Contract law problem - help!!!?

Question

I would like to ask whether there needs to be a pre-existing legal relationship (contractual or otherwise) in order to apply the doctrine of estoppel, in the case of Jorden v Money.

It has been said that the doctrine of estoppel can act as a shield but not as a sword, that is it cannot create a cause of action.

Answer 1

I assume you are referring to English law. The doctrine of estoppel for American Law is more elaborate.

But in general, in English law, all reliance-based estoppels (estoppel by representation, promissory estoppel), with exception to proprietary estoppel, require pre-exising legal relationships to be invoked. The reason is that the doctrine of estoppel should not be used to undermine the doctrine of consideration. Contracts should be enforceable by way of consideration and not estoppel. Therefore, simply put, estoppel can only be invoked when the promise or representation made affects prior legal relations (for eg. forbearance to sue). And it follows from the requirement of pre-existing legal relationships, that estoppel can only be used as a defence to a claim or to defeat a defence when a cause of action has already been established. Again, the reason is that the doctrine of estoppel should not undermine the doctrine of consideration by providing a new cause of action.

However, it is different with proprietary estoppel where non-compliance with statutory formalities makes it difficult for contracts, concerned with the interest in property, to be enforced. To mitigate this hardship, proprietary estoppel steps in and provides a new cause of action to parties who had no pre-existing legal relationships.

In the case of Jorden v Money, there was a pre-existing legal relationship, but the issue was one of existing fact. Estoppel by representation could not be invoked because it was held that the creditor made a representation of intention that he would not enforce a bond, and not one of existing fact.

Answer 2

There is usually always a pre-existing relationaship for the doctrine of estoppel to apply e.g. the High Trees case where one party said they wouldn't do something and then did - they were estopped (prevented) from doing what they said they wouldn't. A handy website is www.justis.com.

Answer 3

Estoppel may occur even when there is no pre-existing legal relationships in cases of declarations of a person which binds other persons even without any contract.

Answer 4

Material modifications of contracts must have new consideration. Without new consideration, the modification is invalid. There was no new benefit received by Rebecca, because Chris already was obligated under the terms of the contract to complete the work by summer. So since there is no new valid consideration, the original agreement is still binding and the attempted modification is not enforceable. Now if Chris were to have said, give me the 500 pounds for adding some extras to the work, even as something as simple as planting some flowers in front of the B&B, then it would be enforceable, because Rebecca would be getting something for agreeing to pay more. Basically Chris doesn't get anything more than what was already in the original agreement, and he should not waste anymore time paying lawyers trying to get paid for something he will not prevail on.