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Promissory Estoppel, Waiver And Election Power Point (2)

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This document discusses the legal doctrines of contracts, estoppel, election, and waiver. It explains that estoppel prevents a party from abandoning an assumption that led another party to detrimentally change position. Election requires choosing between inconsistent legal rights. Waiver involves deliberately abandoning a legal right. Promissory estoppel can create or prevent enforcement of legal obligations where one party relied on a promise from another to their detriment, even without consideration. The document provides examples and case law analyses of how these doctrines relate and have been applied in different legal contexts.

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By Paul Taylor
A contract: Provides for the enforcement of promises supported by consideration. No consideration then prima facie a person is free to retract from that position.
What about a change of position, such as variation to a contract or conduct by A leading to change in position by B where there is no consideration? No contract no remedies. Doctrine of estoppel/election or waiver may prevent such an unjust departure.
Estoppel: protection against the detriment which would flow from a partys change of position if the assumption that led to it was deserted. Election: involves a party making a selection between inconsistent legal rights. Choosing one right necessarily involves abandoning the other. Waiver: 'synonymous' to or 'overlapping' with election and estoppel. A party has waived one of its legal rights in favour of another.
The thread that links together the concepts of waiver, election and estoppel is the deliberate abandonment of legal rights. Any discussion of the principles governing the circumstances in which a partys words or conduct may preclude him from exercising a legal righthave their origin in the differences to be found in the various doctrines (election,waiver and estoppel) Sargent v ASL Developments Ltd (1974) 131 CLR 634, Mason J at 273
An estoppel may arise: (a) Where a promise or representation is made in the context of pre-exising contractual relationship. (b) Where a promise or representation is made in a situation where there is no pre- existing legal relationship. (c) In respect of a promise which is not supported by consideration.
Representations (or promises) as to future conduct.(Legione v Hateley (1983) (HC)) In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-9, Brennan J set out the essential elements of promissory estoppel. Three elements at least are essential: 1) Promise (representation or assurance); 2) Reliance on the promise; 3) Inequity or unconscionable conduct.
Usually in context of a contract between parties. Extended by Commonwealth v Verwayen (1990) 170 CLR 394 pre-existing relation of plaintiff and defendant in the context of litigation. Example: where A promises B that he would not enforce his legal rights under the terms of a contract and B acted and relied on it without giving any consideration, equity would not allow A to renege on his promise to B.
Up until Waltons v- Maher, promissory estoppel could only be used in pre-existing legal relationships. The doctrine can now operate in the absence of existing contractual relations. It can be used as a sword (offensively, as an cause of action) as well as a shield (defensively, only if someone else sues you first). Example: during the course of negotiations for a contract A makes a promise or representation to B that the negotiations will be completed in accordance with the terms agreed, A may be estopped by B from denying it has agreed to complete the negotiations.
Any promise or representation must be: Unequivical and unambiguous; May be express or implied. Legione v Hateley (1983) Mason and Deane JJ
Reliance: must be definite or substantial. Detriment: the promisee must have placed himself in a position of material disadvantage if departure from the assumption be permitted. Unconscionability: dishonest behaviour by promisor. Satisfied if promisor encourages the promisee to create assumptions that lead to reliance. All must be demonstrated to succeed either as a cause of action or a defence on the basis of promissory estoppel.
Election consists in a choice between rights which the person making the election knows he possesses and which are alternative and inconsistent rights. Example: Party A to a contract is entitled to terminate by reason of breach by B. Instead of terminating A (promisee) may elect to affirm the contract. The election by A in not terminating is to say the alternative right to terminate has been waived.
Sometimes the abandonment of a right may be described as waiver. Waiver in the sense of election does not require consideration.
There is no conclusive statement that waiver is a standalone principle and is unlikely to be favoured. Kirby J, in a minority judgement in Agricultural and Rural Finance Pty Ltd v Gardiner (2008) (HC) held that "waiver" constituted a stand-alone principle beyond instances of contractual variation, estoppel and election. In the sense of election the concept of waiver has been used as merely an example of the operation of the wider doctrine of election, i.e. a party has waived one of its legal rights in favour of another.
Waiver in the sense of estoppel occurs when : Party A has waived its rights, by words or conduct, conferred by the contract or by law. The discharge or abondonment of a contract by reason of estoppel Requirements of estoppel will need to be established. Waiver appears more apt as a description of an end result of promissory estoppel.
Promissory estoppel may not apply in the setting of corporations with equal bargaining power Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) (NSW) court held plaintiff acted in reliance of its own commercial interest. Promissory estoppel may be: a) by way of defence in relation to a contractual right; or b) in the assertion of a positive right against the party estopped. The remedy, whether damages or some other equitable relief, granted on the basis of an estoppel must be proportionate to the detriment suffered.

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Promissory Estoppel, Waiver And Election Power Point (2)

  • 2. A contract: Provides for the enforcement of promises supported by consideration. No consideration then prima facie a person is free to retract from that position.
  • 3. What about a change of position, such as variation to a contract or conduct by A leading to change in position by B where there is no consideration? No contract no remedies. Doctrine of estoppel/election or waiver may prevent such an unjust departure.
  • 4. Estoppel: protection against the detriment which would flow from a partys change of position if the assumption that led to it was deserted. Election: involves a party making a selection between inconsistent legal rights. Choosing one right necessarily involves abandoning the other. Waiver: 'synonymous' to or 'overlapping' with election and estoppel. A party has waived one of its legal rights in favour of another.
  • 5. The thread that links together the concepts of waiver, election and estoppel is the deliberate abandonment of legal rights. Any discussion of the principles governing the circumstances in which a partys words or conduct may preclude him from exercising a legal righthave their origin in the differences to be found in the various doctrines (election,waiver and estoppel) Sargent v ASL Developments Ltd (1974) 131 CLR 634, Mason J at 273
  • 6. An estoppel may arise: (a) Where a promise or representation is made in the context of pre-exising contractual relationship. (b) Where a promise or representation is made in a situation where there is no pre- existing legal relationship. (c) In respect of a promise which is not supported by consideration.
  • 7. Representations (or promises) as to future conduct.(Legione v Hateley (1983) (HC)) In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-9, Brennan J set out the essential elements of promissory estoppel. Three elements at least are essential: 1) Promise (representation or assurance); 2) Reliance on the promise; 3) Inequity or unconscionable conduct.
  • 8. Usually in context of a contract between parties. Extended by Commonwealth v Verwayen (1990) 170 CLR 394 pre-existing relation of plaintiff and defendant in the context of litigation. Example: where A promises B that he would not enforce his legal rights under the terms of a contract and B acted and relied on it without giving any consideration, equity would not allow A to renege on his promise to B.
  • 9. Up until Waltons v- Maher, promissory estoppel could only be used in pre-existing legal relationships. The doctrine can now operate in the absence of existing contractual relations. It can be used as a sword (offensively, as an cause of action) as well as a shield (defensively, only if someone else sues you first). Example: during the course of negotiations for a contract A makes a promise or representation to B that the negotiations will be completed in accordance with the terms agreed, A may be estopped by B from denying it has agreed to complete the negotiations.
  • 10. Any promise or representation must be: Unequivical and unambiguous; May be express or implied. Legione v Hateley (1983) Mason and Deane JJ
  • 11. Reliance: must be definite or substantial. Detriment: the promisee must have placed himself in a position of material disadvantage if departure from the assumption be permitted. Unconscionability: dishonest behaviour by promisor. Satisfied if promisor encourages the promisee to create assumptions that lead to reliance. All must be demonstrated to succeed either as a cause of action or a defence on the basis of promissory estoppel.
  • 12. Election consists in a choice between rights which the person making the election knows he possesses and which are alternative and inconsistent rights. Example: Party A to a contract is entitled to terminate by reason of breach by B. Instead of terminating A (promisee) may elect to affirm the contract. The election by A in not terminating is to say the alternative right to terminate has been waived.
  • 13. Sometimes the abandonment of a right may be described as waiver. Waiver in the sense of election does not require consideration.
  • 14. There is no conclusive statement that waiver is a standalone principle and is unlikely to be favoured. Kirby J, in a minority judgement in Agricultural and Rural Finance Pty Ltd v Gardiner (2008) (HC) held that "waiver" constituted a stand-alone principle beyond instances of contractual variation, estoppel and election. In the sense of election the concept of waiver has been used as merely an example of the operation of the wider doctrine of election, i.e. a party has waived one of its legal rights in favour of another.
  • 15. Waiver in the sense of estoppel occurs when : Party A has waived its rights, by words or conduct, conferred by the contract or by law. The discharge or abondonment of a contract by reason of estoppel Requirements of estoppel will need to be established. Waiver appears more apt as a description of an end result of promissory estoppel.
  • 16. Promissory estoppel may not apply in the setting of corporations with equal bargaining power Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) (NSW) court held plaintiff acted in reliance of its own commercial interest. Promissory estoppel may be: a) by way of defence in relation to a contractual right; or b) in the assertion of a positive right against the party estopped. The remedy, whether damages or some other equitable relief, granted on the basis of an estoppel must be proportionate to the detriment suffered.