Promissory%20Estoppel

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Promissory Estoppel

• Sweeney OReilly
• 1st Ed. Chapter 5 pp 110 115
• 2nd Ed. Pp 142 - 147

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• 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) (SOR p111\142)

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

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• 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

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• 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 (SOR p113\144)

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• 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

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

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• 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 (SOR
  p114\145)

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

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Section 52 Trade Practices ActMisleading
Deceptive Conduct

• Sweeney OReilly
• 1st Ed Chapter 3 pp 50 60
• 2nd Ed pp Chapter 3 71 84

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• 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

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

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• 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

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• Scope (cont.)
• Fair Trading Acts extend scopeA 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))

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

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• 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

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

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

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• 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 (SO p55\78)

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• 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 (SO p55\78)

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• 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 (SO p56\79)
• Mere puffs
• Not deceptive conduct

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

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• 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)

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• Causation
• Damages only if conduct caused loss
• Futuretronics v Gadzhis
• Sweetman v Bradfield (SO p58\81)
• No reduction for Contributory Negligence
• I L Securities v HTW Valuers (SO 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

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

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• 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 plaintiffs present
  position and the position it would have been in
  but for the misleading conduct
• Can include loss of commercial opportunity

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

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

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• 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

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• 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

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• 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

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Provision TPA ASICA VIC
Misleading or deceptive conduct 52 12DA 9
Predictions 51A 12BB 4
Injunctions 80 12GD 149
Damages 82 12GF 159
Other remedies 87 12GM 158
Unconscionable conduct 51AA 12CA 7
Unconscionable conduct consumers 51AB 12CB 8
Unconscionable conduct small business 51AC 12CC 8A 8B