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CONTRACT LAW

Essentially, the doctrine of promissory estoppel holds that where A makes a promise to B not to enforce his strict contractual rights against B, A will not subsequently be allowed to act inconsistently with the promise, even though B has provided no consideration for the promise, where it would be inequitable for A to do so. The doctrine of promissory estoppel is generally traced back to Denning J’s judgment in the High Trees case.

Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130

The claimant was the landlord of a block of flats in London. It granted a lease of the block to the defendant with effect from September 1937. In the run up to, and following the outbreak of, the war, the defendant was unable to sub-let all the flats in the block due to the absence of people from London. As a result, the defendant was unable to pay its rent to the claimant. The claimant agreed to reduce the rent by half. By the early part of 1945, the block was fully let. Following the end of the war, the claimant brought an action to recover the unpaid balance of the original rent for the last two quarters of 1945. Denning J held that the claimant was entitled to the sums claimed.


Denning J stated that even though it might be said that the claimant’s promise to reduce the rent was not supported by consideration, it was nevertheless binding. This was because the parties had intended the promise to be binding and to be acted on and because the promise had been acted on. However, the promise had only been intended to apply while the block was not fully let due to the conditions prevailing at the time. Once the block became fully let, the reduction in rent ceased to apply.

It follows from Denning J’s reasoning, that had the claimant sought to recover the unpaid balance of the original rent for period from September 1937 to the beginning of 1945, its claim would have failed.

Promissory estoppel provides a limited exception to the general principle that a promise unsupported by consideration (and not contained in a deed) is unenforceable. One of the authorities on which Denning J relied in his judgment in the High Trees case was Hughes v Metropolitan Railway.

Hughes v Metropolitan Railway Co (1877) 2 App Cas 439

M was the tenant of a property owned by H. H, relying on the terms of the lease, required M to carry out repairs to the premises within six months. The parties then began negotiating a surrender of the lease by M. The negotiations however broke down and soon after H sought to terminate the lease on the ground that M had failed to carry out the repairs within the six-month period. Held: it would have been inequitable for H to enforce its strict rights under the lease. In the circumstances, the six-month period was to be treated as running from the date on which the surrender negotiations had broken down.

‘it is the first principle upon which all courts of equity proceed if parties, who have entered into definite and distinct terms involving certain legal results, certain penalties, or legal forfeiture, afterwards by their own act, or with their own consent, enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, that the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable, having regard to the dealings which have taken place between the parties.’

Lord Cairns LC at 448

In Birmingham and District Land Co v London & North Western Railway Co (No 2) (1888) 40 Ch D 268 Bowen LJ said that the principle enunciated by Lord Cairns was not limited to cases of forfeiture. The true proposition, according to Bowen LJ, is that:

‘if persons who have contractual rights against others induce by their conduct those against whom they have such rights to believe that such rights will either not be enforced or will be kept in suspense or abeyance for some particular time, those persons will not be allowed by a Court of Equity to enforce the rights until such time has elapsed, without at all events placing the parties in the same position as they were before.’ (At 286).

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