Reliance-based Estoppels
Under English law, estoppel by, promissory estoppel and proprietary estoppel are regarded as 'reliance-based estoppels' by Halsbury's Laws of England, Vol 16(2), 2003. Both Halsbury's and Spencer Bower (see below) describe all three estoppels collectively as estoppels by representation. These estoppels can be invoked when a promisee/representee wishes to enforce a promise/representation when no consideration was provided by him. The court will only enforce this lack-of-consideration promise if and only if it would be "unconscionable" for the promisor/representor to rescind from his promise/representation ("it's not fair!"). Estoppel when invoked in such a manner is often considered a rival or alternative to the law of consideration under contract law. Only proprietary estoppel can create a cause of action in English law, though the other two can act in support of a cause of action or a reply to a defence. Under American jurisprudence, equitable estoppel is available only as a defense, while promissory estoppel can be used as the basis of a cause of action.
The requirement of inducement and reliance are broadly the same for all reliance-based estoppels:
- (i) the representor must have intended (actual or presumed) the representee, or have been reasonably understood by the representee as having intended him, to act on the relevant representation (or promise),
- (ii) the form of reliance must have been reasonable or intended, and
- (iii) the representation must have caused the representee to act in such a way that it would be "unconscionable" for the representor to resile. Detriment is measured at the time when the promisor proposes to withdraw his promise, not at the time when the promise is made.
Estoppel by representation of fact and promissory estoppel are mutually exclusive: the former is based on representation of existing fact (or of mixed fact and law), while the latter is based on a promise not to enforce some pre-existing right (i.e., an intention as to the future). Proprietary estoppel can operate only between parties who, at the time of representation, were in a pre-existing relationship, while this is not a pre-requisite under estoppel by representation of fact.
English courts will consider unconscionability taking into account many factors, including the behaviour, state of mind, and circumstances of the parties. Generally, the following eight factors are determinative (Michael Spence, Protecting Reliance: The Emergent Doctrine of Equitable Estoppel, Oxford: 1999, pp60–66):
- how the promise/representation and reliance upon it were induced
- the content of the promise/representation
- relative knowledge of the parties
- parties' relative interest in the relevant activities in reliance
- nature and context of the parties' relationship
- parties' relative strength of position zaneden
- history of the parties' relationship
- steps, if any, taken by the promisor/representor to ensure he has not caused preventible harm.
Read more about this topic: Estoppel In English Law