Misrepresentation in Contract Law

Commercial Law

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Answer-1
Issue
Whether the promise made by N to reduce the rent is enforceable or he can enforce P to
give him full rent as well as arrears?
Rule
When a party makes a promise based on the already existing contractual relationship
between parties, then the person is bound by the terms of the promise due to the principle
of promissory estoppel (Gan 2015, p.55). This is equitable estoppel which protects the rights
of the promisee by binding the promisor to his/her promise. The aim of this principle is to
ensure that a person did not prevent on his/her promise which would be inequitable or
unjust for the promisee for a promise which is made without consideration. The application
of this principle can be understood by evaluation of the judgement given by Denning J inCentral London Property Trust v High Trees House Ltd [1947] 1 KB 130. In this case, the
plaintiff (London Central Property Trust) lent its property to the defendant (High Trees). The
defendant told the plaintiff that the flats are not occupied during the period of World War II
due to which the plaintiff agreed to reduce the rent of the property (Hudson 2016). After
the war, the flats were occupied, and the plaintiff demanded full rent from the defendant as
well as arrears.
Denning J established promissory estoppel in this case by providing that although
consideration is not present, but the promise is enforceable. He further provided that the
plaintiff can demand full rent; however, it cannot recover arrears because there was
evidence that the rent was reduced due to World War II which was ended (Barker 2014).
Specific elements were established in this case which is necessary to be present to apply the
principle of promissory estoppel. The court held in
Legione v Hateley (1983) 57 ALJR 292
that the parties between which a promise is made must be in a pre-contractual relationship.
It was held by the court in
D and C Builders Ltd v Rees [1966] 2 QB 617 that it must be
inequitable in the given scenario to let the promisor go back on the promise. Lastly, it was
held in the judgement of
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 that
the promise must result in altering the position of the promisee due to reliance on the

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promise and the promisee must suffer a material disadvantage which makes it impossible
for the promisee to resume the previous position in the contract.
Application
Since P was struggling financially, he asked N to reduce the rent of his property. N also had
vacant properties, and he did not want to lose P due to which he agreed to reduce the rent.
Later, when he was struggling financially, he demanded full rent from P as well as arrears. P
can rely on promissory estoppel to stop N from going back on his promise as discussed inCentral London Property Trust v High Trees House Ltd. The elements of promissory
elements are present. N and P were in a pre-contractual relationship (
Legione v Hateley). It
would be inequitable for the court to let N go back on his promise because P is still facing
financial problems (
D and C Builders Ltd v Rees). Lastly, the position of P was altered by the
promise, and it would be impossible for him to go back to the original position because his
financial condition is still not improved (
Waltons Stores (Interstate) Ltd v Maher). N reduced
rent because P was facing financial problems and P’s business has still not improved; thus, N
cannot enforce him to pay full rent (
Central London Property Trust v High Trees House Ltd).
Conclusion
Based on the above observations, P can make legal arguments based on the principle of
promissory estoppel to settle this case. The court is likely to provide judgement in favour of
P and reject N’s demands based on the principle of promissory estoppel because all the
elements are present.