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The High Trees Case: Promise or Gift

Introduction:

The promissory estoppel is a legal equity clause that can be applied to effect agreements that are nonbinding.

The principles :

It is the first principle upon which all Courts of Equity proceed, that 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 contact will not be enforced, or will be kept in suspense, or held in abeyance, 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 are thus taken place between the parties.( Claydon, 2008, Online)

This principle means that whenever a party by verbal or action makes a promise to another party that has impact on legal interpretation for the two, that the promise will be met, once the second party takes this word and applies it, the first party will not be allowed by law to backtrack from this agreements . The promise is considered serious by the English court. The parties at this stage must be aware that there are legal qualifications that can be introduced even if the initial agreements or contract was not legally binding. (Kaul, 2007, p. 1-8) (Claydon, 2008, Online)

In summary, this principle supports equity by law. However, it has some exceptions that make it different from the common laws that can be used by litigants to seek damages. This principles has also been referred to by other names such as ‘promissory estoppel’, ‘ new estopel’, ‘quasi estoppel’ and ‘equitable estoppel’. It has its foundation to shield parties from unjust commissions and  omissions. It operates in between the laws of contract and the estoppel principles itself. It started from the Pinnel’s Case (1602). ( Claydon, 2008, Online)

Following the elaborations above, the principle was invoked in Central London Trust Ltd. vs. High Trees House Ltd (1947) KBK Denning J.1 KB 130; [1956] 1 All ER 256; [1947] LJR 77; [1947] 175 LT 332; [1947] 62 TLR 557 by Denning J. In this case, he sought a just solution that arose from an incomplete debt payment by disapproving the ruling that was give in the Foakes v Beer (1984). (Bygrave, 2007, p. 1-4)

Denning J’s Rule of the case

When the case went to court, Denning J. became aware of the equitable principle of promissory estoppel. Thus Denning propounded on the rule because it would have been unfair for the plaintiff to seek arrear on ground of equity, only to vacate from an promise that the court interpreted as serious because it was actioned. (Claydon, 2008, Online)

Denning followed the Pinnel’s case  (1602) in which the ruling provided for consideration of the creditor as long as Pinnel a serious promise to pay back debt, rather than on gratuitous ground. This ruling has been successively upheld and used in cases even though it appear unfair. (Contract Law Page, 2007, Online)

But, further rulings on consideration was shown in the Foakes v. Beer (1884), where the judge asked for the Beers to pay the accumulative debt interest for a debt that was being serviced regularly. The reason given was that Foakes did not ask the court to prevent further actions following the earlier judgment.  (Contract Law Page, 2007, Online)

Denning J. took this position in court because he considered that Central London Property Trust had entered into a contract agreement which had serious promissory words and actions that were truly implemented. Denning J. therefore faulted Central London Properties for taking advantage of the High Trees House rights as the promissee.  Denning J. stood by the promissory estoppel which binds both the complainant and the defendant. Therefore, Denning sought to make the promise binding. (Sixth Form Law, 2008, Online)( Claydon, 2008, Online)

This suit would not have been upheld by the court, following the doctrine of promissory estoppel. Denning J. made a laugh because the defendants would be estopped from backtracking on an earlier promise that was made in 1940. It did  matter that the promise did not have consideration applicable in the High Trees House, and that the agreement was important in itself.

As it was, Central London Properties even wanted to use the law as a sword rather than as a shield.  Denning J. was very aware that in the event that somebody promises not to enforce legal rights, yet the agreement is effected, the court can still order for this agreement to be honored without further regard for considerations. (Sixth Form Law, 2008, Online)

In the Central London Properties v. High Trees , the effects of the promissory estoppel on the requirements for considerations on the contract was to be based on the Central London Property’s promise that rent was to be reduced to the High Trees as tenants which was in fact acted. Thus, the Central London was being stopped from resiling , because when they made this agreements, they did not specify for how long and secondly they were trying to introduce another new dimension of collection of rent arrears.  (Contract Law Page, 2007, Online)

The requirements in contracts are that there must be a legal contract as was held in the Durham Fancy Goods v Michael Jackson (Fancy Goods) [1968] 2 QB 839.

Second there must be a promise that is clear to both parties as was held in The Scaptrade [1983] QB 52, which can be either verbal of by action. Third there must be reliance that guarantees for both parties as held in Ajayi v Briscoe [1964] 1 WLR 1326. Fourth, it must be inequitable for the promisor to resile on the agreement on grounds of legal rights as Central London Property was trying to,  as was held in the D & C Builders v Rees [1965] 2 QB 617. Fifth, it can only be used as a shield not as a sword. Finally, the rights must be suspensive during this contract as was held in Tool Metal Case (1955).(Contract Law Page, 2007, Online)

Denning J. also held that not all promises must be expressed verbally, actions also count as was in the case of Hughes v. Metropolitan Railway Co. (1877). The promissee must show that the revocation of the promise is to their detriment as compared to if there had not made the contractual agreement before. It is also not enough if the promissee has merely resiled from the promise.

What is important is the proof that the promissee is totally unable to get back to the initial contract by outright resilience. In fact if the promissee can get back to the original contract by giving timely notice , then the interpretation  is legal as was noted in the Central London Trust Ltd. vs. High Trees House Ltd (1947) as long as there are no more instances of backtracking in future. ( Bygrave, 2007, p. 1-4). (Chen-Wishart , 2005, p. 175)( Claydon, 2008, Online)

Denning J. made the last reference that would make a promissory estoppel enforceable. On the promissee side, the fact that the agreement looks reliable does not imply that there is equity. Inequity will arise when new terms that were not part of the earlier agreement are introduced into the current agreement. However, in the event that a promissee uses the agreement to get favors by deception, like was the case in D&C Builders v. Rees (1966) then inequity will be rightly interpreted. ( Bygrave, 2007, p. 1-4)

Therefore, Denning made a laugh on the current principle of promissory estoppel in the High Trees case especially when it comes to the considerations doctrine. In this case the considerations is on the promisee’s legal stance. Denning was sure that the defendants had made a serious promise that had to be enforced by the judicial order..( Bygrave, 2007, p. 1-4)

The wider implications is that the principle is not a precipitant of suit on itself, neither does it give the promissee the rights to sue. In the contrary, the doctrine can be prevent a promiser from refusing to apply the earlier contract of agreement rights on the promissee. That is , it guards but does not allow for action.

Additionally, this doctrine will only be applicable when there is an earlier contract that have legal backing which will have provision for consideration. This means that when two parties make a contract, the promissee is only legal bound when the agreement is within the contract and not when it is outside it  or more than the agreement.( Bygrave, 2007, p. 1-4)(Keenan & Riches,2007 )

On the question of whether consideration is needed at all, the consequences of the promissory estoppel have to be considered along the effect on the promiser. In this circumstances, the promiser did not have the right of resuming the action of the agreement at convenience  even with  requirements to give notice as was the case in (Emmanuel Ayodei Ajayi v. RT Briscoe Ltd. (1964)). ( Bygrave, 2007, p. 1-4)(Keenan & Riches,2007, p. )

The rational for requiring consideration in contract is to protect debtor or similarly positioned person from unfairness.  But the this doctrine only suspends the promisors legal privileges without taking them away completely as was noted in the Tool Metal Manufacturing Co. Ltd. v. Tungsten Electric Co. Ltd. (1955)). After this consideration has been made, and it is discovered that next step conditions are unattainable, the best that the principle can do is extinguish rights. But Denning point of concern is that these rights are taken away through out for good. It does not matter if the agreement is revived. ( Bygrave, 2007, p. 1-4)  ( Claydon, 2008, Online)

Central London’s  action must be preceded by a promissory estoppel. The other issue was that Denning J. stood strongly on the earlier promise and disregarded the circumstances that was the prevailing war that led to the new agreements. Since this was a clear case of rule of evidence( Claydon, 2008, Online).

Conclusion:

The promissory estoppel shows that this  rationale behind the requirements of considerations in contracts is right as it does  strengthens the legal position of the promisee.  It also ask for the suspension of legal rights of the promisor to sue if the backtracked from the promise. As  Denning J. held,  if two parties have made a promise that is likely to have legal binding implications between them, the promising party should know that this agreement must be implemented to the promissee.

This stand will be supported by law if any deviations from the original agreements are deemed as long as no new elements are introduce in the existing agreement. The court will make a very strict interpretation of this kind of agreement if the promiser attempt to vary the terms of this agreement unless reasonable notice was made to the promissee. ( Claydon, 2008, Online).(Keenan & Riches,2007 )

In the Central London Property Case vs High Trees House, the defendant was  complaining about not being given  reasonable notice. The circumstances did not matter at all eve if the High Trees were benefiting more than the Central London Property . Denning J, as the judge ignored this part of the evidence and gave out his ruling based on the  Hugh v. Birmingham cases and estopped the Central London Property from levying arrears on rent claims. ( Claydon, 2008, Online).

In this case, the estoppel was used sparingly, to impress the landlord to stop making legal rights claims. It was Denning’s concern that courts have never done a deeper analysis on the estoppel laws. Many would rather use it as a shield than a sword. This is the point at which the considerations suffer most blow.  (Heffrey, Paterson & Hocker, 2008, Online)(Keenan & Riches,2007 )

This is the continuation of the qualification of estoppel principle. The case did not deny the landlord the rights to resume the high taxations as long as they gave reasonable notice which in this case was a gray area. The equitableness of the doctrine in this case was in no doubt.  (Heffrey, Paterson & Hocker, 2008, Online)

References.

Books

Keenan, D., & Riches, S., (2007 ) Business Law. London, Pearson Longman Publishers. 8th Edition.

Journals

Unger, J. (1965). “The High Trees Case: Promise or Gift.”  The Modern Law Review. Vol. 28. No.2  p. 231-235. Blackwell Publishing.

Websites

Chen-Wishart, M. (2005) Contract Law.  Oxford, Oxford University Press. ISBN 0-19-925814-2.

Claydon, R. (2008). Estoppel – 1930-1959.  Available at

 http://www.swarb.co.uk/lisc/Estop19301959.php [Accessed on April 29, 2008.]

Contract Law Page (2007) Part Payments of Debts: The general rule. Available at

http://www.a-level-law.com/contract/agreement/consideration_lecture2.htm [Accessed on April 30, 2008.]

Heffey, Paterson & Hocker (2008). Promised binding in the absence of consideration- estoppel. Available at http://law.anu.edu.au/colin/Layout/Promis_h.htm [Accessed on April 28, 2008.]

Kaul, M. (2007 ). Promissory Estoppel.

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