Business Law Report Essay Example | Topics and Well Written Essays - 2000 words

Business Law Report - Essay Example ..8 3.2 Scenario†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦9 1. Introduction Promissory estoppel is an equitable doctrine that applies to contract law to enforce a promise that is unsupported by consideration. It involves a promise given by one of the parties to a contract, during its performance, not to insist to the terms of the original contract (Feinman, 1984). This doctrine mitigates the harshness of the common law which insists that any promise which is unsupported by a consideration cannot be enforced. In the law of contract, parties must furnish consideration to make the contract binding. Therefore the words ‘estopped’ means ‘prevented’ or precluded. It prevents a party to a contract from denying the truth of a promissory representation (Feinman, 1984). Lord Denning in Combe v Combe[1951] 2 KB 215 at 220defined the doctrine by stating that â€Å" the principle, as I understand it, is that, where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relations as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has introduced, even though it is not supported in points of law by any consideration but only by his words†¦Ã¢â‚¬  2. Requirements of Promissory Estoppel This English position was first adopted in Australia by the High Court’s decision in Legione v Hateley(1983) 152 CLR 406. It sets some key ingredients for the application of the doctrine. First, there must be a pre-existing cont ract between the parties, which they seek to modify. Secondly, there must be a clear and unambiguous promise, which one party relies on as result of which they change their position and lastly, it must be inequitable to allow the promisor to go back on their promise. 2.1. Pre-existing Relationship There must be a legal relationship that existed between the parties. The parties ought to be in a continuing legal relationship, in the course of which, one of the parties agrees to the variation, and/or termination of the current one. Promissory estoppel cannot exist in a vacuum, and that it would only arise where there is an existing relationship between the parties.In most instances the existence of a relationship suffices from the existence of a contract (Boyer, 1952). In essence, the underlying contract must have been enforceable, and consideration for the subsequent agreement that is not required (Boyer, 1952). The requirement for the existence of a contract for the application of th e doctrine of estoppel was held not necessary in the Australian case of Waltons Stores (Interstate) Ltd v Maher[1988] HCA 7. The brief facts of the case were that Walton and Maher entered into a negotiation with regards to a lease of a property that was owned by Maher. They agreed that Maher would demolish a building that was in existence and build a new one which Walton would then occupy. The parties entered principally into an