Contract Law: Promissory Estoppel and Intention to Create Legal Relations

CONTRACT LAW
Name
Department
University
Address
1

QUESTION 1 (a)
Issues
Was the second agreement a new contract and how does it affect the first agreement the two
parties had?
What are the legal consequences of Money Co accepting the agreement?
Does this case fit in the prospects of equitable estoppel?
Was Money Co justified to refuse to pay the second amount?
Laws
The doctrine of promissory estoppel was developed by Lord Denning to prevent one from
reversing a promise they made since it would be unfair to the other party. As it was held in the
case of Central London Property Trust Ltd v High Trees House Ltd1, the defendant in the case
had leased some flats to the complainant to sub-let to renters. When war broke up, it became
difficult to find tenants as people always run away. The claimant then agreed that he was going
to accept half of the rent during this time. The defendants agreed to pay. Soon the war was over,
and the flats became occupied. The claimants they claimed the lease was supposed to be returned
to previous prices and also sued for the arrears.
In the Judgment, Lord Denning stopped the claimants from suing for arrears. He also went ahead
to state conditions under which estoppel can apply. In this, he stated that:
1 'Central London Property Trust V High Trees House' (E-lawresources.co.uk, 2019) <http://www.e-
lawresources.co.uk/Central-London-Property-Trust-v-High-Trees-House.php> accessed 11 March 2019.
2

1. The parties must have been in a legal contract between the claimant and the defendant
before
2. A new promise is made from the claimant and in this they have to agree to give up some
of their rights under the contract
3. The claimant waives these rights knowing that the defendant would rely on the new
promise and this would change their legal positions
4. The defendant has to in fact act by this new promise
5. The claimant would then not be allowed to go back on the promise that they mad being
that it has been acted upon2.
In the case of Combe v Combe3, the Lord Denning went ahead and further explained the doctrine
in which he said that when one party, by their own words or behavior (actions), have made the
other party either a promise or even an assurance which was intended to change or affect their
legal relationship, and this promise has been acted upon accordingly the party that gave the
promise cannot refuse to perform as per the promise. The promising party will be estopped from
reverting to the previous legal relations. Lord Birkett, who was also in the case commented and
described this doctrine of estoppels as a shield and not a sword, meaning that it can only be used
to secure a right and not bring in one4.
2 'Promissory Estoppel Cases | Contract Law' (Lawteacher.net, 2019)
<https://www.lawteacher.net/cases/promissory-estoppel.php> accessed 11 March 2019.
3 'Combe V Combe: CA 1951 - Swarb.Co.Uk' (swarb.co.uk, 2019) <https://swarb.co.uk/combe-v-combe-ca-
1951/> accessed 11 March 2019.
4 Inc. US Legal, 'Estoppel Law And Legal Definition | Us legal, Inc.' (Definitions.uslegal.com, 2019)
<https://definitions.uslegal.com/e/estoppel/> accessed 11 March 2019.
3