Report No. 108

Chapter 3

The Law in The United Kingdom and The United States

3.1. United Kingdom.-

The law in the United Kingdom is stated succinctly in text books1 as follows:

Snell: Promissory estoppel:

Where by his words or conduct one party to a transaction makes to the other a promise or assurance which is intended to affect the legal relations between them, and the other party acts upon it, altering his position to his detriment, the party making the promise or assurance will not be permitted to act inconsistently with it. Like estoppel at common law, promissory estoppel may provide a defence, but it can create no cause of action. The difference between it and proprietary estoppel is that the effect of promissory estoppel may be only temporary whereas that of proprietary estoppel is not only permanent but is also capable of operating positively so as to confer a right of action.

Hanbury: Promissory estoppel:

"Where, by words or conduct a person makes an unambiguous representation as to his future conduct, intending the representation to be relied on and to affect the legal relations between the parties, and the representee alters his position in reliance on it, the representor will be unable to act inconsistently with the representation if by so doing the representee would be prejudiced."

Promissory estoppel contains a number of features which distinguish it from estoppel by representation of fact. First, in that the representation may be one of intention and not one of fact; which raises the question whether it is inconsistent with the House of Lords decision in Jordan v. Money, (1854) 5 HLC 185. But the doctrine is now well established. Secondly, the requirement of detriment to the representee is less stringent in the case of promissory estoppel. Financial loss or other detriment is of course sufficient; but it seems that it is not necessary to show more than that the representee committed himself to a particular course of action as a result of the representation. Thirdly, the effect of the estoppel may not be permanent.

The representor may escape from the burden of the equity if he can ensure that the representee will not be prejudiced. But, consistently with estoppel by representation, promissory estoppel does not create a cause of action; it operates to give a negative protection. It is a shield and not a sword. Proprietary estoppel: This doctrine is applicable where one party knowingly encourages another to act, or acquiesces in the other's actions, to his detriment and in infringement of the first party's rights. A doctrine, based on encouragement and acquiescence, under which a court of equity will adjust the rights of the parties so as to do substantial justice between them.

1. Snell Principles of Equity, 26th Edn.(1966), pp. 625 to 631. Hanbury Modren Equity, 11th Edn. (1981), pp. 735 to 739.