Doctrine of Consideration and Promissory Estoppel - Case Study Example

 This is a study about consideration and Promissory Estoppel doctrines and how they intermarry. The study is going to particularly provide an answer to a given scenario and the entitlements of the parties involved is going to be stated after considering the various arguments and court cases' ruling. Any party acting in reliance on an oral type of contract may at times find that the second party to the contract may refuse to counter-perform stating the reason to this as that oral contracts are unenforceable under frauds statute. It is at this juncture that the promissory estoppel doctrine can be pleaded so as to overcome such kind of defence. as stipulated by this doctrine, any party relying to his or her detriment on another party's promise may make that promise enforceable to such extent as her/his reliance. However, any action under the promissory estoppel doctrine is highly likely to be executed under equity in absence of a jury. It may also fail if the plaintiff cannot demonstrate the element that there will be a result of injustice if the oral promise by the promisor is not enforced. A plaintiff of promissory estoppels doctrine has also to overcome a great deal of hostility by the judiciary to such doctrine. Even if the plaintiff is successful under this, it may not be possible to make a recovery of the whole benefit in which he/she was bargaining.1 (Luepke, 2002) In the period from year 1809 to 1991, common law has made a clear provision that any promise by a party to make a performance of any act, which that party has prior legal obligation to perform, such is not a good consideration. In the same line, any promise received as part of exchange is unenforceable. Such is the case even if the promise would impact by creating a new contract altogether or even modifying the existing contracts' terms. The court of appeal of England has the power to make changes to the law as it has been settled. In the case of William versus Roffey where the facts were that the promisee made to the promisor an understanding that as the promisee he would extend his performance of his undertaking as per the previous contract. It was held by the court that the accruing 'practical benefit' to this case's promisor from the previous promise's repetition would be enough consideration to make such a promise to raise the prior payment an enforceable fact in law. The promise made afterwards outside the process of bargaining was neither offered nor solicited.2 (Twyford, 2002) When the two doctrines interact a controversial situation arises. Most of the questions around promissory estoppel are based upon whether any estoppel arises at the point where the promisee relies on a promise by the promisor or whether such promisee may have to show a specific detriment suffered as a result of the promise. Of preference may be the former promise. It is of great essence, though, to know that even if the detrimental reliance is a requirement under promissory estoppel, the case is still clear from a binding variation of contract. The difference between a contract and a promissory estoppel is that estoppel may arise in case where detriment is evident as a result of a promise's reliance. However, it will amount to a situation of consideration where such detrimental reliance is a promisor's request. For example, if A had a debt owed to B, where B promises to let A off the debt or even make a reduction of the debt. A may go out on a shopping spree and purchase a Television set using money that had been saved. In this case A's promise to pay B is binding under the law of contract where A purchases a TV set. On the other hand if B promises to let A off the owed debt without any condition stipulated, then B is estopped to go back on such promise if A purchases the new Television set using savings, even if B did not require A to purchase anything and does not even care what A does with his/her money. 3(Kramer, A, 2002) Stone, in his book, states that the promissory estoppel doctrine relates to a high extent to that of consideration. here, the argument is that a promise should be intended to be binding, also it should be an intention to act on it, as well as acted upon to be seen to be binding as long as its terms are applicable. Thus, for a promise to be deemed enforceable, the party to whom such promise was intended should have been seen to act while relying on such promise. Therefore, it is not relevant whether the person being promised has made a provision of anything as part of exchange in the form of benefit directed to the one making a promise. a classical kind of consideration doctrine requires that one or all of the conditions to be fulfilled so that the promise is considered enforceable. for instance if X promises Y an amount of $5,000 and Y acting on the promise buys a motor vehicle- under the classical consideration doctrine, Y has not made any consideration and thus X is not bound to make such payment of $5,000.4 (Stone, 2009 p140) Beale and others, in their book, state that the assumption that an act's performance in dependence of a promise, which has not been stated or requested by the promisor, is not good consideration. This is contrary to the doctrine of estoppel.5 (Beale, et al, 2007 p169) For instance in the case of Jorden Versus Money, estoppel was confirmed by the House of Lords. This is by representation of the fact that is existent as opposed to an intention in a matter of future action. This, therefore, means that any party in pursuit of enforcing representation or seeking to depend on estoppel cannot sue on it. Estoppel may apply in cases where assumption or representation upon which the plaintiff operates is with the inclusion of future intention matters. Equitable estoppel can only be applied as a cause of a given action. That is, a shield as well as a sword. In matters of common law, it is there as a shield only.6 (studentatlaw.com, 2007) Under the considerations in promissory estoppel one can consider the ruling in the case of Hughes versus Metropolitan RY, the facts of this case are that there being a fixed or particular promise upon which the promisee had placed his reliance upon, at the point of considering circumstances- it would be inequitable for this case's promisor to wholly exercise his legal rights with strictness and such a promisor may be, in this case, estopped from carrying out such. This case applies to situations of partial debt payment.7 (helium.com, 2010) However, it is important to note that as per the stipulations by English law, promissory estoppel is a third approach to the enforcement of a specific type of undertaking. in a scenario where X and Y have a legal relationship in force and Y makes a reliance upon X's promise not to continue insisting upon his legal rights strictly; X will not be in a position to be let to go back on his word in a given extent such that the undertaking is inequitable to Y. That is, even if such a promise is not consideration supported as well as does not make a satisfaction to the formal legal requirements.8 (Chen-Wishart, 2007 p123) In some situations, persons make a reliance on promises. In such situations, such reliance is enough to form a contractual rights' basis as well as obligations. Under the detrimental reliance doctrine or promissory estoppel, any individual who reasonably relies on another's promise is able to often get to a certain extent magnitude of recovery. When this doctrine is applied or used in a given case the person making a promise is barred from revoking such promise. There are some requirements to be met so as the doctrine of detrimental reliance to be fully applicable. These may include, precise as well as definite promise must be there, the person being promised must in a justifiable way rely upon such promise, the reliance has to be definite and substantial in character, and lastly, justice must be seen to be served in a befitting manner if the promise is enforced.9 (Miller and Jentz, 2009 p189) When one party in a transaction makes a promise to the other in an equivocal and clear way and which has the intention of affecting the relationship between two parties legally or was to the understanding of the other party to be impacting that way, and prior to its withdrawal, the second party acts on it, changing his/her position such that it would be an inequitable effect if the first party withdrew such promise, the promisor is not allowed to act in an inconsistent way to the promise. This is according to Snell's Equity's stipulation of the 31st Edition. 10(insitelawmagazine.com, 2010) Generally, any promise has to be supported by the consideration or an equivalent so as to be legally enforceable. However, this is in a way precluding gratuitous kind of promises from enforceability legally unless such are covered under promissory estoppel. Under promissory reliance, a promise that may induce injurious acts that are definite upon its reliance by the person being promised, such is enforceable under law. Damages under estoppel sometimes depend upon the promisee's reliance upon such rather than the magnitude of the promise and also such damages should not put the promisee at an apt position than the promises by the promisor would have put him/her. 11(onelbriefs.com, 2009) One case at hand is that of Ricketts versus Scothorn (1898). The plaintiff is a grand daughter (Katie Scothorn) and the defendant is the J.C. Ricketts' estate (grandfather). The facts to the case were that in mid 1891, Ricketts made a statement that none of his grandchildren he had had a job and she did not have to work as well. This promise did not have a condition for her to quit work, or any other conditions. Upon Ricketts' demise in 1894, the estate's executor refused to pay, with a claim that the promise by Ricketts had no consideration and thus unenforceable. The court's ruling was in favour of Scothorn. However, the estate of Ricketts appealed. It was held that under promissory estoppel doctrine, the promisee should not use the lack of consideration as a loophole to breach a contract. In the same line of argument, a promise without consideration is enforceable with regard to the detriment. Scothorn was, therefore, entitled and the court ruled in her favour. 12(lawnix.com, 2010) In the case of Devecmon versus Shaw (1888), Devecmon was the one who sued the Combs executors who was dead. Subsequent to the judgment by default and after Devecmon filed a particulars' bill, a jury assessed the detriments suffered by the plaintiff. The plaintiff happened to be the deceased's nephew and had lived with the defendant's family for a number of years. He was also of service as a clerk to the defendant for some years. The plaintiff went for a trip to Europe under his own expense. Under this case, the defendant proved the fact that there was no sufficient evidence to this case. Thus, the plaintiff was not able to recover the interest claimed in the particular's bill. The judgment in this case has been reversed and to the same, a new trial had been ordered. 13(kentlaw.iit.edu, 2010) The other case is that of Hoffman versus Red Owl Stores Inc (1965). The facts were that Hoffman had a bakery business and at the same time wanted to establish a Red Owl Store. Red Owl made a promise that he was ready to open one for him at $18,000. After this, Red Owl started to raise the amount of capital wanted or owed by Hoffman so as to open up the store. Hoffman withdrew from these negotiations and at the same time sued Red Owl. It was held by the court that under the doctrine of estoppel, Hoffman acted due to his detriment and had made reasonable reliance to the promise by Red Owl. The court thus, awarded Hoffman a reliance equivalent of damages. However, the defendant appealed in vain. 14(lawschool.mikeshecket.com, 2010) Another case to consider is that of Forrer versus Sears (1967). The facts of the case are that the plaintiff was promised by sears a permanent basis kind of employment. Subsequently, Forrer (plaintiff) sold his property so as to begin his fulltime work at Sears. Later on, he was fired. The court held that the term permanent employment means that such type of employment can be terminated at either party's will. 15(lawschool.courtreview.com, 2010) In this case of the study, therefore, and on relying to the findings of the study; Bettie and Amelia were in an initial contract. That is, Giles owed Amelia ₤1000. Amelia’s promise makes Bettie to have a reasonable expectation on its fulfillment as a promisee. All the conditions required by the promisor are met and thus, it is up to Amelia to pay the amount promised; since the conditions were in reliance of the promise. Also, the payment of ₤750 is considerable as stipulated clearly by the work of Clen-Wishart and Miller and Jentz book. Reference: Beale, H. G. et al. (2007). Contract: Cases and Materials. Oxford University Press. Edition 5, illustrated. Chen-Wishart, M. (2007). Contract Law. Oxford University Press, Edition 2, illustrated. helium.com. (2010). An Evaluation of the doctrine of Consideration in modern Contract law (UK). Retrieved 21 December 2010 http://www.helium.com/items/1529701-evalution-of-the-doctrine-of- consideration?page=4 insitelawmagazine.com. (2010). Waiver, and Promissory Estoppel. Retrieved 21 December 2010 http://www.insitelawmagazine.com/ch15Waiver.htm kentlaw.iit.edu. (2010). Devecmon v. Shaw. Retrieved 21 December 2010 http://www.kentlaw.iit.edu/faculty/rwarner/classes/contracts- cd/contracts/cases/Contract_LawDevecmon_v_Shaw.htm Kramer, A. (2002). The Many Doctrines of Promissory Estoppel. Retrieved 21 December 2010 http://docs.google.com/viewer?a=v&q=cache:pOOz_jbwUfUJ:www.kramer.me.u k/adam/documents/AMK-%2520SLR%2520(2002)%252037%2520(17- 19)%2520The%2520many%2520doctrines%2520of%2520promissory%2520esto ppel.pdf+DOCTRINE+OF+CONSIDERATION+AND+PROMISSORY+ESTOP PEL&hl=en&gl=ke&pid=bl&srcid=ADGEESjDyvRyNAe67iiAm4CiMoZXSXZ CplT8ap1LOU4G-v7iVJs_8GtjoPb61T2BF1NQczrGR5ekyIaF9gXj8ug465DRY- wDrVnBCnT9cdsNyN1KT1dCE7ncdiKD1jDtA3QOcpMct_1V&sig=AHIEtbT8r 44NYBC2CjPdIaprVnciItUCkg&pli=1. lawnix.com. (2010). Ricketts v. Scothorn – Case Brief Summary. Retrieved 21 December 2010 http://www.lawnix.com/cases/ricketts-scothorn.html lawschool.courtroomview.com. (2010). Forrer v. Sears, Roebuck & Co. Retrieved 21 December 2010 http://lawschool.courtroomview.com/acf_cases/8549-forrer-v- sears-roebuck-co- Luepke, H.F. (2002). Promissory Estoppel and the Statute of Frauds in Missouri. Retrieved 21 December 2010 http://www.mobar.org/9f9753bb-ae48-4a83-885c- 473b89565bfd.aspx mikeshecket.com. (2010). Hoffman v. Red Owl Stores, Inc. Retrieved 21 December 2010 http://lawschool.mikeshecket.com/contracts/hoffmanvredowlstoresinc.htm Miller, R.L. and Jentz, G.A. (2009). Fundamentals of Business Law: Excerpted Cases. Cengage Learning. Edition 2. onelbriefs.com. (2009). Contracts - Consideration and Promissory Estoppel. Retrieved 21 December 2010 http://www.onelbriefs.com/outlines/contracts/consideration_pe.htm Stone, R. (2009). The Modern Law of Contract: Seventh Edition. Taylor & Francis. Edition 8, illustrated. studentatlaw.com. (2007). Estoppel in Equity and Confidential Information. Retrieved 21 December 2010 http://www.studentatlaw.com/articles/153/1/Estoppel-in- Equity-and-Confidential-Information/Page1.html Twyford, J. (2002). The Doctrine of Consideration. Retrieved 21 December 2010 http://epress.lib.uts.edu.au/dspace/bitstream/handle/2100/286/01front.pdf?sequenc e=1. Read More