Promissory Estoppel

Promissory Estoppel Sweeney & O’Reilly 1st Ed. Chapter 5 pp 110 – 115 2nd Ed. Pp 142 - 147

Promisory estoppel • A strict application of the rules of contract formation can lead to unjust results • Courts use equitable jurisdiction to intervene and prevent unfairness • Estoppel is used to stop a person from denying something that they have represented • Central London Property Trust v High Trees House (obiter dicta by Lord Denning) (S&OR p111\142)

Promissory estoppel • Applies where • No consideration exists • Formalities of making a contract have not been satisfied • Walton Stores v Maher (S&OR p114\146)

Elements • AssumptionThe promisee, on reasonable grounds, believes that a particular legal relationship exists or will exist • InducementThe promisor created the assumption • ReliancePromisee acts in reliance on promise • DetrimentPromisee alters its position to its detriment

Inducement • The promisor either • Induced the assumption; or • Being aware that the promisee had made the assumption, deliberately remained silent in circumstances where the promisor could reasonably have been expected to speak • The promise must be precise and unqualified • Legione v Hately (S&OR p113\144)

The Assumption • The promisee on reasonable grounds assumed that a particular legal relationship • Existed; or • Would exist • Legal relationship includes: • A right to something • Release from an obligation • For the promisee or someone else • Now or in the future

Reliance • The promisee acted (or refrained from acting) on the faith of the assumption.

Detriment • The promisee will suffer a detriment if the promisor fails to perform the promise • Mere failure by the promisor to carry out the promise will not of itself amount to detriment • Je Maintiendrai v Quaglia & Quaglia (S&OR p114\145)

Remedy • Minimum orders to prevent detriment • Not necessarily the same remedy as for breach of contract

Section 52 Trade Practices ActMisleading & Deceptive Conduct Sweeney & O’Reilly 1st Ed Chapter 3 pp 50 – 60 2nd Ed pp Chapter 3 71 – 84

Section 52 Trade Practices Act ‘A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’

Elements • A corporation; • In trade or commerce; • Engages in misleading or deceptive conduct; and • Conduct is within scope of TPA.

Scope • Trading, financial or foreign corporation; or • Operating in an Australian Territory; or • Involves an element of interstate trade; or • Conduct used postal, telegraph or telephone services; or • In the course of providing goods or services to the Commonwealth; or • Conduct by the Commonwealth or one of its instrumentalities

Scope (cont.) • Fair Trading Acts extend scope‘A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’ (section 9 Fair Trading Act (Vic))

Exclusions • Certain financial services are excluded • These are covered by s12AD Australian Securities and Commissions Act which is similar to s52 TPA

In Trade or Commerce • Very wide - applies to all ‘commercial’ conduct • Not just contracts • Not just consumer contracts • Covers: • Product claims • Statements made during the course of the sale of a business • Statements made during business negotiations • Statement by real estate agent during sale of house • Advice given by a professional person • Does not include statement of a personal nature • Political speech • Statement by house owner during sale of house

Misleading Conduct • Does not have to be an express statement of fact • Half TruthsCollins Marrickville v Henjo Investments (S&O p53\74)

Misleading Conduct (cont.) • Silence • If the circumstances are unusual it may be unreasonable to remain silent • Demagogue v Remensky (S&O p54\75) • General Newspapers v Telstra (S&O p54\77)

Misleading Conduct (cont.) • Opinions • An opinion is not normally misleading conduct unless • The opinion was not genuinely held • It is an opinion by an expert • If it is unsupported by the facts • RAIA Insurance Brokers v FAI (S&O p55\78)

Misleading Conduct (cont.) • Promises & Predictions • Not normally deceptive conduct unless • A promise made by a person who has no intention of carrying it out • No reasonable grounds for the prediction (s51A(1) TPA) • Wheeler Grace & Pierucci v Wright (S&O p55\78)

Misleading Conduct (cont.) • Promises & Predictions (cont.) • The onus is on the person making a promise or prediction to prove that he had reasonable grounds • section 51A(2) Trade Practices Act) • Futuretronics v Gadzhis (S&O p56\79) • Mere puffs • Not deceptive conduct

Mental element • No requirement for: • Fraud; or • Negligence • Yorke v Ros Lucas (S&O p52\74) • Will not be liable if: • Not the source of the information; and • Disclaims responsibility

Vicarious Liability • A corporation is liable for the conduct of its • Directors • Employees • Agents • Any person who acts at the direction or with the consent of the corporation Section 84(2)(b)

Causation • Damages only if conduct caused loss • Futuretronics v Gadzhis • Sweetman v Bradfield (S&O p58\81) • No reduction for Contributory Negligence • I & L Securities v HTW Valuers (S&O p 82 2nd Ed only) • Will change – Corporate Law Economic Reform Program Bill • Reliance • No loss caused by conduct if no reliance on it • Reliance not required for claims by competitors for false marketing • Does not have to be sole cause

Disclaimers and Exclusion Clauses • Must be prominent to be effective against claims for misleading conduct • Bateman v Slayter (S&O p57\80)

Remedies • Damages • Contract – restore plaintiff to position it would have been in if contract performed • Tort – restore plaintiff to position if tort not committed (i.e. restore plaintiff to pre-contract condition) • S 52 – Difference between plaintiff’s present position and the position it would have been in but for the misleading conduct • Can include loss of commercial opportunity

Remedies • Damages • Can be awarded against corporation’s • Directors • Employees • Agents If they were involved in the conduct • Injunctions

Remedies • Declaration • Court may declare contract wholly or partly void (s87 TPA) • Accounting Systems 2000 v CCH Australia (S&O p59\84) • Variation • Court can vary the terms of the contract • Mr Figgins v Centrepoint Freeholds (S&O p60\84)

Criminal Representations • S 53 TPA creates criminal offences for certain false representations • Services are of a particular standard, quality, value or grade • Goods are new • A particular person has agreed to acquire goods or services • Goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits

Criminal Representations • S 53 TPA (cont.) • Sponsorship, approval or affiliation of the corporation • Price • Availability of facilities for the repair of goods or of spare parts for goods • Place of origin of goods

Criminal Representations • S 53 TPA (cont.) • The need for any goods or services • The existence, exclusion or effect of any condition, warranty, guarantee, right or remedy • All are covered by civil provisions of s52 TPA

Promissory Estoppel