Types of Estoppel
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Estoppel is a legal doctrine that prevents a party from asserting something contrary to what is implied by his previous actions, conduct, or statements when another party has relied upon them. It is an equitable principle designed to prevent injustice and can arise in various contexts. In English law, estoppel can be categorised into several types, including promissory estoppel, proprietary estoppel, estoppel by representation, estoppel by deed, and estoppel by convention. Each type of estoppel plays a critical role in maintaining fairness in legal relationships, ensuring that individuals cannot unfairly depart from their representations, promises, or implied conduct.
1. Promissory Estoppel
Promissory estoppel arises when one party makes a promise or assurance to another, leading the other party to act in reliance on that promise to his detriment. The party making the promise is then estopped, or prevented, from going back on the promise, even though it may lack formal consideration, as required by standard contract law. The landmark case that solidified this doctrine in modern law is Central London Property Trust Ltd v High Trees House Ltd (1947). During World War II, the landlord agreed to reduce rent due to the difficulty in finding tenants. After the war, when the landlord attempted to claim the full rent retrospectively, the court, led by Lord Denning, held that the landlord could not go back on the promise because the tenant had relied on it to his detriment. However, promissory estoppel only acts as a shield, so it can only be used as a defence, not to create new rights or claims, as confirmed in Combe v Combe (1951). Here, the wife could not use promissory estoppel to enforce a promise of maintenance made by her husband because there was no pre-existing legal obligation.
2. Proprietary Estoppel
Proprietary estoppel is concerned with rights or interests in property. It arises when one party, in reliance on a representation or assurance about property, acts to his detriment, and it would be unjust for the owner of the property to insist on his strict legal rights. The case of Thorner v Major (2009) is a classic example. David Thorner worked on his cousin’s farm for many years, believing he would inherit the farm based on his cousin’s conduct and informal statements. When the cousin died without a will, the House of Lords found that proprietary estoppel applied because David had relied on the assurance to his detriment. Another significant case is Gillett v Holt (2001), where Geoffrey Gillett had been repeatedly assured that he would inherit his employer’s property. He relied on these assurances by dedicating his working life to the farm, making the court hold that it would be inequitable for the employer to go back on those promises. Proprietary estoppel can grant wide-ranging remedies, from ownership of property to a lesser interest, such as a right of residence or monetary compensation.
3. Estoppel by Representation
Estoppel by representation occurs when one party makes a statement of fact, leading the other party to rely on that statement to his detriment. If the party making the representation later tries to contradict that statement, they may be estopped from doing so. The case of R v IRC, ex parte MFK Underwriting Agencies Ltd (1990) is illustrative. In this case, representations made by the Inland Revenue about the tax treatment of certain investments were relied upon by investors. When the Inland Revenue later attempted to impose a different tax treatment, the court held that they were estopped from doing so, as the investors had reasonably relied on the original representations. However, estoppel by representation requires a clear statement of fact, not a mere opinion or vague assurance.
4. Estoppel by Deed
Estoppel by deed applies specifically in situations involving formal agreements, such as contracts or conveyances executed as deeds. When a party has signed a deed, they are estopped from denying the facts asserted in the deed. This form of estoppel is less frequently encountered in modern law due to the complexities involved with formal deed execution, but it can arise in cases concerning property conveyances. For instance, if a deed purports that a person owns a property, he is estopped from later claiming he does not own it if another party has relied on that assertion to his detriment.
5. Estoppel by Convention
Estoppel by convention arises when both parties to a transaction share an assumption about the facts or law governing their relationship and act on that assumption. If one party later seeks to deny that shared assumption, they may be estopped from doing so. This form of estoppel was addressed in Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd (1982). In this case, both parties to a loan agreement acted under a shared assumption about the enforceability of a guarantee. When one party later attempted to dispute this assumption, the court held that he was estopped by convention, as both parties had relied on the shared understanding to their detriment. This type of estoppel does not require a formal promise or representation but hinges on mutual understanding.
6. Estoppel by Acquiescence
Estoppel by acquiescence arises when one party stands by while another acts in a way that affects his rights, and it would be unfair to allow the first party to assert his rights after the other party has relied on the belief that no objection would be made. This can occur when a property owner fails to object to encroachments or improvements made by a neighbor, for example. In Ramsden v Dyson (1866), a landowner stood by while another party made improvements to land, believing he had the right to do so. When the landowner later attempted to claim the land, the court held that estoppel by acquiescence applied, as it would be inequitable to allow the landowner to assert his strict legal rights after allowing the other party to act in reliance on the assumption that he had the right to make the improvements.
In summary, estoppel is a multifaceted doctrine with various forms, each designed to prevent unfairness and injustice. Promissory estoppel prevents a party from going back on promises, while proprietary estoppel deals specifically with property rights and interests. Estoppel by representation protects parties from contradictory factual assertions, and estoppel by deed ensures that the facts contained in formal deeds cannot be denied. Estoppel by convention addresses situations where both parties operate under a shared assumption, and estoppel by acquiescence applies where a party fails to assert his rights, allowing another to act to his detriment.
1. Promissory Estoppel
Promissory estoppel arises when one party makes a promise or assurance to another, leading the other party to act in reliance on that promise to his detriment. The party making the promise is then estopped, or prevented, from going back on the promise, even though it may lack formal consideration, as required by standard contract law. The landmark case that solidified this doctrine in modern law is Central London Property Trust Ltd v High Trees House Ltd (1947). During World War II, the landlord agreed to reduce rent due to the difficulty in finding tenants. After the war, when the landlord attempted to claim the full rent retrospectively, the court, led by Lord Denning, held that the landlord could not go back on the promise because the tenant had relied on it to his detriment. However, promissory estoppel only acts as a shield, so it can only be used as a defence, not to create new rights or claims, as confirmed in Combe v Combe (1951). Here, the wife could not use promissory estoppel to enforce a promise of maintenance made by her husband because there was no pre-existing legal obligation.
2. Proprietary Estoppel
Proprietary estoppel is concerned with rights or interests in property. It arises when one party, in reliance on a representation or assurance about property, acts to his detriment, and it would be unjust for the owner of the property to insist on his strict legal rights. The case of Thorner v Major (2009) is a classic example. David Thorner worked on his cousin’s farm for many years, believing he would inherit the farm based on his cousin’s conduct and informal statements. When the cousin died without a will, the House of Lords found that proprietary estoppel applied because David had relied on the assurance to his detriment. Another significant case is Gillett v Holt (2001), where Geoffrey Gillett had been repeatedly assured that he would inherit his employer’s property. He relied on these assurances by dedicating his working life to the farm, making the court hold that it would be inequitable for the employer to go back on those promises. Proprietary estoppel can grant wide-ranging remedies, from ownership of property to a lesser interest, such as a right of residence or monetary compensation.
3. Estoppel by Representation
Estoppel by representation occurs when one party makes a statement of fact, leading the other party to rely on that statement to his detriment. If the party making the representation later tries to contradict that statement, they may be estopped from doing so. The case of R v IRC, ex parte MFK Underwriting Agencies Ltd (1990) is illustrative. In this case, representations made by the Inland Revenue about the tax treatment of certain investments were relied upon by investors. When the Inland Revenue later attempted to impose a different tax treatment, the court held that they were estopped from doing so, as the investors had reasonably relied on the original representations. However, estoppel by representation requires a clear statement of fact, not a mere opinion or vague assurance.
4. Estoppel by Deed
Estoppel by deed applies specifically in situations involving formal agreements, such as contracts or conveyances executed as deeds. When a party has signed a deed, they are estopped from denying the facts asserted in the deed. This form of estoppel is less frequently encountered in modern law due to the complexities involved with formal deed execution, but it can arise in cases concerning property conveyances. For instance, if a deed purports that a person owns a property, he is estopped from later claiming he does not own it if another party has relied on that assertion to his detriment.
5. Estoppel by Convention
Estoppel by convention arises when both parties to a transaction share an assumption about the facts or law governing their relationship and act on that assumption. If one party later seeks to deny that shared assumption, they may be estopped from doing so. This form of estoppel was addressed in Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd (1982). In this case, both parties to a loan agreement acted under a shared assumption about the enforceability of a guarantee. When one party later attempted to dispute this assumption, the court held that he was estopped by convention, as both parties had relied on the shared understanding to their detriment. This type of estoppel does not require a formal promise or representation but hinges on mutual understanding.
6. Estoppel by Acquiescence
Estoppel by acquiescence arises when one party stands by while another acts in a way that affects his rights, and it would be unfair to allow the first party to assert his rights after the other party has relied on the belief that no objection would be made. This can occur when a property owner fails to object to encroachments or improvements made by a neighbor, for example. In Ramsden v Dyson (1866), a landowner stood by while another party made improvements to land, believing he had the right to do so. When the landowner later attempted to claim the land, the court held that estoppel by acquiescence applied, as it would be inequitable to allow the landowner to assert his strict legal rights after allowing the other party to act in reliance on the assumption that he had the right to make the improvements.
In summary, estoppel is a multifaceted doctrine with various forms, each designed to prevent unfairness and injustice. Promissory estoppel prevents a party from going back on promises, while proprietary estoppel deals specifically with property rights and interests. Estoppel by representation protects parties from contradictory factual assertions, and estoppel by deed ensures that the facts contained in formal deeds cannot be denied. Estoppel by convention addresses situations where both parties operate under a shared assumption, and estoppel by acquiescence applies where a party fails to assert his rights, allowing another to act to his detriment.
