is how we might tell

whether it would be unconscionable for a representor to depart

from their representation. In order to make this clear, the court

set out the five elements listed at the outset of these topic notes.

Let’s now turn to those.

2.6 Review questions

Question 1

What point of law was established in Pinnel’s Case?

a) A contract for a debt must be in writing;

b) Payment of a lesser amount cannot be good consideration

for the discharge of a debt;

c) A party which has accepted part payment in full discharge

of a debt is estopped from commencing an action to

recover the rest of the debt;

d) Party payment of a debt is only sufficient if accompanied

by peppercorn consideration.

17

Answer: (b)

Question 2

Which of the following cases was the first substantial decision

addressing the reasoning in Pinnel’s Case?

a) Hughes v Metropolitan Railway

b) Central London Property Trust v High Trees House

c) Waltons Stores (Interstate) v Maher

d) Birmingham & District Land Co v London & North

Western Railway Co

Answer: (a)

Question 3

Estoppel, as a concept, was developed in:

a) Common law

b) Equity law

c) Statute law

d) Constitutional law

Answer: (b)

Question 4

A specifically Australian doctrine of estoppel was developed in:

a) Hughes v Metropolitan Railway

b) Central London Property Trust v High Trees House

c) Waltons Stores (Interstate) v Maher

d) Birmingham & District Land Co v London & North

Western Railway Co

Answer: (c)

18

3.0 Elements of promissory estoppel

To explore the elements of promissory estoppel, I would like to

utilize the facts given in a hypothetical case which will sound

remarkably similar to High Trees.

In our hypothetical case, a developer gave a long-term

lease over part of a shopping centre to a cinema operator.

The cinema operator was to pay $5000 per week in rent.

Shortly after the cinema operator commenced business,

the national economy took sudden downturn and

businesses such as cinemas, which were essentially

luxuries, found it hard to attract business. The cinema

operator would not be able to operate profitably and still

meet $5000 rent payments. The operator informed the

shopping centre owner of these circumstances.

The shopping centre owner was therefore left with

something of a dilemma: it could insist on the $5000 rent

payments but the result would be that the cinema would

be placed in receivership, would likely cease to operate,

and the shopping centre owner may receive no payments

at all. On the other hand, if they accepted a lower amount

of rent this may allow the cinema operator to keep

operating, until improvement in the economy allowed

them to perform well.

The shopping centre therefore wrote to the cinema

operator to state that they would accept a lower rent

payment until such time as they should decide otherwise.

The cinema operator gratefully agreed, and continue to

operate, paying the lower rent.

19

The changing rental arrangements were never reduced to

writing as an amendment to the contract, and the cinema

operator gave no consideration for the reduction in rent.

Two years later, improvement in the economy plus the

release of several massive blockbuster movies led to a

situation where the cinema was performing extremely

well. The shopping centre therefore wrote to the cinema

operator to state that they intended to resume the

collection of $5000 per week as stated in the original

contract. Furthermore, as the contract had never been

amended, they felt that they were now owed the unpaid

rent from the two year period where $5000 per week had

not been paid.

The cinema operator refused to pay and the shopping

centre sued for recovery of the allegedly outstanding rent.

Now, let’s put these circumstances to the criteria outlined in

Waltons v Maher.

13341369

20

3.1 There must be a representation

Is there a representation in the above case? That is, is there a

noncontractual promise? Fairly clearly, there is. In most

estoppel situations it is not terribly difficult to identify the

representation. In this case, the representation is the statement

by the shopping centre that it would accept less than $5000

rent for a period extending until it decided otherwise.

3.2 The representor must induce reliance upon the

representation

The second element is that the representor must induce

reliance upon the representation. In other words, the

representor must say or do something which leaves the other

party to believe that they can safely rely upon the

representation. In the case above, the representor (the

shopping centre) quite clearly indicated to the cinema operator

that the cinema operator was able to immediately start paying a

lower amount of rent. The shopping centre has therefore

induced reliance upon its representation.

Things might have been different if the representation had been

more ambiguous. For instance, if the managers of the shopping

centre and the cinema were having a discussion and the

shopping centre manager said, “We should help you out by

dropping your rent a bit”, would you still say that the manager

had intended for the cinema manager to rely on the

representation? Can you see that the second statement is more

speculative and less certain then the facts outlined above? The

cinema manager might well seize upon this statement and seek

to pay lower rent, but it would be difficult to maintain that this

statement on its own was intended to be a representation that

the cinema manager could rely upon.

21

3.3 The representee must rely upon the

representation

The third element of equitable estoppel is that the representee

must rely upon the representation. What this means, in effect,

is that the representee must change their behavior in some way

(either by taking an action or refraining from taking an action)

and their doing so must be a direct consequence of the

representation.

In the case above, it is fairly clear that the representee did rely

upon the representation. We are told that the cinema operator

gratefully accepted the offer to accept less rent; this cinema

operator therefore paid less rent as a direct result of the

representation that this would be acceptable to the shopping

centre manager.

What if the shopping centre had made a decision to accept a

lower rent but had not communicated this decision to the

cinema manager, but the cinema manager had commenced

underpaying the rent because he simply could not afford to pay

the $5000 per week? Can you see that in this situation, estoppel

would be no help at all because the representee (the cinema

manager) has no idea about the representation to be made by

the shopping centre managers. Even though the conduct in the

two situations is identical (that is, a lower amount of rent is

paid) in the second situation the lower payment is not made in

reliance upon the representation. In that case, the lower

payment is simply a failure to complete contractual obligations.

3.4 The representor must know that the

representee is relying upon the representation

22

The fourth criterion is that the representor must know that the

representee is relying upon the representation. In other words,

the representor must know that the other party has taken them

at their word; that their promise or statement has become the

basis of another party’s action. This makes sense. If the

representor has no idea that anyone has relied upon the

promise, then no harm would be done if they withdrew from

their promise. However if they knew that someone else had

taken action in consequence of their promise, it does not seem

unreasonable to hold them to that promise.

So how do we see this case? The shopping centre manager is

aware in two ways that the cinema manager is relying upon the

representation that the shopping centre will accept less rent:

first, we’re told that the cinema manager “gratefully accepted”

the offer. This suggests some communication of acceptance.

Second, it is quite clear from the facts that throughout the

period of economic downturn, the shopping centre accepted the

lower rent payments without objection. In the absence of any

alternative argument, it can be very strongly presumed that the

shopping centre management new that the lower rent payments

were being made in reliance upon the shopping centre’s

representation.

3.5 The representee must suffer some detriment if

the representation is departed from

The final element of equitable estoppel is that the representee

must suffer some detriment if the promise is departed from. In

other words, the representee must somehow be worse off in a

material way if the representor is allowed to break their

promise or depart from their statement.

23

In this case, it is not difficult to see the detriment. If the

shopping centre is held to their representation, the cinema will

not owe them any back pay; if the shopping centre is not held

to their representation, then the cinema will owe them a great

deal of money.

Again, this criterion makes a great deal of sense. If the

representee does not suffer any detriment, then it is difficult to

see how it could be unconscionable to withdraw from the

promise.

So, at the end of this process of reasoning, we can see that in

the example given above, all the elements of estoppel are met.

So what happens now?

3.6 The remedy

Because equitable estoppel is a creature of equity, the court has

a fair degree of flexibility to fashion an appropriate remedy. In

some circumstances, the appropriate remedy might be an

injunction to prevent the representor from taking certain

actions contrary to their promise. In other circumstances, some

form of compensation may be appropriate to restore the

representee to the position they might have held if the

representor had delivered upon their promise. As a general

rule, the remedy will be to refuse to allow the representor to

resile from their promise; the court will do what it can to

impose upon the parties the outcomes which would have

occurred if the representor had stuck to its promise; this has the

result of undoing the unconscionable effect of the broken

promise.

3.7 Review questions

24

Question 5

Which of the following is not an element of promissory estoppel

in Australia?

a) The representor must induce reliance upon the

representation

b) The representor must know that the representee is relying

upon the representation

c) The representee must rely upon the representation

d) The representee must give valuable consideration for the

representation

Answer: (d)

Question 6

Which of the following will remove the possibility of a case in

estoppel?

a) The representee believed in the representation and relied

upon it

b) The representee had already determined their course of

action, so they did not consider the representation

c) The representee considered the representation, but did not

change their course of action

d) The representee did not believe the representation to be

true

Answer: (b), (c) & (d)

Question 7

25

Which of the following is true in relation to remedies for

estoppel?

a) The court has a range of equitable remedies available

b) The court is limited to common law damages

c) The court must award damages in accordance with

statutory estoppel provisions

d) The court will endeavor to place the innocent party in the

position they would have been in, if the representor had

not resiled from their promise

Answer: (d)

4.0 Review

4.1 Concluding Summary

This week we have considered the doctrine of estoppel, which is

a doctrine of equity which emerged over time to protect

innocent parties form some of the harsher aspects of the

common law rules of contract. In particular, promissory

estoppel emerged to prevent parties from making

precontractual representations which, although they were never

formally part of the contract, nevertheless induced a party to

become a part of the contract. In essence, and stripping away

all of the legal overtones, the core message of estoppel is that it

is not acceptable for parties to simply lie to other parties in

order to secure their agreement to a contract.

In Australia, the doctrine is largely defined by the High Court’s

decision in Waltons v Maher, which set out the core five

26

considerations for the doctrine of promissory estoppel.

Together, these have the effect of providing innocent parties

with a remedy, without removing altogether the requirement

for parties to negotiate carefully, and to distinguish terms of

their contract from other precontractual representations.

5.0 Tutorial Problems

Problem 3

Anyone for pizza?

Please watch the short animated video at the following link, and

then consider the questions below.

https://www.youtube.com/watch?v=9-sLw41mMLo

Cast your mind back to what you learned about contract

formation. Did Felicity have, at any time, a contract with Ron?

Go through the five elements of promissory estoppel outlined in

Waltons v Maher. Are all five of the elements met?

Draft a letter, on Felicity’s behalf, to Ron. Explain how you

consider the issue should be resolved, and what you consider

the legal consequences will be for him if he does not agree.

[60 Minutes]

6.0 Debrief

27

After completing this topic you should recognize:

That the legal term estoppel is used in a number of ways,

but we are concerned only with promissory, or equitable

estoppel (which are two terms for the same concept);

That the doctrine of promissory estoppel developed as a

doctrine of equity law, and is therefore distinct from the

usual common law rules of contract law;

That the doctrine of promissory estoppel developed slowly,

through a series of cases over hundreds of years;

That the key case which unlocks promissory estoppel in

Australia is Waltons Stores (Interstate) v Maher;

That there are five elements for promissory estoppel in

Australia:

o First, there must be a representation.

o Second, the person making the representation (the

representor) must induce the other person to rely

upon the representation.

o Third the person to whom the representation was

made (the representee) must actually rely upon the

representation.

o Fourth, the representor must know that the

representee is relying upon the representation.

o Finally, the representee’s reliance upon the

representation must result in them incurring some

detriment.

That the courts have a range of equitable remedies

available once an estoppel is made out.