Contract Law | A Promissory Estopple

RUNNING HEAD: - Contract Law 0 | P a g e
CONTRACT LAWS
Module Number

Contract Law 1 | P a g e
Table of Contents
Part-A..........................................................................................................................................................1
Issues.......................................................................................................................................................1
Rule.........................................................................................................................................................1
Application..............................................................................................................................................1
Conclusion...............................................................................................................................................2
Part-B...........................................................................................................................................................3
Case discussions......................................................................................................................................3
(A)............................................................................................................................................................3
Issue........................................................................................................................................................3
Rule: -......................................................................................................................................................3
Application: -...........................................................................................................................................3
Conclusion...............................................................................................................................................4
(B)............................................................................................................................................................4
Issue........................................................................................................................................................4
Rule.........................................................................................................................................................4
Application..............................................................................................................................................5
Conclusion...............................................................................................................................................5
c)..............................................................................................................................................................5
Issue........................................................................................................................................................5
Rule.........................................................................................................................................................5
Application..............................................................................................................................................6
Conclusion...............................................................................................................................................7
References...................................................................................................................................................8
Case law...................................................................................................................................................9

Contract Law 2 | P a g e
Part-A
Issues
Whether the Standard Chartered Bank has the right to claim its amount from the Bank of China
or not?
Rule
A promissory Estopple is a doctrine in the contract law which prevents a person to back out from
his promise even if there is no legal contract between the parties. It is provided under the law that
an aggrieved party can recover its damages from the promisor if the damages occurred due to the
failure of promise made by promisor. However a promise must have some legal consideration or
agreement but the doctrine of promissory estopple allows the promise to be enforced without
complying the requirements of a valid contract. In the case of promissory estopple some other
requirements are to be considered. It is to be seen that promise made to the promisee was
significant enough and the reasonable person can rely on it. As held in the case of Baird Textile
Holdings Ltd v Marks and Spencer plc [2001] EWCA Civ 274, it is divulged that One other
element is that the promisee must have acted upon the promise made to him irrespective of the
fact that consideration is involved or not. As in the case of Walker, Campbell
(2004). Butterworths Student Companion Contract (4th ed.). LexisNexis. p. 70-72. ISBN 0-408-
71770-X , it is held that the third major element of promissory estopple is that the promisee
suffered from any loss because the promisor failed to deliver his promise. The loss occurred to
one party because of the other party based on the fraudulent act would be undertaken in the court
case and compensation for that fraudulent act or loss occurred to party would be compensated
through the legal proceeding. Nonetheless, in the given case, Bank of China is in the position of
promissory estopple and would be liable to undertake the evidence and show cause notice for
this.
Application
In the given case law, the Standard Chartered Bank accepted a letter of credit issued by Bank of
China. The letter of credit was fraudulently signed by the applicant and it was successfully
authorized by the Bank of China as the signature was forged by the applicant very nicely. On the
default of the letter of credit, the Standard Chartered Bank claimed the payable amount from the

Contract Law 3 | P a g e
Bank of China as they had issued it on the behalf of the applicant. Here the question of law is
that whether the Standard Chartered Bank has the right to claim its amount from the Bank of
China or not. As the details given in the case law, the Bank of China is in the position of
promissory estopple. Therefore, all the rules and regulations related to the promissory estopple is
applicable on this case and all the cases related to this would be applied accordingly (Baird,
2019). In the given case, it is found that if any of the fraudulent act is done by the one party to
another then in the case, party who made the fraud would be liable to compensate the other party
for any of the fraud by him or any loss occurred to other party on this fraud. In the given case,
claim could be undertaken by the standard Chartered Bank for the fraud but for that it needs to
showcase the proof or written evidence needs to be submitted.
As in the case of Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7, (1988) 164 CLR 387
(19 February 1988), High Court (Australia). It is held that the loss or damage to the promisee can
be economic or in other form. In case of failure of promise on the hand of promisor, the promise
can be enforced by on the determination of Court by ordering the promisor to perform the
promise (Alden, 2017). However, the Court has discretion to decide that what to do in particular
case after considering the conditions of the case. In the given case the Bank of China made
promise to Standard Chartered bank to pay the debt on the behalf of the applicant for whom the
Bank of China issued a letter of credit to the Standard Chartered bank. However there is no
written or verbal contract between both banks but as per the doctrine of promissory estopple a
promisor cannot go back on his promise (Talaat, 2019).
Conclusion
It is considered that the liability of a person is measured by the end results of his conduct or
consideration of the intention undertaken while signing the contract. Nonetheless, there is no
written or verbal contract between both banks but as per the doctrine of promissory estopple a
promise can not be taken by the promise maker. Hence the causation of fraudulent in the given
case is a major element while deciding about the liability of a other party. Hence as per the law
of promissory estopple the Standard Chartered Bank can claim for its damages and can recover it
from the Bank of China. However, third promissory estopple is that the promisee suffered from
any loss because the promisor failed to deliver his promise and all the losses occurred to the
party because of the fraudulent act of other party would be compensated to the extent to which