Contract Law: Equitable Estoppel

Introduction of the Issue

Liza agreed to stay in Julian’s house while the latter worked in New York for two years on the condition that Julian would leave her barbeque behind for Liza to use. However, Julian carried the barbeque with her, breaking the promise upon which Liza relied to the extent of giving away her own barbeque. Liza and Julian were in a legally binding contract and this promise constitutes promissory estoppel for which Liza can seek some relief from her detriment in court.

Law

Waltons Stores (Interstate) Ltd v Maher provides that a court action may be taken based on a promise under the promissory estoppel.¹ The promissory estoppel could be utilized as a shield or an arrow by the promisee. The judges stated that a non-contractual promise is enforceable if the promisor has made a promise and creates the assumption that the promise will be performed; the promisee relies on it to their detriment and the promise is unconscionable. Commonwealth of Australia v Verwayen established that estoppel does whatever is necessary to prevent suffering a detriment and might include effective enforcement of the promise.² Legione v Hateley found that a secretary’s word of mouth gave rise to promissory estoppel.³

Application

In Waltons, there are conditions that must be met for an enforceable promise, known as promissory estoppel. Liza is required to prove that the case meets all the elements of promissory estoppel. Firstly, she has a legal contract signed with Julian of occupying the house while the owner is in New York. Secondly, Julian made a promise that was believable to leave her barbeque in the house so that Liza would use it. Thirdly, Liza relied on the promise, moved into Julian’s house, and gave her old barbeque away. Therefore, she suffered detriments in the relocation process that she would not have considered without the promise and gave her barbeque away based on the same promise, leaving her without a barbeque. Finally, it is unconscionable to let Julian renege on the promise to the detriment of Liza. Following the decision in the Commonwealth of Australia, it is necessary to prevent Liza from suffering these detriments.

Since shipping back the barbeque may not be necessary, the court may award Liza damages to restore her condition, including getting a new barbeque from Julian. If Liza’s losses can be calculated in financial terms, the court may award such damages and compensation as a remedy. In this case, Liza can determine financial losses and get compensation rather than having the original promise fulfilled. Julian might offer to ship the barbeque back to Australia if it would seem more practical.

Conclusion

Liza can enforce Julian’s promise under the doctrine of equitable estoppel, and specifically, promissory estoppel. The court will be convinced that Liza relied on the promise to use the barbeque in her relocation decision and the motivation to give away her old barbeque. Therefore, she incurred costs in the moving of her furniture and other belongings and was left without a barbeque. The court’s decision might award her damages for the costs incurred or enforce the voluntary promise by having Julian ship the barbeque back to Australia.

Bibliography

Commonwealth of Australia v Verwayen (1990) 64 ALJR 540.

Legione v Hateley [1983] 57 ALJR 152 CLR 406.

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.

Footnotes

1. Waltons Stores 387.
2. Commonwealth of Australia v Verwayen (1990) 64 ALJR 540.
3. Legione v Hateley [1983] 57 ALJR 152 CLR 406.

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