Tool Metal Mfg Co Ltd v Tungsten Electric Co Ltd [1955]

Tool Metal Mfg Co Ltd v Tungsten Electric Co Ltd [1955]

Tool Metal Mfg Co Ltd v Tungsten Electric Co Ltd [1955] 2 All ER 657 is a notable case related to promissory estoppel. In this case, Tool Metal (TMM) and Tungsten Electric (TECO) entered into a settlement agreement in 1938, which included a provision for licensing fees based on the quantity of contract material sold or used by TECO.

After the outbreak of World War II in 1939, TMM verbally agreed to forego the compensation from TECO, with the understanding that the parties would later enter into a new written contract. However, TECO refused to sign any new contract drafted by TMM. As a result, TMM informed TECO that they would enforce the original 1938 agreement.

When TMM eventually sued TECO for the licensing fees, the court held that TMM was entitled to reinstate the licensing fees, provided reasonable notice was given. In this case, the court determined that reasonable notice should be given from 1 January 1947.

This case is often cited in the context of promissory estoppel, a legal doctrine that prevents a party from going back on a promise made to another party if the latter has relied on that promise to their detriment. The court's decision in Tool Metal v Tungsten Electric reinforces the principle that, even in the absence of a formal written contract, promissory estoppel may still apply, and a party may be bound by their promises if the other party has relied on those promises to their detriment.
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