To begin with, the case as regards Richard and Ernie is related to the Doctrine of Promissory Estoppel, which is derived from Equity. According to this doctrine, if one party to the contract (promisor) makes a promise which the other party to the contract (promisee) acts upon, the promisor is estopped from going back on his promise, even though the promise did not provide any consideration.
Theoretically, by this concept, Ernie should be estopped from asking Richard for the remaining balance of ₤140. The main reason is that Ernie promised to accept a smaller sum of ₤160 from Richard in full settlement, intending Richard to rely on that promise, so he cannot go back to the original promise of ₤300 as a full payment. Hereafter, a number of cases concerning this Doctrine shall be discussed as a reference in support of the case of Richard and Ernie.
One of the most important cases relevant to the case of Richard and Ernie is Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130, from which the Doctrine of Promissory Estoppel originated. The Court held that part of money as requested by the plaintiff, could be recovered. According to Lord Denning, if the plaintiff asked to claim the whole sum of money, he would fail to recover the money even though the defendant did not provide any consideration. It is because the plaintiff’s contractual right for the whole sum of rent in 1940-5 was destroyed by agreeing to accept the reduced rent in the wartime. By the Doctrine of Promissory Estoppel, the plaintiff was estopped from getting the full rent in wartime, so he could only recover the rent after wartime. Referring to this case, it shows that in the case of Ernie and Richard, Ernie has no contractual rights to claim the remaining money.
The Essay on Case Law and the Doctrine of Precedent
In this essay I will be discussing several points of interest that will help me answer the given question. My first point is on the Hierarchy of the courts. In this point I will explain the different ‘levels’ there are in the English system. My second point is Stare Decisis and what it is. This point is made up of several questions that I will answer; why have binding precedent? What ...
There is another similar case, which is Tool Metal Manufacturing Co. Ltd v Tungsten Electric Co. Ltd [1955] 1 WLR 761 (HL).
There was a term in the contract that the defendant had to pay compensation to the plaintiff if he exceeded the set quota of imports. However, due to national interest in wartime, the plaintiff agreed to let him exceeded the quota without any compensation. Soon after the war, the plaintiff gave notice to the defendant that the plaintiff had to pay compensation for the non-war period hereafter. The Court held that by the Doctrine of Promissory Estoppel, the counterclaim failed since there was reasonable notice and thus the plaintiff could recover the amount in the non-war period. In other words, the plaintiff could never return to the original promise to get the full payment. In this way, this gives an idea that in the case of Ernie and Richard, Richard could rely on the Doctrine as defense.
Another important case is Hughes v Metropolitan Railway Company (1877) 2 App Cas 439 (HL), which is often be seen as the starting point of the Doctrine of Promissory Estoppel. The House of Lords held the six-month notice period restarted at the date when the negotiation broke down. In other words, the contract of repairing was kept in suspense, and the plaintiff was estopped from going back to the promise to enforce the defendant to do the repair. This proves that in the case of Ernie and Richard, Ernie is estopped from going back to the original promise.
There is another similar case, which is Brikom Investments Ltd v Carr [1979] 1 QB 467 (CA).
Though the original contractual term was that the tenants had to pay the maintenance, the landlords had made promise orally that they would use their own expense, so the tenants refused to pay afterwards. The Court held the landlords could not recover the expense from the tenants. As stated by Lord Denning, by the Doctrine of Promissory Estoppel, the landlords could not go back to the original promise. Once again, this provides evidence that in the case of Ernie and Richard, Ernie is estopped from returning to the previous promise.
The Essay on Mabo Case And The Doctrine Of Terra Nullius
Doctrine of terra nullius Terra nullius literally means 'land belonging to no one', and referred not only to territory that was inhabited, but also yo territory inhabited by people who had no system of law or social or political organization that was recognised by the English. Instead of recognising the laws and customs that existed at time of colonisation, the British government declared the land ...
These four cases show a similarity — the debtors did not have financial difficulties and the creditors did not have economic duress in making their second promises (having lesser sum for full settlement).
Yet, if there is the existence of economic duress, the Doctrine of Promissory Estoppel will not apply to the case and hence the second promise made under economic duress will be invalid.
The classic case in respect of economic duress is D. & C. Builders Ltd v Rees [1966] 2 QB 617 (CA).
The plaintiff lent a loan of ₤482 to the defendant, yet the defendant had financial difficulties and said that either the plaintiff accepted ₤300 as a full settlement or received nothing at all. Under economic duress, the plaintiff had no choice but to accept the settlement. The Court held that the defendant had to repay the remaining balance. As explained by Lord Denning, since the promise was not freely given, it was under an inequitable state; in other words, the plaintiff had contractual rights on the first promise and the second promise was invalid, so the Doctrine of Promissory Estoppel could not apply. Similarly, in the case of Ernie and Richard, Richard also had difficulties in paying the money in a short time. In spite of that, Richard did not ask for a smaller amount for the full settlement. Hence, there was not any economic duress imposed by Richard. Thus, the Doctrine of Estoppel would still be applied and Ernie’s right for the remaining balance was lost.
Based on the assumption that Ernie actively and freely promised with Richard that he would accept a lesser sum for full settlement, and there was no economic duress forced by Richard, the Doctrine of Promissory Estoppel is applied. Under this circumstance, Ernie lost his rights for the full sum. Only if Richard was the one to ask for the compromise and force Ernie to accept the terms or have no money at all, then it will not be the case — even Ernie was forced to compromised, this promise will not be valid and hence Ernie will be entitled to get the full amount of payment.
The Term Paper on Economic Duress
A contract is voidable or vitiate under several situations, economic duress is one of the examples. Economic duress is a vitiating factor in a contract as it is a common law defense. When there happens to be an economic duress in a contract, the party can make the contract voidable if the requirements are fulfilled. One needs to be noted that the contract is only voidable instead of being voided ...
Bibliography
Books
– Poole J., (2004), Casebook on Contract Law, 6th edition, Oxford, Hampshire.
– Richards P., (2004), Law of Contract, 6th edition, Pearson, Dorchester.
– Elliott C. and Quinn F., (2003), Contract Law, 4th edition, Pearson, Dorchester.
Cases
Brikom Investments Ltd v Carr
[1979] 1 QB 467 (CA)
Central London Property Trust Ltd v High Trees House Ltd
[1947] KB 130
D. & C. Builders Ltd v Rees
[1966] 2 QB 617 (CA)
Hughes v Metropolitan Railway Company
(1877) 2 App Cas 439 (HL)
Tool Metal Manufacturing Co. Ltd v Tungsten Electric Co. Ltd
[1955] 1 WLR 761 (HL)
