StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Estoppel Is a Very Complex Legal Term - Essay Example

Cite this document
Summary
The paper "Estoppel Is a Very Complex Legal Term" discusses that recent publications like ASIC’s report on “book up” store credit arrangements in some rural and Indigenous communities illustrate the potential use of unconscionability laws to regulate the financial services industry…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER98.7% of users find it useful
Estoppel Is a Very Complex Legal Term
Read Text Preview

Extract of sample "Estoppel Is a Very Complex Legal Term"

ESTOPPEL Introduction In an effort to maintain our pledge of brief and straightforward answers, I will cheerfully condense the legal definition of estoppel into a few well-chosen paragraphs. Those pursuing a degree in law may want to rely on another source for the bar exam. Estoppel is a very complex legal term dealing with the role of conscience and truth in a court proceeding. An estoppel is a defence against a party reneging on a previous statement assumed to be a legal truth. Once a statement of fact is entered into a court case, the person who made that statement must stand by its truthfulness. He or she cannot claim a new position in a future business or private dealing. If the other party makes a decision based on the untruthful second statement and a lawsuit ensues, they can claim an estoppel in court against the plaintiff. In order for the estoppel to be considered valid, however, the defendant needs to demonstrate damages stemming from the untruthful statement. For example, if a landlord tells a tenant that he or she only owes half of the monthly rent because of repairs, the tenant can reasonably treat that as a statement of fact. He or she may write a check for half of the normal monthly rent and assume he or she is in good standing. If the landlord later decides to sue the tenant for not paying the entire amount of the lease, the tenant may claim an estoppel in court. The landlord's verbal agreement to accept half payment should have been recognized as binding, even if the original lease was not changed. The tenant had a reasonable right to change his rent payments based on a perceived truth. An estoppel is generally a defensive move, not a first strike. The plaintiff in a case can claim a number of reasons why the defendant should honour a contract or pay damages, for example. The defence must demonstrate that the plaintiff's own statements go against established facts in order to claim an estoppel. There must also be evidence that the defendant based his actions strictly on the reliance of truth and that he suffered damages because of it. Enforcement of an estoppel is generally left up to the discretion of the individual judge hearing the case. TYPES OF ESTOPPEL Equitable estoppel A type of estoppel that bars a person from adopting a position in court those contradict his or her past statements or actions when that contradictory stance would be unfair to another person who relied on the original position. For example, if a landlord agrees to allow a tenant to pay the rent ten days late for six months, it would be unfair to allow the landlord to bring a court action in the fourth month to evict the tenant for being a week late with the rent. The landlord would be estopped from asserting his right to evict the tenant for late payment of rent. Estoppel by deed A type of estoppel that prevents a person from denying the truth of anything that he or she stated in a deed, especially regarding who has valid ownership of the property. For example, someone who grants a deed to real estate before he actually owns the property can't later go back and undo the sale for that reason if, say, the new owner strikes oil in the backyard. Estoppel by silence A type of estoppel that prevents a person from asserting something when she had both the duty and the opportunity to speak up earlier, and her silence put another person at a disadvantage. For example, Edwards' Roofing Company has the wrong address and begins ripping the roof from Betty's house by mistake. If Betty sees this but remains silent, she cannot wait until the new roof is installed and then refuse to pay, asserting that the work was done without her agreement. Promissory estoppel A type of estoppel that prevents a person who made a promise from reneging when someone else has reasonably relied on the promise and will suffer a loss if the promise is broken. For example, Forrest tells Antonio to go ahead and buy a boat without a motor, because he will sell Antonio an old boat motor at a very reasonable price. If Antonio relies on Forrest's promise and buys the motorless boat, Forrest cannot then deny his promise to sell Antonio the motor at the agreed-upon price. (2) A legal doctrine that prevents the relitigation of facts or issues those were previously resolved in court. For example, Alvin loses control of his car and accidentally sideswipes several parked cars. When the first car owner sues Alvin for damages, the court determines that Alvin was legally drunk at the time of the accident. Alvin will not be able to deny this fact in subsequent lawsuits against him. This type of estoppel is most commonly called collateral estoppel. The Rise of Unconscionability Unconscionability The concept of unconscionability in our law is not new. It has been a feature of many cases in Australia over the years, the highlight being the High Court of Australia decision in Commercial Bank of Australia Limited v Amadio. The common law notion of unconscionability has been codified in what is now known as section 51AA of the Trade Practices Act (the TPA). Some early decisions gave unconscionability quite a wide reading in cases that raised preliminary matters of procedure and related matters (see, for example, Olex Focas Pty Ltd v Skodaexport Co Ltd and HECEC Australia Pty Ltd v Hydro-Electric Corporation). In light of these cases, there were suggestions that section 51AA might become as widely used in litigation in Australia as section 52 of the TPA. Section 52 prohibits misleading or deceptive conduct and has been described by one leading academic commentator as a 'plaintiff's exocet'. Section 52 has become part of the landscape in litigation involving contractual disputes, trade mark disagreements, passing off claims and other similar matters. Indeed, it is often, perhaps flippantly, suggested that for a lawyer not to include a claim based on section 52 of the TPA in such litigation may amount to negligence. In 1998, the notion of unconscionability was extended to small business. Even though the monetary limit available in relation to such actions is only $3 million, the prospect of increased litigation involving unconscionability was widely anticipated. However, the recent High Court decision in Australian Competition and Consumer Commission v Berbatis (Berbatis)6 handed down on 9 April, has caused a rethink on the likelihood of unconscionability becoming more widely used. The case is an indicator of the Court's attitude to section 51AC even though it only deals directly with section 51AA (because the litigation was commenced by the Australian Competition and Consumer Commission (ACCC) prior to the availability of section 51AC). In this article we discuss Berbatis, and some other interesting cases in which the concept of unconscionability has been relied on outside the area of the TPA. Despite the willingness of some judges to rely on unconscionability to provide relief or suggest proposed remedies in unusual situations, it is generally believed that the concept of unconscionability will not become as widely used or as effective as section 52 of the TPA. The facts of the Berbatis case Berbatis Holdings Pty Ltd (Berbatis) was the landlord of a retail shopping centre. A number of the tenants were involved in a dispute with Berbatis. While the litigation remained on foot, the lease of Mr and Mrs Roberts (the Roberts) was due to expire. It did not contain an option to renew. The Roberts had arranged for the sale of their business, but this was entirely dependent upon them obtaining a renewal of their current lease for assignment along with the accrued goodwill of the business. Significantly, Berbatis knew the Roberts were under considerable financial and emotional stress, particularly in light of a family illness. Berbatis sought to make the renewal of the lease conditional upon the Roberts agreeing to discontinue the litigation. The Roberts agreed to withdraw their litigation as part of the renewal of the lease. The ACCC brought proceedings on behalf of the Roberts, and various others, alleging unconscionable conduct. Justice French at first instance, ([2000] FCA 1376) found that by imposing this condition, Berbatis had unfairly exploited the particular vulnerability of the Roberts in relation to the sale of their business to achieve ends which Justice French felt were 'commercially irrelevant to the terms and conditions of any proposed new lease'. The Full Federal Court overturned the decision of Justice French ([2001] FCA 757). In upholding the decision of the Full Court, the majority of the High Court (Chief Justice Gleeson, Justices Gummow, Hayne and Callinan with Justice Kirby dissenting) gave a narrow interpretation of the term 'unconscionability'. Unconscionable conduct or hard bargain The majority of the judges of the High Court focused particularly on the difference between the notion of a 'special disability', which they felt would attract protection under the TPA, and in particular, section 51AA, and a 'hard bargain', which the court felt was a commercial reality with which the court should not concern itself. In that context, certain members of the court were possibly suggesting that even in the context of section 51AC, where the notion of unconscionability is given a wider meaning by virtue of specific guidelines, this underlying principle may well prevail, despite those guidelines. The majority held that the conduct of Berbatis 'fell short of a disabling condition or circumstance seriously affecting their ability to make a judgment as to their own best interests.' In reaching this conclusion, the High Court observed that for an action to be 'unconscionable', the weaker party must be in a position of 'special disadvantage,' that is exploited by the stronger party. While acknowledging that the Roberts were at a 'distinct disadvantage', the majority felt there was nothing 'special' about it. All members of the majority were inclined to view the transaction as an example of a difficult commercial decision arising out of an inevitable disparity of bargaining power. In this regard, the family illness, and the imminent sale of the business were insufficient to demonstrate the relevant disadvantage. The majority agreed that having one's will overborne is not a necessary element in establishing special disadvantage. Chief Justice Gleeson found that the Roberts did not suffer from an inability to make a judgment, but an inability to get their own way resulting from their unequal bargaining position - a common disability the courts will ordinarily not relieve. In this context, it is interesting to note that in finding for the ACCC at first instance, Justice French described the disadvantage of the Roberts as 'situational' (arising from an intersection of legal and commercial circumstances)' as opposed to 'constitutional' (arising from an inherent weakness or infirmity). While accepting that special disadvantage could be situational, Justice Gleeson urged caution in the use of this category, warning against such a description taking on a life of its own, in substitution for the language of the statute. In their joint judgment, Justices Gummow and Hayne held that the facts fell short of circumstances that would constitute unconscionability. To sustain a complaint of unconscionable conduct, it would be necessary in their view for the applicant to establish that the special disadvantage resulted in a loss of the weaker party's capacity to make a judgment about their best interests. Additionally, they rejected the view of Justice French that the withdrawal of litigation required by Berbatis was commercially irrelevant on the basis that the judgment as to what constitutes a relevant point of negotiation is for the parties involved to decide. Justice Callinan similarly found that no special disadvantage arose out of the disparity of bargaining power on the facts, given that in his view, 'there were no circumstances seriously affecting the ability of Mr and Mrs Roberts to make a judgment as to where their best interests lay'. In dissent Justice Kirby had raised concerns during argument before the High Court that a wide interpretation of unconscionability might amount to driving a 'herd of elephants through the marketplace.' In view of Justice Kirby's strong support for the protection of small business and individuals, rather than the competitive process, it is not surprising that he ruled in favour of the ACCC. He held that the conduct was unconscionable within the meaning of the TPA in so far as the Roberts were clearly unable to assess their rights and interests as a result of the overbearing conduct of Berbatis. Justice Kirby took a subjective view in holding in favour of the applicant in this case and his decision can be interpreted as one highly influenced by the relevant facts rather than the law. He preferred to rely on the findings of the trial judge rather than trying to weave a more expansive definition of unconscionability into section 51AA. New developments in unconscionability, good faith, and statutory reform of trade practices and financial services regulation make it easier to hold banks and other corporations in the private and public sectors accountable in general and to overturn or rewrite contracts and securities in particular. In brief, the statutory and non-statutory forms of unconscionability are undergoing revision and expansion simultaneously across all of these dimensions or alternatively in conjunction with these related developments: The judicial and legislative development of sections 51AA, 51AC, and 52 of the Trade Practices Act mirrors that Act's transformation from an Act primarily regulating anti-competitive conduct and abuse of market power to one which equally regulates commercially unfair, self-interested, and opportunistic conduct whatever its impact on competition and markets. The recent extension of unconscionability to embrace "situational" disadvantage based on a party's legal and financial position as well as "constitutional" (or inherent) disadvantage arising from a person's health or lack of understanding has as much potential to interrupt corporate and commercial dealings as the expansion of indicia of statutory unconscionability and ACCC test cases on its scope. The expanded indicia of unconscionability in section 51AC clearly extend unconscionability even further beyond its orthodox equitable boundaries and its meaning in section 51AA. Inherent personal difficulties relating to language difficulties, infirmity, and other hardships which characterize the link between unconscionability and notions of special disability or special disadvantage in landmark cases like Blomley v Ryan[21] and Commercial Bank of Australia Ltd v Amadio do not exhaust unconscionability's reach in banking and commercial context. That reach extends to conduct between commercial parties, including corporations which are in a disadvantageous position relative to governments and government business enterprises. While the immediate concern after Garcia is whether the familial relationships of trust and confidence which might attract unconscionability's intervention in financing and security contexts extend beyond wives to include husbands, heterosexual and homosexual co-habitees, and extended family and friends, a wider concern is whether unconscionability can strike at commercial relationships involving trust and confidence (eg banker-customer, landlord-tenant, and employer-employee relationships). As outlined below, there is also the possibility that corporations might avail themselves of doctrines like unconscionability, undue influence, and duress. Strong judicial support exists for extending unconscionability in section 51AA beyond its conventional equitable boundaries, with clear potential application to a broad band of commercial conduct beyond Amadio-like situations and to dealings between commercial parties in the public and private sectors. That development has implications for cognate unconscionability provisions like those in the ASIC Act. The relocation of unconscionability in relation to 'financial services' from the Trade Practices Act to the ASIC Act is now complete. Some commentators believe that the post-CLERP corporate law reforms are manageable in practice in normal circumstances for directors and officers, and that the more troublesome areas of expanding regulation lie elsewhere, such as in the expanding scope of unconscionability regulation. Consider, for example, former TPC Commissioner Bob Baxt's comments on this: The entrepreneur, in my view, should be able to act with some degree of confidence provided we do not embrace statutory reforms of a rather eccentric nature. They will know that in essence whilst any decision taken can in appropriate circumstances be second guessed; provided they have taken relevant advice, balanced the appropriate interests that need to be balanced in the circumstances, and avoid at all costs the possibility that they may gain personally from the transaction (unless they have obtained clear and independent approval of that action from directors or shareholders), they need not lose to much sleep. Greater danger, it seems, lies in the possibility that the general law of negligence, the law of unconscionability, and other consumer protection laws, will expose directors to a range of actions by 'busy bodies' and others in circumstances that were not countenanced even 20years ago ... It is clear that we must not sacrifice the interests of those who are the more vulnerable members of society (including stakeholders or potential stakeholders in companies such as employees) simply to pursue wealth; but the more we expose the company director, and others, to claims by persons who have no financial or other direct interest in the activities of the corporation without linking those actions to specific obligations imposed by the law, the more we expose the corporate entrepreneur to the kind of risks that will make it less and less attractive if not impossible for that person to take risks in Australia. Regulating unconscionable, unfair, and other forms of self-interested conduct is a mushrooming area of statutory and judge-made regulation and also an area of growing concern for directors of government and non-government corporations alike. New developments in unconscionability, good faith, and statutory reform of trade practices and financial services regulation make it easier to hold banks and other corporations in the private and public sectors legally accountable. A number of statutory and non-statutory developments combine to limit abuse of corporate and public power and self-interested behavior by corporations and governments in ways which might not have been imagined a decade ago. Particular interest focuses on procedural fairness, unconscionability, good faith, and other fairness-based arguments as well as rights-based arguments, in situations where the law enhances the legal imperative for one party - often a governmental or business organization wielding significant public or commercial power - to take account of the interests of another party. Until recently, the law has adopted an orthodox and politically liberal laissez faire approach to corporate and commercial self-interest, stepping in only at the extremes to prevent clear abuses of power which result from a stronger party acting in their own economic self-interest, as in conventional situations of unconscionability involving a stronger party taking advantage of a weaker party's illiteracy, stupidity, language difficulties, drunkenness, need for advice, or other personal indicia of being under a 'special disadvantage' a la Amadio. However, the introduction of qualitatively different statutory indicia of unconscionability in section 51AC of the Trade Practices Act, together with the recent expansion of the notion of 'special disadvantage' for the purpose of section 51AA to include situational unconscionability stemming from a weaker commercial party's legal and financial circumstances, both mean that corporations face new trade practices and financial services regulatory risks when they effectively hold someone over a barrel and extract a commercial concession. The gap between sharp conduct and unconscionable conduct has narrowed in the last 12-18 months. Moreover, the latest round of financial services reform changes add new unconscionability provisions to the ASIC Act and the Corporations Act, including an equivalent of section 51AC of the Trade Practices Act in the ASIC Act (new section 12CC) to regulate unconscionable conduct in connection with small business and financial services. Recent publications like ASIC's report on "book up" store credit arrangements in some rural and Indigenous communities illustrate the potential use of unconscionability laws to regulate the financial services industry. So, the recent spate of ACCC test cases across various industries (eg banking, franchising, retailing) have implications for clients and advisers involved in financial services under the equivalent and new unconscionability provisions in the ASIC Act. Commercial operators are likely to face future litigation based on the recent extension of the general law on unconscionability (which is encapsulated to varying degrees now in the Trade Practices Act and other federal Acts) to regulate unconscientiously exploitation of individuals or even other commercial parties who are in a weaker bargaining position and who might be characterized as suffering from a special disadvantage, which might now be financial, legal, or informational in nature (and hence more relevant in commercial contexts, as distinct from a personal disadvantage like illness or drunkenness, which is usually a remote consideration in most commercial transactions). This expansion of both the reach of unconscionability and its increasing regulatory manifestations now in the trade practices, financial services, and corporate laws has equally significant implications for non-government corporations and regulators too. Bibliography Estoppel (English Law) from Wikipedia (2007). Retrieved on March 27, 2007. From http://en.wikipedia.org/wiki/Estoppel_(English_law) Estoppel from Wikipedia (2007). Retrieved on March 27, 2007. From http://en.wikipedia.org/wiki/Estoppel Estoppel by Ken Burnett. Retrieved on March 27, 2007. From http://www.touchbriefings.com/pdf/976/26.pdf What is Estoppel by Wise Geek Retrieved on March 28, 2007. From http://www.wisegeek.com/what-is-estoppel.htm Estoppel from Encyclopaedia. Retrieved on March 28, 2007. From http://www.nafa.org/Source/BM_Estoppel.pdf Estoppel from Smallbusiness.com. Retrieved on March 28, 2007. From http://www.smallbusiness.com/wiki/Estoppel Estoppel by K-zone. Retrieved on March 28, 2007. From http://www.kevinboone.com/lawglos_Estoppel.html Notion of Unconscionability by Allen Arthur Robinson. Retrieved on March 29, 2007. From http://www.aar.com.au/pubs/pdf/ldr/focljun03.pdf Unconscionability breaks new grounds by Allen Arthur Robinson. Retrieved on March 29, 2007. From http://www.aar.com.au/pubs/baf/banking2.htm Unconscionable Conduct Australian Competition and consumer commission. Retrieved on March 29, 2007. From http://www.accc.gov.au/content/index.phtml/itemId/303748/fromItemId/3669 Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Estoppel Essay Example | Topics and Well Written Essays - 3000 words”, n.d.)
Estoppel Essay Example | Topics and Well Written Essays - 3000 words. Retrieved from https://studentshare.org/miscellaneous/1517465-estoppel
(Estoppel Essay Example | Topics and Well Written Essays - 3000 Words)
Estoppel Essay Example | Topics and Well Written Essays - 3000 Words. https://studentshare.org/miscellaneous/1517465-estoppel.
“Estoppel Essay Example | Topics and Well Written Essays - 3000 Words”, n.d. https://studentshare.org/miscellaneous/1517465-estoppel.
  • Cited: 0 times

CHECK THESE SAMPLES OF Estoppel Is a Very Complex Legal Term

The Importance and Necessity of Consideration in English Law

The purpose of the requirement of consideration is to put some legal limits on the enforceability of agreements even where they are intended to be legally binding.... eaning of ConsiderationIt is common knowledge that definitions as to the legal meaning of consideration can be classified into two categories.... An example is the requirements for a valid contract, whose requirements are numerous and more complex than what obtains in the common law....
36 Pages (9000 words) Dissertation

Narni Pty Ltd - Bank Law

The bank operated and permitted the account to operate in a very flexible way so that the monthly surges far exceeded any such limit".... The Court found that it was a "term of this arrangement between the Bank and Narni that the Bank would not refuse to honour cheques drawn by it on the ground that the balance of the account exceeded the approved overdraft limit of $65,000.... The correctly held that it was an implied term of the arrangement that the Bank could not terminate or vary it without giving the customer reasonable notice so as to allow time for it to arrange its affairs to comply....
8 Pages (2000 words) Essay

Doctrine of Estoppel in Australian Law

stoppel has therefore had an important impact on contract, but, it should be kept in mind that estoppel is a general doctrine which operates in all sorts of other areas as well.... estoppel is defined in English law as: "a principle of justice and of equity.... estoppel is an equitable doctrine that proposes that a person who requests the courts to give a legal remedy should posses a clear conscience.... estoppel is not a remedy "at law" in the jurisdictions of common law, but is based on the principles of equity....
14 Pages (3500 words) Essay

The Books Ltd and Print UK Ltd - Promissory Estoppel

romissory estoppel is an important remedy, provided by the law, to an injured party in a contract.... However, legal luminaries have contended that it can be used as a shield and not as a sword.... romissory estoppel, also known as detrimental reliance, is that which the promisor can be reasonably expected to initiate some action or forbearance by either the promisee or a third party.... n the realm of equity, the notion of promissory estoppel binds the parties to the agreements; despite the l....
9 Pages (2250 words) Article

The Nature of Proprietary Estoppel

However, Sexton argues that the '2002 Act achieves this purpose only to a very limited degree'5.... Ultimately, the ease with which a third party proprietary right can be protected against a purchaser depends on the nature of the right whether legal or equitable, which is further highlighted by the implementation of the LRA 2002.... Firstly, as a general principle with regard to registered land, legal interests are required to be registered unless they fall within the category of overriding interests....
11 Pages (2750 words) Essay

Varying of Contract Terms

Consideration is an important principle for a contract as the English courts take that into when determining the legal enforceability of a contract.... the promissory estoppel allows changing contracts benefiting the parties who have acted to own detriment relying on the counterparty's promise.... The issue in this question relates to the doctrine of consideration, the traditionalists approach towards the varying of the terms of the contract and the doctrine of promissory estoppel....
7 Pages (1750 words) Case Study

The Case of Narni Pty Ltd V National Australia Bank Limited

s the matter came before the court, the claimant argued that the defendant had breached an implied term (and other terms of the overdraft), however, of great concern is the implied term.... This research paper 'The Case of Narni Pty Ltd V National Australia Bank Limited' looks into the issues raised in the case specifically, the implied contractual obligations the bank owes to the customer....
8 Pages (2000 words) Assignment

Origins of the Doctrine of Promissory Estoppel

The doctrine of promissory estoppel is attributed to Lord Denning's Central London Property v High Trees case the grounds of which in history originate from two pre-existing common law estoppel sources, a strategy for imposing constancy invoked.... The doctrine of promissory estoppel is attributed to Lord Denning's Central London Property v High Trees case the grounds of which in history originate from two pre-existing common law estoppel sources, a strategy for imposing constancy invoked....
10 Pages (2500 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us