Promissory Estoppel in Irish Contract Law

Promissory estoppel is the equitable gloss on consideration, and it is examined for a predictable reason: it is where a consideration problem goes once the strict rules have produced an unattractive result. A question about a creditor who agreed to take less, or a landlord who agreed to accept reduced rent, is not finished when you have said the concession was unsupported by consideration. The second move is whether equity will restrain the promisor from enforcing the very rights they said they would not enforce.

It is a creature of equity, not of statute: there is no provision to cite, and its content comes entirely from the cases. The question is always whether it would be inequitable to let the promisor resile.

Where the doctrine comes from

The equity originates in Hughes v Metropolitan Railway Co (1877) 2 App Cas 439 House of Lords. A landlord served notice requiring his tenant to repair within six months; negotiations then opened over the tenant's interest, and the tenant, understanding the repairing obligation to be suspended meanwhile, did not do the work. When the talks collapsed the landlord relied on the expiry of that period. The House of Lords refused: where negotiations lead one party to suppose strict rights are held in suspense, the party who induced that supposition cannot enforce them if it would be inequitable.

Denning J built the modern doctrine on that foundation in Central London Property Trust Ltd v High Trees House Ltd [1947] 1 KB 130 England & Wales. A block of London flats was let at a substantial ground rent; wartime conditions emptied the building and the landlord agreed in writing to accept half rent. When the flats filled again the landlord claimed the full rent for the later period and succeeded — the concession, properly construed, ran only while the wartime conditions lasted. But Denning J added the famous passage: a promise to accept less, intended to be acted on and in fact acted on, binds despite the absence of consideration. That was obiter, and remains the doctrine's foundation.

The building blocks

• An existing legal relationship. The doctrine operates on rights the parties already have — landlord and tenant in Hughes, creditor and debtor in a part-payment problem.
• A clear and unequivocal promise or representation that the promisor will not enforce their strict legal rights. Ambiguity is fatal: an expression of sympathy is not such a representation.
• Intended to be acted on. The promise in High Trees was made so the tenant would order its affairs by it; one nobody expected to be acted on does not engage the equity.
• Reliance — an alteration of position. The promisee must have acted on the promise; Irish courts stress detrimental reliance — Griffin J in Doran v Thompson Ltd [1978] IR 223 Ireland requires that the promisee acted on the promise, "altering his position to his detriment".
• Inequity in resiling. Even with promise and reliance, the promisor is restrained only where going back would be unconscionable.

What the Irish courts have done with it

The doctrine is well established in Irish law, and the Supreme Court’s statement of it is Griffin J’s in Doran v Thompson Ltd [1978] IR 223 Supreme Court (IE): where one party has by words or conduct made to the other a clear and unambiguous promise or assurance intended to affect their legal relations and to be acted on, and the other has acted on it, altering his position to his detriment, the promisor cannot revert to the previous legal relations as if no promise had been made. The plea itself failed there, silence not being a representation absent a duty to speak. Keane CJ restated the test in Ryan v Connolly [2001] IESC 9 Supreme Court (IE): the representation must be clear, but it need not be incapable of more than one interpretation; the question is whether it was reasonable to construe it as the promisee did.

In Revenue Commissioners v Moroney [1972] IR 372 Ireland a father sold the family public house in form only, to his sons for £16,000, a price never meant to be paid; the consideration being illusory, the transaction was a gift. Kenny J in the High Court held that in an action by the parent against the sons they "would succeed on what is now called promissory estoppel". The Supreme Court affirmed on a different ground — that no purchase money had ever been owed, so there was no right the father could have been estopped from asserting — so Moroney is not a Supreme Court recognition of the doctrine. Keane J traced the equity to Hughes and High Trees and stated it as Irish law in Truck and Machinery Sales Ltd v Marubeni Komatsu Ltd [1996] 1 IR 12 Ireland, though the plea failed on the facts; and in The Barge Inn Ltd v Quinn Hospitality Ireland Operations 3 Ltd [2013] IEHC 387 Ireland Laffoy J applied it to a rent reduction, the tenant having relied on the landlord’s promise to its detriment. Reliance is not a formality to be asserted: identify what the promisee did, or did not do, because of the promise.

Three limits to keep straight

Shield, not sword. In Combe v Combe [1951] 2 KB 215 England & Wales a husband promised his former wife an annual payment; she gave nothing in return, and when the money stopped she sued on the promise itself. She could not: in England estoppel restrains the enforcement of existing rights but creates no cause of action. The Irish Supreme Court has not followed that as a rule. In Courtney v McCarthy [2007] IESC 58 Supreme Court (IE) Geoghegan J said the shield-and-sword adage "does not mean any longer, if it ever did mean it, that estoppel can only be a matter of defence and can never ground a cause of action", and specific performance was granted on an estoppel; and in Webb v Ireland [1988] IR 353 Supreme Court (IE) the Supreme Court gave effect to an assurance by a monetary award. Both arose out of an existing relationship or transaction, and neither makes a bare gratuitous promise between strangers enforceable — but the limit cannot be stated here as it is in England.

Suspensory, not generally extinctive. The equity usually suspends the promisor's strict rights rather than destroying them; they may be revived for the future on reasonable notice. That is what Hughes and High Trees decided: in each the promisor recovered once the state of affairs behind the concession had passed. Only where resumption would itself be inequitable is the effect permanent.

Inequity is essential. In D & C Builders v Rees [1966] 2 QB 617 England & Wales a building firm owed £482 was, in financial difficulty, pressed into taking £300 in full settlement; it recovered the balance. The concession had been extracted by pressure: the promise must be freely given and the reliance itself equitable.

Distinctions students get wrong

Estoppel is not a substitute for consideration. It does not make a gratuitous promise enforceable at large; it stops a party enforcing rights inconsistently with what they said.

Nor is promissory estoppel the same as proprietary estoppel, which concerns assurances about rights in property relied on by the person given them, and which can found a claim.

Finally, know where estoppel sits in the part-payment problem. Payment of a lesser sum does not discharge a greater liquidated debt — the rule in Pinnel's Case (1602) 5 Co Rep 117a, confirmed in Foakes v Beer (1884) 9 App Cas 605 House of Lords — and the Irish courts still apply it strictly. Accepting a policy's encashment value plus €4,000 was mere part-payment, giving the bank no collateral advantage and so no consideration (AIB Mortgage Bank v Hayes [2017] IEHC 615 High Court (Circuit Appeal) (IE)); nor was an agreement reducing the sum owed in return for a repayment schedule (Heatherridge Associates v Curran [2019] IEHC 570 Ireland). Where the debtor has no fresh consideration, estoppel is the argument that remains — but bare part-payment will not do.

Related Contract notes: consideration · offer and acceptance · intention to create legal relations · undue influence · all free Contract notes.