Professional Documents
Culture Documents
John Marrin QC
Keating Chambers
THE ARTICLES
AND PAPERS PUBLISHED BY KEATING CHAMBERS ARE FOR THE PURPOSE OF RAISING
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ADVICE
I.
Estoppel
A.
Introduction
Discussion will focus on:
B.
Estoppel by representation
Estoppel by convention
Promissory estoppel
Estoppel by Representation
If a party makes a representation with the intention and effect of inducing
another party to alter his position to his detriment in reliance on the
representation, the party making the representation may be estopped from
relying on facts which are at variance with the representation. (Keating 11002)
To establish a valid estoppel by representation of fact (Wilken para. 9.02):
the claimants argued, inter alia, that the Council were estopped from denying
that the agreement had been executed under seal.
Regarding estoppel by representation, HHJ Fox-Andrews stated (at p. 88):
I find that there was a representation by the RDC that the contract would be
under sealThe vital question, however, is whether Whittal altered their
position so that they suffered detriment in reliance on that representation.
The test of detriment is whether it appears unjust or inequitable that the
defendants should now be allowed to resile from the RDCs representation,
having regard to what Whittal have done or have refrained from doing in
reliance on that representationMr White had not satisfied me that but for
the fact Whittal believed the contract was under seal Whittal would have
commenced this action within the six year period.
C.
Estoppel by Convention
Arises where:
convention and the RDC defendants are estopped from denying that the
contract was under seal.
D.
Estoppel by Deed
In contrast to the estoppels discussed above, estoppel by deed is a rule of
evidence which binds parties by the solemn and unambiguous statements in
a deed that they have executed.
antiquated, however, it still forms part of the modern law, as shown by the
Court of Appeal decision in First National Bank v Thompson [1996] 1 All ER
144 (prior to which, as noted in Wilken, 12.03 fn 8, the leading case was
Greer v Kettle [1938] AC 156, decided in 1937).
However, it may be argued, as is set out in Wilken para 12.07 12.12 that
there seems to be no situation where estoppel by deed will operate where
either estoppel by convention or representation will not also apply.
The elements necessary for A to be able to raise an estoppel by deed against B
are:
E.
Promissory Estoppel
The doctrine of promissory estoppel originates from the cases of Hughes v
Metropolitan Railway and Central London Property Trust v High Trees
House.
Hughes v Metropolitan Railway (1877) 2 App Cas 439
Landlord gave his tenant notice requiring him to do repairs within six months.
During six months he began to negotiate with the tenant for purchase of his
lease. When negotiations broke down, he immediately claimed to forfeit the
lease on the ground that the tenant had not done the repairs. The claim was
rejected.
Lord Cairns stated it is the first principle upon which all Courts of Equity
proceed, that if parties who have entered into definite and distinct terms
involving certain legal rights certain penalties or legal forfeiture
afterwards by their won act or with their own consent enter upon a course of
negotiation which had the effect of leading one of the parties to suppose that
the strict rights arising under the contract will not be enforced, or will be kept
in suspense, or held in abeyance, the person who otherwise might have
enforced those rights will not be allowed to enforce them where it would be
inequitable having regard to the dealings which have thus taken place
between the parties. (per Lord Cairns, p. 448)
Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130
The claimants granted to the defendants a tenancy of a block of flats at a rent
of 2500l per year in September 1937. During the war, it became clear that the
defendants could not afford the rent and an arrangement was made between
the parties reducing the rent to 1,250l per annum. The defendants paid the
reduced rent.
between the rents. The defendants claimed the claimants were estopped from
demanding rent at the higher rate or had waived their right to do so up until
their letter in September 1945.
Denning J first considered whether the case may be a variation. He found that
That equitable doctrine, however, could hardly apply in the present case
because the variation here might be said to have been made without
consideration.
With regard to estoppel by representation, Denning J stated: the
representation made in relation to reducing the rent, was not a representation
of an existing fact. It was a representation, in effect, as to the future, namely,
that payment of the rent would not be enforced at the full rate but only at the
reduced rate.
entering upon a course of negotiation which has the effect of leading one of
the parties to suppose that the strict rights arising under the contract will not
be enforced. Here, as soon as the respondents raised the question of a claim
under either clause 11(6) or clause 24(1)(a), the parties entered into the
negotiations for an ex gratia settlement, negotiations which lasted over a
period of years. Even after those negotiations had come to an end, appellants
expressed no objection to the respondents instructing their own quantity
surveyors to prepare their claim, not did they give any notice to the effect that
they intended to resume their right under either clause to require a written
application within any particular period of time.
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as they are reflected and given effect in that document. (per Lightman J at
para. 7).
G.
The nature of contruction projects means the works are ongoing and
defects in those works may not be immediately noticeable, therefore it is
unlikely they will be drawn to the attention of the architect, enabling him
to represent that they have been approved.
It will be relatively difficult for the contractor to argue that it acted to its
detriment.
II.
Waiver
A.
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Depending on the context we use the term waiver to mean the permanent
abandonment of a right or its temporary suspension or the acceptance of a
different performance of a right or its temporary suspension or the acceptance
of a different performance from that which was originally promised or which
the opposing party was obliged to provide. But the use of the tem by itself
tells one nothing about the reason why the party in question will be held to
have abandoned or suspended a right or is bound to accept a different
performance. (Spencer Bower, Estoppel by Representation, 4th edition p.
369)
The doctrine [of equitable forbearance or promissory estoppel] has closer
affinities with the common law rules of waiver, in the sense of forbearance:
both are based on promises, or representations of intention; both are
suspensive (rather than extinctive) in nature and both are concerned with the
legal effects of promises rather than with proof of disputed facts. The main
difference between them is that the equitable doctrine avoids the difficulties
encountered at common law in distinguishing between a variation and a
forbearance.
There is now much judicial support for these submissions. Thus Lord Pearson
in Woodhouse AC Israel Cocoa Ltd v Nigerian Produce Marketing Co Ltd
[[1972] AC 741, 762] said that promissory estoppel was far removed from
the familiar estoppel by representation of fact and seems, at any rate in a case
of this kind, to be more like a waiver of contractual rights. In a number of
later cases waiver and promissory estoppel (or the rule in Hughes v
Metropolitan Ry) are treated as substantially similar doctrines. (Chitty (30th
edition) 3-104 3-105).
B.
Cases on Waiver
Glencore Grain Ltd v Flacker Shipping (the Happy Day) [2002] 2 All ER
(Comm) 896
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Broadly speaking there are two types of waiver strictly so-called: unilateral
waiver and waiver by election. Unilateral waiver arises where X alone has
the benefit of a particular clause in a contract and decided unilaterally not to
exercise the right to or forego the benefit conferred by that particular
clauseWaiver by election on the other hand is concerned with the reaction
of X when faced with conduct by Y, or a particular factual situation which has
arisen, which entitles X to exercise or refrain from exercising a particular
right to the prejudice of Y. (per Potter LJ, para. 64).
Scarf v Jardine (1882) 7 App Case 345:
The principle, I take it, running through all the cases as to what is an
election is this, that where a party in his own mind has thought that he would
choose one of two remedies, even though he has written it down on a
memorandum or has indicated it in some other way, that alone will not bind
him; but so soon as he has not only determined to follow one of his remedies
but has communicated it to the other side in such a way as to lead the opposite
party to believe that he has made that choice, he has completed his election
and can go no further; and whether he intended it or not, if he has done an
unequivocal actI mean an act which would be justifiable if he had elected
one way and would not be justifiable if he had elected the other waythe fact
of his having done that unequivocal act to the knowledge of the persons
concerned is an election. (per Lord Blackburn at 360-1)
Charles Rickards Ltd v Oppenhaim [1950] KB 616
The defendant ordered from the claimants a Rolls Royce Silver Wraith chassis
which was duly delivered. The defendant wanted to build a body on the
chassis and the claimants obtained an estimate from a third party of six or
seven months at the most. On the date for delivery the work was not
completed. The defendant did not cancel the contract but pressed for delivery
of the completed car and so waived the provision as to delivery within at most
seven months. The defendant sent a notice requiring completion by a later
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date, upon being informed that the car would not be ready by that date, the
defendant bought another care and claimed the sum from the claimants that he
paid for the chassis.
Denning LJ stated that:
If the defendant, as he did, led the plaintiffs to believe that he would not
insist on the stipulation as to the time against them, Whether it be called
waiver or estoppel on his part, or an agreed variation or substituted
performance, it does not matter. It is a kind of estoppel. By his conduct he
evinced an intention to affect their legal relations. He made, in effect, a
promise not to insist on his strict legal rights. That promise was intended to
be acted on, and was in fact acted on. He cannot afterwards go back on it.
C.
Pure Waiver
Reinwood Ltd v L Brown & Sons Ltd [2008] CLC 422
The JCT contract between the two parties for construction work in
Manchester provided for monthly interim payments on the seventh day of
each month. The work related partly to residential accommodation, under
which the supplies of goods and services would be zero-rated, and partly to
commercial accommodation, which would be chargeable to VAT at the
standard rate.
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D.
Non-waiver clauses
Enterprise Managed Services Ltd v East Midland Contracting Ltd [2007]
EWHC 727 (TCC)
The claimant sought a declaration that the court had no jurisdiction to decide a
claim by the respondent contractor or an order striking out the claim as
disclosing no cause of action or an order for summary judgment as. The
defendant countered that a condition precedent to commencing proceedings
other than adjudication had not been satisfied since there had not yet been
certification of the works. The claimant argued, inter alia, that although there
may not have been certification as strictly required by the contract,
nonetheless, by virtue of the practice adopted by the employerthen as
between the employer and the main contractor any strict requirement for the
issue of a certificate ahs in effect been waived, so that for the purposes of the
main contract there had been certification. (para. 45).
HHJ Stephen Davies stated, obiter: If necessary, I would also have been
prepared to find that the evidence before me demonstrates to a sufficient
standard that both employer and main contractor had mutually waived any
need for the physical issue of a document embodying a certificate in relation
to each project, so that: (i) for the purposes of the main contract each
individual project had been certified practically complete; (ii) for the
purposes of clause 15 of the sub-contract, the same applied. I would have
reached this conclusion notwithstanding the terms of clause 1.1.5 of the main
contract, because: (a) I am not convinced that as a matter of interpretation of
the main contract what has happened here amounts to a waiver of the
Contract, in whole in part; (b) even if it has, by at the latest the date of
the deed of variation of 14 June 2005 there had been an agreed waiver, which
was in writing and which was permitted under clause 1.1.1, either by the
adoption of the General Requirements from the outset, or by their inclusion as
a contract document by that date, or in any event in relation to each project
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by payment against authorised track sheets under the remittance, credit and
payments report; (c) I consider that on the evidence the employer would be
estopped from relying on clause 1.1.5 if he sought to rely on his own failure to
procure the issue of a certificate in such circumstances.
III. Variation
A.
B.
The contractor is
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C.
The variation must later the obligations of the parties. Therefore, where
the scope of the works is concerned, the variation must increase or
decrease the actual or implied obligations of the contractor to carry out
the works.
(2)
(3)
The contractor should have agreed to carry out the work, i.e. accepted
the request;
(4)
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Cases on Variation
Williams v Roffey Bros [1991] 1 QB 1
The claimant subcontractor contracted to carry out carpentry work in a block
of 27 flats for 20,000. The claimant got into financial difficulty as the agreed
price was too low and the defendants made an oral agreement o pay the
claimant an additional sum of 10,300 at a rate of 575 for each completed
flat. The claimant completed eight more flats, but the defendant had made
only one further payment. The claimant claimed for the sums promised.
The Court of Appeal upheld the judgment at first instance that the claimant
could recover the sums promised. The main issue in the case concerned
whether the variation was a new contract enforceable by good consideration
(i.e., Roffey Bros had received something of value in return for the extra
money they promised). The court held that Consideration there must still be
but, in my judgment, the courts nowadays should be more ready to find its
existence so as to reflect the intention of the parties to the contract where the
bargaining powers are not unequal and where the finding of consideration
reflect the true intention of the partieswhere, as in this case, a party
undertakes to make a payment because by so doing it will gain an advantage
arising out of the continuing relationship with the promise the new bargain
will not fail for want of consideration. (per Russell LJ, pp.18 19)
E.
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