Estoppel – Promissory Estoppel

Doctrine of Estoppel

Estoppel in simple terms

To prevent someone from contradicting to previously stated or agreed by law is known as an estoppel. It is protection given to a person from being wronged by the actions or words of another person. And the Promissory Estoppel promisor who made a promise of lawful consideration at the time to promise and the promise depends on that promise, if the promise made is begotten which leads to loss, the promissory estoppel guarantees recovery of damages.

Purpose of Estoppel:

The main purpose of estoppel is to set a bar preventing one from contradicting what has said before or is legally established to be true. The person cannot deny the fact which is been already settled as truth so that the person cannot do any injustice to another person by contradicting his/her statements. Its aim is to look into areas of equity, justice, and good conscience.

Example of Estoppel:

1. Reva seeks an order from the family court for Steve to pay for the child support. Steve is estopped from by the court to deny the fact that he is the father of the child in an attempt to avoid the obligations of child support.
2. Sam induces John by intentionally making John believe that the land belongs to him and to buy the said land. Afterward, the land gets transferred to Sam and he tries to set aside the sales deed by stating that during the time of sale, he had no title. To prove his want to title is not allowed by the principle of estoppel.
3. The tenant was informed by the landlord that the landlord has reduced the rent, so the tenant relying on the statement of the landlord the tenant decides to stay. Here from collecting the full fund, the landlord can be estopped.

Estoppel in Indian law

Section 115 to 117 of the Indian Evidence Act, 1872 deals with Doctrine of Estoppel. As per these provisions, it stops/ restrains/prohibits a person from making contradicting statements or giving false evidence in a court of law.

In case of Sourujmull & ors. V. Gnages Manufacturing Co. the Doctrine of Estoppel in general and Promissory Estoppel were recognized.

Promissory Estoppel

The promisor who made a promise of lawful consideration at the time to promise and the promise depends on that promise, if the promise made is begotten which leads to loss, the promissory estoppel guarantees recovery of damages.

What are the three elements of promissory estoppel?

Promisor, promisee, and the promise made that wasn’t honored are the three main elements/ components needed for the promissory estoppel.

What does promissory estoppel mean in law?

Promissory estoppel occurs as a part of contract law as in contract law lawful consideration is crucial for making an agreement or promise which is like a contract. The purpose of the promissory estoppel is to be fair if the promisee experiences damages due to dependency on the promise made, to upheld by law.

Requirements of Promissory Estoppel:

• The promisor must show his intention of not enforcing his legal rights. The promisor can make promises in any form such as conveyance.
• The promisee must show reasonable dependency by doing his part of the promise by believing in the promise made by the promisor.
• An actual economic loss or loss of well-being must be suffered by the promisee due to failure on part of the promisor to deliver on the promise.
• The court of law can enforce the promissory estoppel to uphold the promise made if it is the only way to provide justice to the promisee.

What is the legal effect of promissory estoppel?

Even if there is no consideration given promissory estoppel provides a way to legally bind the promise made. It cannot totally make the contract/ promise fully enforceable. The requirements of promissory estoppel must be present before the contract/ promise is made enforceable by law.

Example of Promissory Estoppel:

• Lisa agreed to go on a Europe trip as her aunt encouraged her by promising to reimburse the expenses of the trip. Lisa agreed to the same but when she returned from the trip her aunt refused to reimburse any expenses. Lisa sued her aunt in civil court where the court found that Lisa had agreed to take a trip to Europe on a promise made by her aunt of reimbursement of expenses and her decision to take the trip solely was dependent on the promise made by her aunt. The court ordered Lisa’s aunt to pay the expenses as the agreement became enforceable due to promissory estoppel.
• Tina was promised by the shopkeeper that he would change the clothes if they do not fit Tina’s size. So, she took clothes home depending on the promise made by the shopkeeper. Hence, the shopkeeper is estopped from refusing to take back the clothes.

Difference between Estoppel and Promissory Estoppel

The two doctrines may have some similarity but they are different from each in following aspects:

1. In Estoppel for an existing fact, representation is made. Whereas in Promissory Estoppel for future intention representation is made.
2. Estoppel is backed by the party’s consideration. Whereas Promissory Estoppel is not supported by consideration but by the future conduct of parties.
3. Section 115 to 117 of the Indian Evidence Act, 1872, deals with estoppel. There are no such provisions for Promissory Estoppel in Evidence Act.
4. Estoppel can be utilized only as a defense. Whereas Promissory Estoppel can be utilized as a cause to obtain damages arising from the action of the promisor.
5. Estoppel deals in the law of torts. Promissory Estoppels deals with Indian Contract Act,1872.

Conclusion:

It can be concluded on a note that the doctrine of estoppel is an important principle protecting people from fraud, misrepresentation, etc. This doctrine helps to punish the person doing wrongful conduct and tries to avoid the person against whom the act is been done from suffering huge losses.

Doctrine of estoppels retrains the person from contradicting his/ her statement made earlier in court of law.  

Source:

1. https://www.indiacode.nic.in/bitstream/123456789/6819/1/indian_evidence_act_1872.pdf

Article by- Adv. Prathi Shetty