Promissory Estoppel

Topics: Contract, Law, Common law Pages: 4 (2689 words) Published: October 28, 2014

Contracts are made to ensure reliability and effectiveness between the parties doing business. A contract is an agreement giving rise to obligations which are enforced or recognised by law. The obligations and the rights of the parties in an agreement are laid down undoubtedly in a contract. This is to ensure that the parties are aware of their duties and responsibilities of an agreement. There are three requirements, which need to be satisfied for a contract to be valid and those would be offer, acceptance and consideration but the doctrine of Promissory Estoppel (PE) seems to overthrow some of the established rules of a contract. In regards to the two doctrines, this paper will look at how the doctrine of consideration and the doctrine of PE relate to each other and also if the current legal position is justifiable to enforce a creditor’s promise to accept less. Let’s take a look at the definition of consideration first. According to Justice Lush in Currie v Misa; “A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered, or undertaken by the other.” So to describe it in simpler terms, a consideration “is the price for which the promise of the other party is bought” as mentioned by Pollock in Dunlop v Selfridge. But this already seems to give scope for some arguments as it seems to “coincide” with the argument of Lord Somervell in Chappell v Nestle where he suggests that “even a peppercorn does not cease to be good consideration even if it may be thrown away”. This suggests that there is no clear definition of the price for a promise but then one could argue that one of the criteria for consideration is that it must be sufficient but need not be adequate. In other words, if an agreement is freely reached between the parties, the inadequacy of the price is immaterial to the existence of a binding contract. So,...

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Jill Poole, Textbook on Contract Law (11th Edition, Oxford University Press, 2012)
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Adam Kramer, “The many Doctrines of PE” (2002), Volume 37, Student Law Review 17
Phuong N Pham, Waning of Promissory Estoppel, Cornell Law Review, Vol
Orit Gan, Journal of Gender, Race & Justice, Vol. 16, Issue 1 (Winter 2013), pp. 49
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Electronic Sources:
‘Contract Law’ http://www.cilex.org.uk/pdf/Unit%202%20-%20Contract%20Law%20-%20with%20logo.pdf (02.03.2014)
‘Promissory Estoppel’ http://www.ejcl.org/103/art103-6.pdf (06.03.2014)
Table of Cases:
Chappell & co. Ltd v Nestlé Co. Ltd (1960) AC 87
Eastwood v Kenyon (1840) 11 A & E 438
Tweddle v Atkinson (1861) 1 B & S 393
Stilk v Myrick (1809) “ Camp 317.
Currie v Misa (1874-75) LR 10 Ex 153
Dunlop v Selfridge (1915) AC 847
D&C Builders Ltd v Rees (1966) 2 QB 617
Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 2 All ER 657
Hughes v Metropolitan Railway Co. (1877) 2 App Cas 439
Central London Property Trust Ltd v High Trees House Ltd (1947) KB 130
Combe v Combe (1951) 2 KB 215
Walton Stores (Interstate) Ltd v Maher (1988) 76 ALR 513
Steyn J. Z., “Contract Law: Fulfilling the Reasonable Expectations of Honest Men” (1997) 113 LQR 433
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