Date: Fri, 11 Apr 2003 17:03:58 +0800

From: Low Fatt Kin Kelvin

Subject: Estoppel in the HL

Responding to Paul, I do not see estoppel as "valuable law". It really, together with some constructive trusts and the doctrine of part performance, represents the Courts' attempts to avoid certain formality requirements which it regards as unnecessary. In fact, it does precisely what the House of Lords were so concerned not to do in Actionstrength, viz to nullify these formality requirements.

The technique it employs (this only works outside of contract, which perhaps explains the result in Actionstrength) is to pay lip service to the formality concerned. It does so by not rendering it wholly nugatory. Estoppel does not apply in every informal transaction so the formality enacted by Parliament still stands. It is only triggered where there has been detrimental reliance on a representation made by the party to be estopped. The crucial differentiating factor between an estoppel case and a run of the mill non-compliance case is the detrimental reliance. Therefore, although they purport to enforce an informal transaction, it does so by insisting on detrimental reliance. This is why it is so difficult to apply estoppel in the contractual formality context without some further requirement (eg part performance). Almost every instance of consideration can be regarded as detrimental reliance. The technique does not work as well in this context.

But because it responds to harm, it becomes very difficult to justify why the response should be something altogether unrelated (typically enforcement of the promise). Indeed, every now and then, the courts find themselves faced with a case where the promise is disproportionate to the harm suffered and when that happens, they typically refuse to order enforcement.

It is this dissonance between the actual response and the event that triggers the response that is discomforting. It is akin to saying that consideration is a requirement for enforcing a promise but if you can establish loss suffered as a result of deceit committed by the other party, you can now enforce the contract. Why should this be the case?

I am far more comfortable with the new but as yet unaccepted reliance-based theory of estoppel where all you get is compensation for loss. If loss is what you are responding to, then compensation seems the perfectly sensible response.

This is largely based on my recollection of the law of estoppel and I will be most happy if someone can convince me otherwise as I am very uncomfortable disagreeing with a large body of law.

Kelvin Low
Assistant Professor
National University of Singapore

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