Exception to Pinnels: Promissory Estoppel
Generally under common law, a promise made without consideration to support it, is generally unenforceable. Promissory Estoppel applies when one party to a contract promises the others that he will not enforce his or her legal rights under the contract in whole or in part. Provided that the other party acts in reliance on that promise binds the person making it, even though it is unsupported by consideration.
The doctrine of Promissory Estoppel acts as a defence to a claim by a creditor for the remainder of the debt where part-payment has been accepted. The effect of the doctrine is to prevent or to “estop” the claimant from going back on a promise because it would be unfair and inequitable to do so.
If someone makes a promise and someone relies on it to their detriment and the other party doesn’t provide consideration, the courts can enforce that promise as long as the requirements are met. The requirements were first developed in High Trees .
Requirements of Promissory Estoppel (PE):
1) Pre-existing contractual relationship between the parties (Hughes v Metropolitan Railways)
2) Promise has to be clear and unambiguous ( Woodhouse v Nigerian produce)
3) Alteration of the parties positions (High Trees Case)
4) It must be unfair to allow them to go back on their promise (D & C Builders v Rees)
5) Elements of High Trees case.
Four requirements relating to the promise, unsupported by consideration:
1) The promisor must intend the promise to be binding,
2) The promisor must intend the promise to be acted upon,
3) The promise must be acted upon by the promisee to his detriment,
The promisor must attempt to act inequitably with the promise made.