Estoppel
Estoppel is closely related to the doctrines of waiver, variation, and election and is applied in many areas of law, including insurance, banking, employment, international trade, etc.[citation needed] In English law, the concept of legitimate expectation in the realm of administrative law and judicial review is estoppel's counterpart in public law, although subtle but important differences exist.
Major types..
Reliance-based estoppels—These involve one party relying on something the other party has done or said. The party who did/said the act is the one who is estopped. Under English law, this class includes estoppel by representation of fact, promissory estoppel.
Estoppel by representation of fact (English law name), equitable estoppel (American law)
Equitable estoppel (in English law), including
Proprietary estoppel
Promissory estoppel
Estoppel by record—This frequently arises as issue/cause of action estoppel or judicial estoppel where the orders or judgments made in previous legal proceedings prevent the parties from litigating the same issues or causes of action,
Estoppel by deed (often regarded as technical or formal estoppels)—Where rules of evidence prevent a litigant from denying the truth of what was said or done
Estoppel by silence—Estoppel that prevents a person from asserting something when he had the right and opportunity to do so earlier, and such silence put another person at a disadvantage.
Laches—estoppel in equity by delay. Laches has been considered both a reliance-based estoppel, and a sui generis estoppel.
All reliance-based estoppels require the victimized party to show both inducement and detrimental reliance, i.e.:
there must be evidence to show that the representer actually intended the victim to act on the representation or promise, or
the victim must satisfy the court that it was reasonable for him or her to act on the relevant representation or promise, and
what the victim did must either have been reasonable, or
the victim did what the representer intended, and
the victim would suffer a loss or detriment if the representor was allowed to deny what was said or done — detriment is measured at the time when the representor proposes to deny the representation or withdraw the promise, not at the time when either was made, and
in all the circumstances, the behavior of the representor is such that it would be "unconscionable" to allow him or her to resile.
Estoppel by representation of fact and promissory estoppel are mutually exclusive: the former is based on a representation of existing fact (or of mixed fact and law), while the latter is based on a promise not to enforce some pre-existing right (i.e. it expresses an intention as to the future). A proprietary estoppel operates only between parties who, at the time of the representation, were in an existing relationship, while this is not a requirement for estoppel by representation of fact.
Where one person (‘the representor’) has made a representation of fact to another person (‘the representee’) in words or by acts or conduct, or (being under a duty to the representee to speak or act) by silence or inaction, with the intention (actual or presumptive) and with the result of inducing the representee on the faith of such representation to alter his position to his detriment, the representor, in any litigation which may afterwards take place between him and the representee, is estopped, as against the representee, from making, or attempting to establish by evidence, any averment substantially at variance with his former representation, if the representee at the proper time, and in proper manner, objects thereto.
An estoppel by representation [of fact] will arise between A and B if the following elements are made out. First, A makes a false representation of fact to B or to a group of which B was a member. [It is not necessary to demonstrate A knew that the representation was untrue.] Second, in making the representation, A intended or [in the alternatively,] knew that it was likely to be acted upon. Third, B, believing the representation, acts to its detriment in reliance on the representation. [It must have been reasonable to rely on the representation.] Fourth, A subsequently seeks to deny the truth of the representation. Fifth, no defence to the estoppel can be raised by A.
A representation can be made by words or conduct. Although the representation must be clear and unambiguous, a representation can be inferred from silence where there is a duty to speak or from negligence where a duty of care has arisen. Under English law, estoppel by representation of fact usually acts as a defence, though it may act in support of a cause of action or counterclaim.
Equitable estoppel (English law)
For the American doctrine of equitable estoppel, see Estoppel by representation of fact.
Under English and Australian legal systems, estoppels in equity include promissory and proprietary estoppels. (Contrast with estoppel by representation, which is a claim (under the English system) at law.) For more information, see Promissory estoppel and Proprietary estoppel below.
Proprietary estoppel..
In English law, proprietary estoppel is distinct from promissory estoppel. Proprietary Estoppel is not a concept in American law, but a similar result is often reached under the general doctrine of promissory estoppel.
Traditionally, proprietary estoppel arose in relation to rights to use the land of the owner, and possibly in connection with disputed transfers of ownership. Although proprietary estoppel was only traditionally available in disputes affecting title to real property, it has now gained limited acceptance in other areas of law. Proprietary estoppel is closely related to the doctrine of constructive trust.
J. Fry summarized the five elements for proprietary estoppel as:
the claimant...
...made a mistake as to his legal rights (typically because the actual owner attempted to convey the property, but the transfer is invalid or ineffective for some reason);
...did some act of reliance;
the defendant...
...knows of the existence of a legal right which he (the defendant) possesses, and which is inconsistent with the right claimed by the claimant;
...knows of the claimant's mistaken belief; and,
...encouraged the claimant in his act of reliance.
Example: A father promised a house to his son who took possession and spent a large sum of money improving the property, but the father never actually transferred the house to the son. Upon the father's death, the son claimed to be the equitable owner. The court found the testamentary trustees (as representatives of the deceased father's estate) were estopped from denying the son's proprietary interest, and ordered them to convey the land to the son.
Equitable estoppel is distinct from promissory estoppel. Promissory estoppel involves a clear and definite promise, while equitable estoppel involves only representations and inducements. The representations at issue in promissory estoppel go to future intent, while equitable estoppel involves statement of past or present fact. It is also said that equitable estoppel lies in tort, while promissory estoppel lies in contract. The major distinction between equitable estoppel and promissory estoppel is that the former is available only as a defense, while promissory estoppel can be used as the basis of a cause of action for damages.
—
For an example of promissory estoppel in the construction industry, suppose that B Ltd consolidates estimates from a number of subcontractors and quotes a single price on a competitive tender. The client accepts B Ltd's quote and construction begins. But one of the subcontractors then claims reimbursement above its original estimate and, because of this change, B Ltd cannot profit from the works. If both parties knew that the accuracy of the individual estimates was critical to the success of the tender and the profitability of the contract as a whole, a court might apply promissory estoppel and allow B Ltd to pay only what the subcontractor originally estimated rather than the new, higher price. But, if both parties hoped that there would be an opportunity to increase the contract prices to reflect additional expenditure, the subcontractor's conscience would not be as limited in seeking a higher payment and B Ltd might be penalised for not building an adequate contingency sum into the tendered price.
One contentious point during the drafting of the Restatement was how to calculate the amount of damages flowing from a promissory estoppel. During the deliberations, the following example was considered: a young man's uncle promises to give him $1,000 to buy a car. The young man buys a car for $500, but the uncle refuses to pay any money. One view was that the young man should be entitled to $1,000 (the amount promised), but many believed that the young man should only be entitled to $500 (the amount he actually lost). The language eventually adopted for the Second Restatement reads: "The remedy granted for breach may be limited as justice requires." — a formula which leaves quantification to the discretion of the court.
Estoppel is closely related to the doctrines of waiver, variation, and election and is applied in many areas of law, including insurance, banking, employment, international trade, etc.[citation needed] In English law, the concept of legitimate expectation in the realm of administrative law and judicial review is estoppel's counterpart in public law, although subtle but important differences exist.
Major types..
Reliance-based estoppels—These involve one party relying on something the other party has done or said. The party who did/said the act is the one who is estopped. Under English law, this class includes estoppel by representation of fact, promissory estoppel.
Estoppel by representation of fact (English law name), equitable estoppel (American law)
Equitable estoppel (in English law), including
Proprietary estoppel
Promissory estoppel
Estoppel by record—This frequently arises as issue/cause of action estoppel or judicial estoppel where the orders or judgments made in previous legal proceedings prevent the parties from litigating the same issues or causes of action,
Estoppel by deed (often regarded as technical or formal estoppels)—Where rules of evidence prevent a litigant from denying the truth of what was said or done
Estoppel by silence—Estoppel that prevents a person from asserting something when he had the right and opportunity to do so earlier, and such silence put another person at a disadvantage.
Laches—estoppel in equity by delay. Laches has been considered both a reliance-based estoppel, and a sui generis estoppel.
All reliance-based estoppels require the victimized party to show both inducement and detrimental reliance, i.e.:
there must be evidence to show that the representer actually intended the victim to act on the representation or promise, or
the victim must satisfy the court that it was reasonable for him or her to act on the relevant representation or promise, and
what the victim did must either have been reasonable, or
the victim did what the representer intended, and
the victim would suffer a loss or detriment if the representor was allowed to deny what was said or done — detriment is measured at the time when the representor proposes to deny the representation or withdraw the promise, not at the time when either was made, and
in all the circumstances, the behavior of the representor is such that it would be "unconscionable" to allow him or her to resile.
Estoppel by representation of fact and promissory estoppel are mutually exclusive: the former is based on a representation of existing fact (or of mixed fact and law), while the latter is based on a promise not to enforce some pre-existing right (i.e. it expresses an intention as to the future). A proprietary estoppel operates only between parties who, at the time of the representation, were in an existing relationship, while this is not a requirement for estoppel by representation of fact.
Where one person (‘the representor’) has made a representation of fact to another person (‘the representee’) in words or by acts or conduct, or (being under a duty to the representee to speak or act) by silence or inaction, with the intention (actual or presumptive) and with the result of inducing the representee on the faith of such representation to alter his position to his detriment, the representor, in any litigation which may afterwards take place between him and the representee, is estopped, as against the representee, from making, or attempting to establish by evidence, any averment substantially at variance with his former representation, if the representee at the proper time, and in proper manner, objects thereto.
An estoppel by representation [of fact] will arise between A and B if the following elements are made out. First, A makes a false representation of fact to B or to a group of which B was a member. [It is not necessary to demonstrate A knew that the representation was untrue.] Second, in making the representation, A intended or [in the alternatively,] knew that it was likely to be acted upon. Third, B, believing the representation, acts to its detriment in reliance on the representation. [It must have been reasonable to rely on the representation.] Fourth, A subsequently seeks to deny the truth of the representation. Fifth, no defence to the estoppel can be raised by A.
A representation can be made by words or conduct. Although the representation must be clear and unambiguous, a representation can be inferred from silence where there is a duty to speak or from negligence where a duty of care has arisen. Under English law, estoppel by representation of fact usually acts as a defence, though it may act in support of a cause of action or counterclaim.
Equitable estoppel (English law)
For the American doctrine of equitable estoppel, see Estoppel by representation of fact.
Under English and Australian legal systems, estoppels in equity include promissory and proprietary estoppels. (Contrast with estoppel by representation, which is a claim (under the English system) at law.) For more information, see Promissory estoppel and Proprietary estoppel below.
Proprietary estoppel..
In English law, proprietary estoppel is distinct from promissory estoppel. Proprietary Estoppel is not a concept in American law, but a similar result is often reached under the general doctrine of promissory estoppel.
Traditionally, proprietary estoppel arose in relation to rights to use the land of the owner, and possibly in connection with disputed transfers of ownership. Although proprietary estoppel was only traditionally available in disputes affecting title to real property, it has now gained limited acceptance in other areas of law. Proprietary estoppel is closely related to the doctrine of constructive trust.
J. Fry summarized the five elements for proprietary estoppel as:
the claimant...
...made a mistake as to his legal rights (typically because the actual owner attempted to convey the property, but the transfer is invalid or ineffective for some reason);
...did some act of reliance;
the defendant...
...knows of the existence of a legal right which he (the defendant) possesses, and which is inconsistent with the right claimed by the claimant;
...knows of the claimant's mistaken belief; and,
...encouraged the claimant in his act of reliance.
Example: A father promised a house to his son who took possession and spent a large sum of money improving the property, but the father never actually transferred the house to the son. Upon the father's death, the son claimed to be the equitable owner. The court found the testamentary trustees (as representatives of the deceased father's estate) were estopped from denying the son's proprietary interest, and ordered them to convey the land to the son.
Equitable estoppel is distinct from promissory estoppel. Promissory estoppel involves a clear and definite promise, while equitable estoppel involves only representations and inducements. The representations at issue in promissory estoppel go to future intent, while equitable estoppel involves statement of past or present fact. It is also said that equitable estoppel lies in tort, while promissory estoppel lies in contract. The major distinction between equitable estoppel and promissory estoppel is that the former is available only as a defense, while promissory estoppel can be used as the basis of a cause of action for damages.
—
For an example of promissory estoppel in the construction industry, suppose that B Ltd consolidates estimates from a number of subcontractors and quotes a single price on a competitive tender. The client accepts B Ltd's quote and construction begins. But one of the subcontractors then claims reimbursement above its original estimate and, because of this change, B Ltd cannot profit from the works. If both parties knew that the accuracy of the individual estimates was critical to the success of the tender and the profitability of the contract as a whole, a court might apply promissory estoppel and allow B Ltd to pay only what the subcontractor originally estimated rather than the new, higher price. But, if both parties hoped that there would be an opportunity to increase the contract prices to reflect additional expenditure, the subcontractor's conscience would not be as limited in seeking a higher payment and B Ltd might be penalised for not building an adequate contingency sum into the tendered price.
One contentious point during the drafting of the Restatement was how to calculate the amount of damages flowing from a promissory estoppel. During the deliberations, the following example was considered: a young man's uncle promises to give him $1,000 to buy a car. The young man buys a car for $500, but the uncle refuses to pay any money. One view was that the young man should be entitled to $1,000 (the amount promised), but many believed that the young man should only be entitled to $500 (the amount he actually lost). The language eventually adopted for the Second Restatement reads: "The remedy granted for breach may be limited as justice requires." — a formula which leaves quantification to the discretion of the court.
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