Overview
Estoppel is essentially a rule of evidence whereby a person is barred from denying the truth of a fact that has already been settled. Where a court finds that a party has done something warranting a form of estoppel, that party is said to be "estopped" from making certain related arguments or claiming certain related rights. The defendant is said to be "estopped" from presenting the related defence, or the plaintiff is said to be "estopped" from making the related argument against the defendant. Lord Coke stated, "It is called an estoppel or conclusion, because a man's own act or acceptance stoppeth or closeth up his mouth to allege or plead the truth." The plea of estoppel is closely connected with the plea of waiver, the object of both being to ensure bona fides in day to day transactions.
Because estoppel is so factually dependent, it is perhaps best understood by considering specific examples.
- Example 1: A city entered into a contract with another party. The contract stated that it had been reviewed by the city's counsel and that the contract was proper. Estoppel applied to estop the city from claiming the contract was invalid.
- Example 2: A creditor unofficially informs a debtor that the creditor forgives the debt between them. Even if such forgiveness is not formally documented, the creditor may be estopped from changing its mind and seeking to collect the debt, because that change would be unfair.
- Example 3: A landlord informs a tenant that rent has been reduced, for example, because there was construction or a lapse in utility services. If the tenant relies on this statement in choosing to remain in the premises, the landlord could be estopped from collecting the full rent.
Estoppel is closely related to the doctrines of waiver, variation, and election and is applied in many areas of law, including insurance, banking, employment, contracts, etc. In English law, the concept of legitimate expectation in the realm of administrative law and judicial review is estoppel's counterpart in public law, although subtle but important differences exist.
Promissory estoppel is often applied where there is an agreement without a consideration, or the consideration is future based; as a promise. When applied in defense by a defendant it may be called a 'shield', and where applied by a plaintiff it may be called a 'sword'. It is most commonly used as a 'shield', with some commentators stating that it can only be used as a shield, although this varies with jurisdictions.
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