Consideration

1. A word on formalities of a contract – deeds

1. Contracts, other than deeds, must be supported by valid consideration in order to be

enforceable
2. Deeds are contracts with a seal

2. Consideration

A contract must be supported by consideration moving from each contractual party to the other. There
must be some sort of benefit (or detriment) moving from party A to the other party B and vice versa.

Thus, a contract is essentially a "bargain" or "exchange" between A and B whereby:-

(1) A promises to B that A will do "X" for B "in consideration of" (in return for) B conferring a benefit (or
incurring a detriment) as stipulated by A; and,

(2) B promises to A that B will do "Y" for A "in consideration of" (in return for) A conferring a benefit (or
incurring a detriment) as stipulated by B.

Typically, X will be the consideration moving from A to B (that is, the benefit or detriment which A
confers or incurs at B's request) and Y will be the consideration moving from B to A (that is, the benefit
or detriment which B confers or incurs at A's request).

1) Under the traditional definition, it is sufficient if there is either a detriment to the promisee or
benefit to the promisor; detriment to the promisee does not need to benefit the promisor
(O’Sullivan v Management Agency & Music Ltd [1985] QB 428)
2) A promise is regarded as consideration for a counter-promise only its performance would also
have been so regarded, e.g. mere promise to accept a gift is no consideration for the promise to
make it

A note on invented consideration

1) In the US, “nothing is consideration unless it is regarded as such by both parties”

2) English courts, however, do not insist on this requirement; an act or forbearance, though not
the object of the promisor to secure it or that it has not been consciously realized, is still good
consideration (Pitt v Jones [2007] EWCA Civ 1301)
3) Criticism: too much discretion for the court to hold the contract enforceable or otherwise; there
is also a lack of consistency in the exercise of this discretion

Some examples: sale of goods, contract for services, executory promises, forbearance to sue,
compromises or settlement agreements.
3. Not for adequacy of consideration – nominal consideration

-- Consideration must be “something of value in the eye of the law” (Thomas v Thomas (1842) 2 QB 851)

 Capable of estimation in terms of economic or monetary value

 White v Bluett (1853) 23 LJ Ex 36: no consideration from the son for his father’s not to sue him
on a promissory note by promising in return not to bore his father with complaints
 Cf. Ward v Byham [1956] 1 WLR 496: promise by the mother of an illegitimate child to make it
happy as valid consideration for the father’s promise to pay allowance [ACheng: exceeding the
legal requirement and threshold]

-- Therefore, informal gratuitous promise does not amount to a contract for the lack of valid
consideration (Re Hudson (1885) 54 LJ Ch 811) and thus only enforceable by deed

Consideration need only be sufficient but not adequate

Objects of trifling value

Chappell & Co Ld v Nestle Co Ltd [1960] AC 87 (Chocolate manufacturers sold gramophone for 1s. 6d.
plus three wrappers of the chocolate bars; delivery of the wrappers still formed part of the
consideration, even though they were of very low value)

Sufficiency of nominal consideration: if consideration must as a matter of arithmetic be worth less than
the counter-promise, there would be no contract, i.e. paying $100 in return for $1  it would be a gift
of $99 in essence (Birmingham City Council v Forde [2009] EWHC 12)

Cf. the exchange of special coins or notes, $1 for a valuable property, “peppercorn rent” (deliberate
inclusion of a nominal consideration; fortuitous nominal consideration will not render a gratuitous
promise binding)

Nominal distinguished from inadequate consideration

Midland Bank & Trust Co Ld v Green [1981] AC 513

A husband sold a farm to the wife at 500 L but was worth 40000 L. Held that the wife was a “purchaser
for money or money’s worth” so that the sale to her prevailed over an unregistered option to purchase
the land, which had been granted to one of the couple’s children.

Lord Wilberforce:
1) “’Nominal consideration’ and ‘nominal sum’ appear… as terms of art, to refer to a sum or
consideration which can be mentioned consideration but s not necessarily paid.”
2) “To equate ‘nominal’ with ‘inadequate’ or even ‘grossly inadequate’ consideration would
embark the law on inquiries which I cannot think were ever intended by Parliament

Another test proposed in Westminster City Council v Duke of Westminster [1991] 4 All ER 136 to see
whether a lease was subjected to nominal consideration: “Any substantial value – that is, a value of
more than, say 5 L… will prevent the disposition from being for a nominal consideration.”

4. "Past consideration is no consideration"

-- Determining whether consideration is past is a matter of fact; wording of the agreement is not
conclusive

Re McArdle [1951] Ch 669: a promise made “in consideration of your carrying out” certain work was
gratuitous because the work had already been done

Lampleigh v. Brathwait (1615) Hob 105

"[A] mere voluntary courtesie will not have a consideration to uphold an assumpsit. But if that courtesie
were moved by a suit or request of the party that gives the assumpsit, it will bind, for the promise,
though it follows, yet it is not naked, but couples itself with the suit before, and the merits of the party
procured by that suit, which is the difference."

3 requirements for past consideration to be good consideration:

1. the act has been done at the request of the promisor;

2. it has been understood that payment would be made; and
3. the payment must be legally recoverable if it has been promised in advance (Re Casey’s Patents
[1892] 1 Ch 104)

Pao On v Lau Yiu Long [1980] AC 614 (PC HK).

P own shares of Shing On. D own majority shareholding in Fu Chip. Fu Chip floated on the Stock
Exchange in February 1973. D wish to acquire Shing On's building. P wanted to sell shares in Shing On.

D agreed that Fu Chip would buy P's Shing On shares in consideration for the allotment of 4.2 million Fu
Chip shares to P. Agreed market value of Fu Chip shares was $2.50 per share, P agree not to sell 60% of
Fu Chip shares before April 1974. Later, parties enter into supplementary agreement whereby D agree
to buy back Fu Chip at $2.50 per share before April 1974.

P then say that will not perform first agreement unless supplementary agreement annulled and D
instead guarantee to pay any difference between market price of Fu Chip shares and $2.50 per share in
April 1974. D agree so as not to jeopardise flotation of Fu Chip, D's guarantee executed May 1973.

Fu Chip shares down in April 1974. P sought to enforce guarantee. D says no consideration for
guarantee.

-- A clear summary of the case from Chitty:

“The claimants had entered into a contract with the X Co for the sale to that company of their shares in
another company. Under that contract, the claimants were to be paid by an allotment of shares in the X
Co, and they also promised not to sell 60 per cent of these shares for one year. This promise had been
made at the request of the defendants, who held most of the shares in the X Co and who were anxious
that the value of their holding should not be depressed by a sudden sale of all the shares allotted to the
claimants. Later, the defendants gave the claimants a guarantee in which they promised to indemnify
the claimants against any loss which they might suffer as a result of a fall in the value during the year of
the shares in the X Co.

The Privy Council rejected the argument that the consideration for the guarantee was past. The
claimants’ promise not to sell the shares in the X Co was good consideration for the guarantee; for
although that promise had been made before the guarantee was given, it had been made at the
defendants’ request and on the understanding that the claimants were, in return for making it, to
receive some form of protection against the risk (to which the promise exposed them) of a fall in the
value of the X Co’s shares.”

Lord Scarman (at 629-30):-

"The Board agrees with Mr. Neill's submission that the consideration expressly stated in the written
guarantee is sufficient in law to support the defendants' promise of indemnity. An act done before the
giving of a promise to make a payment or to confer some other benefit can sometimes be consideration
for the promise. The act must have been done at the promisors' request: the parties must have
understood that the act was to be remunerated either by a payment or the conferment of some other
benefit: and payment, or the conferment of a benefit, must have been legally enforceable had it been
promised in advance. [The law] All three features are present in this case. The promise given to Fu Chip
under the main agreement not to sell the shares for a year was at the first defendant's request. The
parties understood at the time of the main agreement that the restriction on selling must be
compensated for by the benefit of a guarantee against a drop in price: and such a guarantee would be
legally enforceable. [The facts] The agreed cancellation of the subsidiary agreement left, as the parties
knew, the plaintiffs unprotected in a respect in which at the time of the main agreement all were agreed
they should be protected."

On economic duress (at 635-6):-

"Duress, whatever form it takes, is a coercion of the will so as to vitiate consent. Their Lordships agree
with the observation of Kerr J. in Occidental Worldwide Investment Corporation v. Skibs A/S Avanti
[1976] 1 Lloyd's Rep. 293, 336 that in a contractual situation commercial pressure is not enough. There
must be present some factor 'which could in law be regarded as a coercion of his will so as to vitiate his
consent.' This conception is in line with what was said in this Board's decision in Barton v. Armstrong
[1976] A.C. 104, 121 by Lord Wilberforce and Lord Simon of Glaisdale - observations with which the
majority judgment appears to be in agreement. In determining whether there was a coercion of will such
that there was no true consent, it is material to inquire whether the person alleged to have been coerced
did or did not protest; whether, at the time he was allegedly coerced into making the contract, he did or
did not have an alternative course open to him such as an adequate legal remedy; whether he was
independently advised; and whether after entering the contract he took steps to avoid it. All these
matters are, as was recognised in Maskell v. Horner [1915] 3 K.B. 106 , relevant in determining whether
he acted voluntarily or not.

In the present case there is unanimity amongst the judges below that there was no coercion of the first
defendant's will. In the Court of Appeal the trial judge's finding (already quoted) that the first defendant
considered the matter thoroughly, chose to avoid litigation, and formed the opinion that the risk in
giving the guarantee was more apparent than real was upheld. [The facts] In short, there was
commercial pressure, but no coercion. Even if this Board was disposed, which it is not, to take a
different view, it would not substitute its opinion for that of the judges below on this question of fact.

It is, therefore, unnecessary for the Board to embark upon an inquiry into the question whether English
law recognises a category of duress known as 'economic duress.' But, since the question has been fully
argued in this appeal, their Lordships will indicate very briefly the view which they have formed. At
common law money paid under economic compulsion could be recovered in an action for money had
and received Astley v. Reynolds (1731) 2 Str. 915. The compulsion had to be such that the party was
deprived of 'his freedom of exercising his will' (see p. 916). It is doubtful, however, whether at common
law any duress other than duress to the person sufficed to render a contract voidable: sec Blackstone's
Commentaries, Book 1, 12th ed. pp. 130-131 and Skeate v. Beale (1841) 11 Ad. & E. 983. American law
(Williston on Contracts, 3rd ed.) now recognises that a contract may be avoided on the ground of
economic duress. The commercial pressure alleged to constitute such duress must, however, be such
that the victim must have entered the contract against his will, must have had no alternative course
open to him, and must have been confronted with coercive acts by the party exerting the pressure:
Williston on Contracts , 3rd ed., vol. 13 (1970), section 1603. American judges pay great attention to
such evidential matters as the effectiveness of the alternative remedy available, the fact or absence of
protest, the availability of independent advice, the benefit received, and the speed with which the
victim has sought to avoid the contract. Recently two English judges have recognised that commercial
pressure may constitute duress the pressure of which can render a contract voidable: Kerr J. in
Occidental Worldwide Investment Corporation v. Skibs A/S Avanti [1976] 1 Lloyd's Rep. 293 and Mocatta
J. in North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd. [1979] Q.B. 705. Both stressed that
the pressure must be such that the C victim's consent to the contract was not a voluntary act on his part.
In their Lordships' view, there is nothing contrary to principle in recognising economic duress as a factor
which may render a contract voidable, provided always that the basis of such recognition is that it must
amount to a coercion of will, which vitiates consent. It must be shown that the payment made or the
contract entered into was not a voluntary act."

Note that also authority for proposition that pre-existing contractual obligation can be valuable
consideration.

Quantum meruit.

5. Situations where the contract was (not) supported by valid consideration

Gifts, deeds, moral obligations (Eastwood v Kenyon, guardian of a young girl could not enforce a promise
by her husband), "natural affection"

Promising the impossible. No consideration. Cf. the doctrine of (common) mistake

Promising that which one would have done anyway

 Consideration would be said to be illusory

 Where the promise provided an inducement for the act or forbearance, the requirement of
 consideration is satisfied even though there were also other inducements operating on the
promisee’s mind (Brikom Investments Ltd v Carr [1979] QB 467)

6. Promising to perform something which one is already duty-bound to do

(1) By the law

 Collins v Godefroy: attorney subpoenaed to give evidence was promised a guinea a day for
attendance (for the loss of time) - a promise without consideration
 Treitel: the practice of the reward cases has changed - expert witnesses can validly contract for
payment, for compensation of time
 Public duty cases are more readily explained on the grounds of public policy, e.g. a public officer
cannot enforce a promise by a private citizen to pay him money for doing his public duty
(Wathen v Sandys (1811) 2 Camp 640)

Glasbrook Brothers Ltd v Glamorgan County Council [1925] AC 270 (Owners of a coal mine promised to
pay the police for extra degree of protection; enforceable contract)

Ward v Byham [1956] 1 WLR 496 (CA). D promises to pay L1/week to P to take care of their child (born
out of wedlock). P marries X. D ceases to pay. P sues D. D says no consideration as P legal duty to take
care of child.

1. Consideration: the child was happy, which was more than the legal requirement
2. Conferred a factual benefit on the father or on the child, even though she may not have suffered
any detriment

(2) By a previous contract with the same party;

Stilk v Myrick (1809) 2 Camp 317; cf. 6 Esp 129. Sailors agree to sail London to Baltic and back at L5 per
month. At Cronstadt, 2 sailors desert. Master agrees with remaining sailors to pay more (divide among
them wages of 2 deserters) if sailors get ship back to London.

1. Public policy concern? Now an argument of less strength with the relevant law in duress
If a promise is invalidated even though there is no duress, according to Lord Scarman in Pao On,
this will be “unhelpful because it would render the law uncertain”
2. No consideration by doing only what they were already bound to do – no legal
detriment/benefit
3. Treitel: now more generally held view is that this category of cases will lack consideration as the
promisee will not have suffered legal detriment

Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1 (CA)

P contracts to work for D as carpenter to build 27 flats at L20,000. When part of work done (and L16,200
paid), P encounters financial trouble. D offer to P L10,300 more if P keeps working. D wished to avoid
liquidated damages. P substantially completes work, before walking out of project. Can D claim part of
additional consideration offered by D?

D obtained "practical benefit": ensured P kept working rather than break contract; avoided liquidated
damages; and avoid expense of hiring substitute.

Requirements for establishing practical benefit (Glidewell LJ):

1. If A has entered into a contract with B to do work for, or to supply goods or services to, B in
return for payment by B
2. At some stage before A has completely performed his obligations under the contract B has
reason to doubt whether A will, or will be able to, complete his side of the bargain
3. B thereupon promises A an additional payment in return for A’s promise to perform his
contractual obligation on time [may be other consideration, e.g. a promotion (Hanson v Royden)
4. As a result of giving his promise, B obtains in practice a benefit, or obviates a disbenefit
5. B’s promise is not given as a result of economic duress or fraud on the part of A
6.  The benefit to B is capable of being consideration for B’s promise, so that the promise will be
legally binding

Cf. North Ocean Shipping CO Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] QB 705

Glidewell LJ: "As I have said, Mr. Evans accepts that in the present case by promising to pay the extra
£10,300 his client secured benefits. There is no finding, and no suggestion, that in this case the promise
was given as a result of fraud or duress. If it be objected that the propositions above contravene the
principle in Stilk v. Myrick, 2 Camp. 317 , I answer that in my view they do not; they refine, and limit the
application of that principle, but they leave the principle unscathed e.g. where B secures no benefit by
his promise. It is not in my view surprising that a principle enunciated in relation to the rigours of
seafaring life during the Napoleonic wars should be subjected during the succeeding 180 years to a
process of refinement and limitation in its application in the present day. It is therefore my opinion that
on his findings of fact in the present case, the judge was entitled to hold, as he did, that the defendants'
promise to pay the extra £10,300 was supported by valuable consideration, and thus constituted an
enforceable agreement.

As a subsidiary argument, Mr. Evans submits that on the facts of the present case the consideration,
even if otherwise good, did not "move from the promisee." This submission is based on the principle
illustrated in the decision in Tweddle v. Atkinson (1861) 1 B. & S. 393. My understanding of the meaning
of the requirement that 'consideration must move from the promisee' is that such consideration must
be provided by the promisee, or arise out of his contractual relationship with the promisor. It is
consideration provided by somebody else, not a party to the contract, which does not 'move from the
promisee.' This was the situation in Tweddle v. Atkinson, but it is, of course, not the situation in the
present case. Here the benefits to the defendants arose out of their agreement of 9 April 1986 with the
plaintiff, the promisee. In this respect I would adopt the following passage from Chitty on Contracts ,
26th ed. (1989), p. 126, para. 183, and refer to the authorities there cited:-

'The requirement that consideration must move from the promisee is most generally satisfied where
some detriment is suffered by him e.g. where he parts with money or goods, or renders services, in
exchange for the promise. But the requirement may equally well be satisfied where the promisee confers
a benefit on the promisor without in fact suffering any detriment.'
  Benefit of the promisor or detriment to the promisee would be sufficient

That is the situation in this case. I repeat, therefore, my opinion that the judge was, as a matter of law,
entitled to hold that there was valid consideration to support the agreement under which the
defendants promised to pay an additional £10,300 at the rate of £575 per flat. For these reasons I would
dismiss this appeal."

Russell LJ: "These citations demonstrate that whilst consideration remains a fundamental requirement
before a contract not under seal can be enforced, the policy of the law in its search to do justice
between the parties has developed considerably since the early 19th century when Stilk v. Myrick, 2
Camp. 317 was decided by Lord Ellenborough C.J. In the late 20th century I do not believe that the rigid
approach to the concept of consideration to be found in Stilk v. Myrick is either necessary or desirable.
Consideration there must still be but, in my judgment, the courts nowadays should be more ready to
find its existence so as to reflect the intention of the parties to the contract where the bargaining
powers are not unequal and where the finding of consideration reflect the true intention of the parties.

What was the true intention of the parties when they arrived at the agreement pleaded by the
defendants in paragraph 5 of the amended defence? The plaintiff had got into financial difficulties. The
defendants, through their employee Mr. Cottrell, recognised the price that had been agreed originally
with the plaintiff was less than what Mr. Cottrell himself regarded as a reasonable price. There was a
desire on Mr. Cottrell's part to retain the services of the plaintiff so that the work could be completed
without the need to employ another subcontractor. There was further a need to replace what had
hitherto been a haphazard method of payment by a more formalised scheme involving the payment of a
specified sum on the completion of each flat. These were all advantages accruing to the defendants
which can fairly be said to have been in consideration of their undertaking to pay the additional
£10,300. True it was that the plaintiff did not undertake to do any work additional to that which he had
originally undertaken to do but the terms upon which he was to carry out the work were varied and, in
my judgment, that variation was supported by consideration which a pragmatic approach to the true
relationship between the parties readily demonstrates.

For my part I wish to make it plain that I do not base my judgment upon any reservation as to the
correctness of the law long ago enunciated in Stilk v. Myrick. A gratuitous promise, pure and simple,
remains unenforceable unless given under seal. But where, as in this case, a party undertakes to make a
payment because by so doing it will gain an advantage arising out of the continuing relationship with the
promisee the new bargain will not fail for want of consideration. As I read the judgment of the assistant
recorder this was his true ratio upon that part of the case wherein the absence of consideration was
raised in argument. For the reasons that I have endeavoured to outline, I think that the assistant
recorder came to a correct conclusion and I too would dismiss this appeal."

Purchas LJ: "The point of some difficulty which arises on this appeal is whether the judge was correct in
his conclusion that the agreement reached on 9 April did not fail for lack of consideration because the
principle established by the old cases of Stilk v. Myrick, 2 Camp. 317 approving Harris v. Watson , Peake
102 did not apply. Mr. Makey, who appeared for the plaintiff, was bold enough to submit that Harris v.
Watson, albeit a decision of Lord Kenyon, was a case tried at the Guildhall at nisi prius in the Court of
King's Bench and that Stilk v. Myrick was a decision also at nisi prius albeit a judgment of no less a judge
than Lord Ellenborough C.J. and that, therefore, this court was bound by neither authority. I feel I must
say at once that, for my part, I would not be prepared to overrule two cases of such veneration involving
judgments of judges of such distinction except on the strongest possible grounds since they form a pillar
stone of the law of contract which has been observed over the years and is still recognised in principle in
recent authority: see the decision of Stilk v. Myrick to be found in North Ocean Shipping Co. Ltd. v.
Hyundai Construction Co. Ltd. [1979] Q.B. 705, 712 per Mocatta J. With respect, I agree with his view of
the two judgments by Denning L.J. in Ward v. Byham [1956] 1 W.L.R. 496 and Williams v. Williams
[1957] 1 W.L.R. 148 in concluding that these judgments do not provide a sound basis for avoiding the
rule in Stilk v. Myrick, 2 Camp. 317. Although this rule has been the subject of some criticism it is still
clearly recognised in current textbooks of authority: see Chitty on Contracts, 28th ed. (1989) and
Cheshire, Fifoot and Furmston's Law of Contract, 11th ed. (1986). By the same token I find myself unable
to accept the attractive invitation offered by Mr. Makey to follow the decision of the Supreme Court of
New Hampshire in Watkins and Sons Inc. v. Carrig (1941) 21 A. 2d 591 .

In my judgment, therefore, the rule in Stilk v. Myrick, 2 Camp. 317 remains valid as a matter of principle,
namely that a contract not under seal must be supported by consideration. Thus, where the agreement
upon which reliance is placed provides that an extra payment is to be made for work to be done by the
payee which he is already obliged to perform then unless some other consideration is detected to
support the agreement to pay the extra sum that agreement will not be enforceable. The two cases,
Harris v. Watson, Peake 102 and Stilk v. Myrick, 2 Camp. 317 involved circumstances of a very special
nature, namely the extraordinary conditions existing at the turn of the 18th century under which
seamen had to serve their contracts of employment on the high seas. There were strong public policy
grounds at that time to protect the master and owners of a ship from being held to ransom by
disaffected crews. Thus, the decision that the promise to pay extra wages even in the circumstances
established in those cases, was not supported by consideration is readily understandable. Of course,
conditions today on the high seas have changed dramatically and it is at least questionable, as Mr.
Makey submitted, whether these cases might not well have been decided differently if they were tried
today. The modern cases tend to depend more upon the defence of duress in a commercial context
rather than lack of consideration for the second agreement. In the present case the question of duress
does not arise. The initiative in coming to the agreement of 9 April came from Mr. Cottrell and not from
the plaintiff. It would not, therefore, lie in the defendants' mouth to assert a defence of duress.
Nevertheless, the court is more ready in the presence of this defence being available in the commercial
context to look for mutual advantages which would amount to sufficient consideration to support the
second agreement under which the extra money is paid. Although the passage cited below from the
speech of Lord Hailsham of St. Marylebone L.C. in Woodhouse A.C. Israel Cocoa Ltd. S.A. v. Nigerian
Produce Marketing Co. Ltd. [1972] A.C. 741 was strictly obiter dicta I respectfully adopt it as an
indication of the approach to be made in modern times. The case involved an agreement to vary the
currency in which the buyer's obligation should be met which was subsequently affected by a
depreciation in the currency involved. The case was decided on an issue of estoppel but Lord Hailsham
of St. Marylebone L.C. commented on the other issue, namely the variation of the original contract in
the following terms, at pp. 757-758:-

'If the exchange of letters was not variation, I believe it was nothing. The buyers asked for a variation in
the mode of discharge of a contract of sale. If the proposal meant what they claimed, and was accepted
and acted upon, I venture to think that the vendors would have been bound by their acceptance at least
until they gave reasonable notice to terminate, and I imagine that a modern court would have found no
difficulty in discovering consideration for such a promise. Business men know their own business best
even when they appear to grant an indulgence, and in the present case I do not think that there would
have been insuperable difficulty in spelling out consideration from the earlier correspondence.'

In the light of those authorities the question now must be addressed: Was there evidence upon which
the judge was entitled to find that there was sufficient consideration to support the agreement of 9
April, as set out in the passage from his judgment already set out in the judgment of Glidewell L.J.? The
references to this problem in Chitty on Contracts 26th ed. (1989), are not wholly without some conflict
amongst themselves. In paragraph 1601 the editors turn to the question of consideration to support an
agreement to vary an existing contract:-

'In many cases, consideration can be found in the mutual abandonment of existing rights or the
conferment of new benefits by each party on the other.'

Reference is made to the Woodhouse case to which I have already referred:-

'For example, an alteration of the money of account in a contract proposed or made by one party and
accepted by the other is binding on both parties, since either may benefit from the variation. . . .
However, an agreement whereby one party undertakes an additional obligation, but the other party is
merely bound to perform his existing obligations, or an agreement whereby one party undertakes an
additional obligation, but for the benefit of that party alone, will not be effective to vary the contract as
no consideration is present.'

These statements are based upon Stilk v. Myrick, 2 Camp. 317 and Syros Shipping Co. S.A. v. Elaghill
Trading Co. [1980] Lloyd's Rep. 390 . Reference is also made to paragraph 197 earlier in the textbook
where Stilk v. Myrick is considered at some length. On the other hand, at paragraph 183 the editors
make this proposition:-

'The requirement that consideration must move from the promisee is most generally satisfied where
some detriment is suffered by him: e.g. where he parts with money or goods, or renders services, in
exchange for the promise. But the requirement may equally well be satisfied where the promisee
confers a benefit on the promisor without in fact suffering any detriment. For example, in De la Bere v.
Pearson Ltd. [1908] 1 K.B. 280 the defendants owned a newspaper and invited readers to apply for
financial advice on the terms that the defendants should be entitled to publish the readers' letters and
their own replies.'

This is an accurate recital of the facts in De la Bere v. Pearson Ltd. [1908] 1 K.B. 280 but when the
argument and judgments are read the case turned on issues other than consideration, namely
remoteness of damage, etc. So the case is doubtful support for the proposition made in this paragraph.

The question must be posed: what consideration has moved from the plaintiff to support the promise to
pay the extra £10,300 added to the lump sum provision? In the particular circumstances which I have
outlined above, there was clearly a commercial advantage to both sides from a pragmatic point of view
in reaching the agreement of 9 April. The defendants were on risk that as a result of the bargain they
had struck the plaintiff would not or indeed possibly could not comply with his existing obligations
without further finance. As a result of the agreement the defendants secured their position
commercially. There was, however, no obligation added to the contractual duties imposed upon the
plaintiff under the original contract. Prima facie this would appear to be a classic Stilk v. Myrick case. It
was, however, open to the plaintiff to be in deliberate breach of the contract in order to "cut his losses"
commercially. In normal circumstances the suggestion that a contracting party can rely upon his own
breach to establish consideration is distinctly unattractive. In many cases it obviously would be and if
there was any element of duress brought upon the other contracting party under the modern
development of this branch of the law the proposed breaker of the contract would not benefit. With
some hesitation and comforted by the passage from the speech of Lord Hailsham of St. Marylebone L.C.
in Woodhouse A.C. Israel Cocoa Ltd. S.A. v. Nigerian Produce Marketing Co. Ltd. [1972] A.C. 741 , 757-
758, to which I have referred, I consider that the modern approach to the question of consideration
would be that where there were benefits derived by each party to a contract of variation even though
one party did not suffer a detriment this would not be fatal to the establishing of sufficient
consideration to support the agreement. If both parties benefit from an agreement it is not necessary
that each also suffers a detriment. In my judgment, on the facts as found by the judge, he was entitled
to reach the conclusion that consideration existed and in those circumstances I would not disturb that
finding. This is sufficient to determine the appeal. The judge found as a fact that the flats were
'substantially completed' and that payment was due to the plaintiff in respect of the number of flats
substantially completed which left an outstanding amount due from the defendants to the plaintiff in
the absence of the payment of which the plaintiff was entitled to remove from the site. For these
reasons and for the reasons which have already been given by Glidewell L.J. I would dismiss this appeal."

-- Promisee similarly provides other consideration where, before the new promise was made,
circumstances have arisen which justify the promisee’s refusal to perform the original contract, e.g.
refusal to complete the contractual voyage when many of their fellows have deserted so that the
completion of the voyage would involve hazards not originally contemplated

(3) By a previous contract with a third party

-- Actual performance of a contractual duty owed to a third party can still constitute valid consideration.

-- Scotson v Pegg (1861) 6 H&N 295  not wholly conclusive as the promisee did or may have done
more than he was bound under the earlier contract, thus providing additional consideration

Shadwell v Shadwell (1860) 9 CB (NS) 159 (Uncle wrote to nephew: “I am glad to hear of your intended
marriage with Ellen Nicholl; and as I promised to assist you at starting, I am happy to tell you that I will
pay you L150 yearly during my life…”)

1) Nephew provided valid consideration for the uncle’s promise

2) Detriment to the nephew (pecuniary liabilities resulting in embarrassments?) and benefit to the
uncle that the marriage was the object of interest to a near relative

-- Of doubtful authority as the dissenting judgment given by Byles J treating the marriage as a condition
rather than a consideration for the promise was approved by subsequent authority (Jones v Padavaton)

New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd (The Eurymedon) [1975] AC 154

A (stevedores) unloaded goods from B (carrier) ’s ship. Some of these belonged to C (shipper) who, may
be taken to have promised A not to sue him for damaging the goods. (Himalaya clause) A and B
contracted for unloading the goods. Consideration from A to C?

 C secured actual delivery of the goods; C was not legally entitled to the performance of A’s duty
 to unload as the duty was owed to B only

7. Agreements to treat a contract as discharged (rescinded) and agreements to vary a contract

Treating the contract as rescinded

(1) Agreements to rescind the contract where each party has outstanding rights

-- Consideration as the giving up of the rights under the contract; essential for both parties to make the
promise

(2) Where only one party has outstanding rights

-- Must provide separate consideration

Variation

(1) Rescission followed by new contract

(2) Variation before conclusion of contract (negotiation stage)

-- Brikom Investments Ltd v Carr [1979] QB 467 (Landlords of blocks of flats negotiated with their
tenants for the sale of long leases on terms requiring the tenants to contribute to the const of roof
maintenance. At the time of negotiations landlords promised to execute these “at our own cost”.)

-- Collateral contract (representation)

8. Waiver (Forbearance in common law)

-- A variation which is not contractually binding (for want of consideration) may have certain limited
legal effects

-- Where an individual promises to give up rights under a contract, this may amount to a waiver

-- It may mean: (1) rescission, (2) variation, (3) forbearance [variation of the contract that may fail for
want of consideration]

Treitel develops three points to illustrate principle:

1) The party requesting the forbearance cannot refuse to accept the varied performance. Thus, if a
seller at the request of the buyer delivers late, the buyer cannot refuse to accept on the ground
that delivery was not made at the time specified in the contract. (Hickman v Haynes (1875) LR
10 CP 598)
 2) If the varied performance is actually made and accepted, neither party can claim damages on
the ground that performance was not in accordance with the original contract. Thus in the
above example the seller who delivers late, or the buyer who takes delivery late, is not liable in
damages. But if the contract is not performed at all, the damages are assessed on the footing
that the breach took place at the end of the extended period. (Ogle v Vane (1868) LR 3 QB 272)
3) The cases that give rise to the greatest difficulty are those in which the party granting the
forbearance refuses to perform, or to accept performance, in accordance with it.

Suppose, for example, that a buyer agrees, at the seller's request, to accept late delivery. The
buyer cannot then claim damages for the seller's failure to deliver within the contract period;
but a further set of problems can arise if, after expiry of that period but within the extended
period, the seller tenders delivery, and the buyer refuses to accept it. One possible view is that
the seller cannot derive rights from a forbearance that is not binding as a contract, and that
therefore he is not entitled to damages for the buyer's refusal to take delivery within the
extended, but outside the original, contract period. A claim for such damages was accordingly
rejected in Plevins v Downing (1876) 1 CPD 230 where the agreement to extend the delivery
dates had no contractual force since it was oral when it should have been evidenced in writing
and since it was probably unsupported by consideration having been made at the request, and
for the sole benefit, of the seller.”

Treitel, Law of Contract (11th Edition) pp 103-104

-- Forbearance differs from variation supported by consideration in the sense that it does not irrevocably
alter the rights of the parties under the original contract. The party giving the forbearance may, in most
cases, retract it.

-- Charles Rickards v Oppenheim [1950] 1 KB 616 A buyer who pressed for delivery after the delivery
date was not allowed to sue for late delivery but could retract the forbearance by giving the seller a new
delivery date (a reasonable date) beyond which he must not go.

-- The Courts have extinguished legal rights on a forbearance when the party relying on the
forbearance is not able to return to the status quo ante. A buyer who states that he will accept goods
of a lesser quality from those contracted for will lose his right by forbearance if the seller then acts in
such a way that he cannot then supply goods of the contract quality within the delivery period.

Toepfer v Warinco AG [1978] 2 Lloyd's Rep 569

Chitty

-- Was similar to equitable estoppel (Woodhouse AC Israel Cocoa Ltd v Nigerian Produce Marketing Co
Ltd per Lord Pearson)

-- Main difference being that the equitable doctrine avoids the difficulties encountered at common law
in distinguishing between a variation and a forbearance.
9. Estoppel (“Forbearance” in equity)

Hughes v Metropolitan Railway (1877) 2 App Cas 439. P ask D to repair premises leased by D from P. D
suggests buying premises. Negotiations for sale of premises over 2 months, but break down. D then
states (after 4 months) that will undertake repairs. But P applies to eject D for failure to repair. Court
grants relief from forfeiture.

Lord Cairns LC:-

"[I]t is the first principle upon which all Courts of Equity proceed, that if the parties who have entered in
definite and distinct terms involving certain legal results – certain penalties or legal forfeiture –
afterwards by their own act or with their own consent enter upon a course of negotiation which has the
effect of leading one of the parties to suppose that the strict rights arising under the contract will not be
enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have
enforced those rights will not be allowed to enforce them where it would be inequitable having regard
to the dealings which have thus taken place between the parties."

1) Landlord led the tenant to suppose that he would not enforce his right to forfeit
2) Therefore, he could not immediately forfeit the lease but allow reasonable time for repairs

Requirements

(1) There must be a pre-existing legal relationship giving rise to rights and duties between the parties

Cf. “A shield but not a sword”; contrast the position in Australia, Walton Stores (Interstate) Ltd v Maher
(1988) 164 CLR 387

(2) An clear and unequivocal representation by A to B that A will not enforce A's strict legal rights as
against B, which is intended to affect the legal relationship between the parties  Objective test

1) The promise or the representation may be express or implied

2) Silence and inactivity: generally insufficient; it is hardly unequivocal

(3) Intention on the part of A that B will rely on the representation

(4) Reliance by B on A's representation.

1) Detriment? Not necessary; the doctrine applied even though there is no detriment (WJ Alan &
Co Ltd v El Nasr Export & Import Co [1972] 2 QB 189
2) Change of position in reliance on the promise so that it is inequitable to resile

(5) Inequitable to go back on the promise: no longer able to restore to the original position
Suspensory

Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 1 WLR 761 (HL)

During WWII, P voluntarily agreed to forgo the compensation for exceeding the quota of producing the
metal alloys as it anticipated a new agreement would be entered into after the war.

Lord Tucker: "The sole question, therefore, before the courts on this issue in the present action has been
throughout: Was the counterclaim in the first action a sufficient intimation to terminate the period of
suspension which has been found to exist? Pearson J. held that it was. He said:-

'The result of these cases in my opinion is that, where the rule of equity applies, the period of
suspension comes to an end when it is in all the circumstances equitable that it should come to an end,
and that is, normally at any rate, according to the circumstances, either at or within a reasonable time
after the termination of the state of affairs which is the cause or basis of the suspension. It is not
necessary that the person whose legal rights have been suspended should give a notice purporting to
terminate the suspension, although of course it would be fair and reasonable and advisable for him to
do so. In this case the state of affairs which was the cause or basis of the suspension would have been,
according to the view taken in the court of first instance in the former action, the continuance of the
negotiations for new licensing arrangements, but according to the view of the Court of Appeal the state
of affairs was, I think, the attitude of T.M.M.C. in not requiring payment of the compensation for the
time being. When that attitude was reversed, a reasonable time for resumption of compensation
payments began to run. The making of the counterclaim in the first action clearly involved a reversal of
the previous attitude, and therefore it started running a reasonable time for resumption of
compensation payments.'"

Ajayi v Briscoe [1964] 1 WLR 1326 per Lord Hodson:

“The principle ... is that when one party to a contract in the absence of fresh consideration agrees not to
enforce his rights an equity will be raised in favour of the other party. This equity is, however, subject to
the qualifications (1) that the other party has altered his position, (2) that the promisor can resile from
his promise on giving reasonable notice, which need not be formal notice, giving the promisee a
reasonable opportunity of resuming his position, (3) the promise only becomes final and irrevocable if
the promisee cannot resume his position.”

-- The doctrine has an extinctive effect because subsequent events, though not making the obligation
impossible, have made it highly inequitable to require such performance, even after reasonable notice.

Birmingham & District Land Co v L & NW Railway (1888) 40 Ch D 268 (Building lease bound the tenant to
build by 1885. Agreed to suspend obligation. While suspension was in force, land compulsorily acquired
by a railway company so that performance was impossible. Obtained compensation. But right to build
was extinguished.)

Defensive nature
Estoppel does not found a cause of action.

Combe v Combe [1951] 2 KB 215

H promises to pay divorced wife L100 per year. W did not apply for maintenance. But H did not pay. Q:
Was the wife's forbearance to apply for maintenance valid consideration for H's promise?

Denning LJ: “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 so introduced, even though it is not supported
in point of law by any consideration but only by his word.

Seeing that the principle never stands alone as giving a cause of action in itself, it can never do away
with the necessity of consideration when that is an essential part of the cause of action. The doctrine
of consideration is too firmly fixed to be overthrown by a side-wind. Its ill-effects have been largely
mitigated of late, but it still remains a cardinal necessity of the formation of a contract, though not of
its modification or discharge. I fear that it was my failure to make this clear which misled Byrne J, in the
present case. He held that the wife could sue on the husband's promise as a separate and independent
cause of action by itself, although, as he held, there was no consideration for it. That is not correct. The
wife can only enforce it if there was consideration for it. That is, therefore, the real question in the case:
was there sufficient consideration to support the promise?”

-- Followed by Barid Textile Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ 274 [The requirements
for the operation of the equitable doctrine was not even met, in the absence of certainty]

"A shield but not a sword"

Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 (High Court of Australia)

W negotiates to lease M property. M suggest demolishing existing building and putting up new one to W
requirements. W send draft lease. M inform W that property being demolished. M propose
amendments to lease, return signed amended lease to W. M proceeds to demolish more of existing
building and build new building. W then say do not wish to pursue lease. M argue that enforceable
agreement for a lease.

-- W has knowingly induced M to believe that a binding contract would be brought into existence by
exchange of contracts, and to act in reasonable reliance on that belief

-- No unjust enrichment was found

-- M was aware of the fac that no binding agreement has come into existence and so takes the risk that
the negotiations may fail

Mason CJ and Wilson J: "It seems to us ... that [W] was under an obligation to communicate with [M]
within a reasonable time after receiving the executed counterpart [of the lease] and certainly when it
learnt ... that demolition was proceeding. It had to choose whether to complete the contract or to warn
[M] that it had not yet decided upon the course it would take. It was not entitled simply to retain the
counterpart deed executed by [M] and do nothing. [W's] inaction, in all the circumstances, constituted
clear encouragement or inducement to [M] to continue to act on the basis of the assumption which they
had made. It was unconscionable for [W], knowing that [M] were exposing themselves to detriment by
acting on the basis of a false assumption, to adopt a course of inaction which encouraged them in the
course they adopted. To express the point in the language of promissory estoppel [W] is estopped in all
the circumstances from retreating from its implied promise to complete the contract."

Estoppel by convention (cf. the doctrine of mistake – mistake as to the term but not to the fact)

(1) Estoppel by convention arises where both parties to a transaction “act on assumed state of facts or
law, the assumption being either shared by both or made by one and acquiesced in by the other”.

(2) Parties are then prevented from denying the truth of that assumption, if it would be unjust or
unconscionable to allow them to go back on it.

(3) The mistaken assumption of the party claiming the benefit must be shared or acquiesced in by the
party alleged to be estopped – on the basis of the shared assumption, or that it “requires
communications to pass across the line between the parties”.

(4) A party is prevented from denying a fact, i.e. that the assumed promise has been made, or the
existence of the promise.

(5) The estoppel does not operate prospectively, i.e. once the common assumption is revealed to be
erroneous the estoppel will not apply to future dealings.

(6) Present situation seems to be that it cannot create a new cause of action (Baird Textile Holdings Ltd v
Marks & Spencer Plc)

Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84

[Surety estopped from going back on understanding that guarantee covered a loan, even though on true
construction the guarantee did not cover the loan.]

Lord Denning MR describes all kinds of estoppels in terms of:

"one general principle shorn of limitations. When the parties to a transaction proceed on the basis of an
underlying assumption – either of fact or of law – whether due to misrepresentation or mistake makes
no difference – on which they have conducted the dealings between them – neither of them will be
allowed to go back on that assumption when it would be unfair or unjust to allow him to do so. If one of
them does seek to go back on it, the courts will give the other such remedy as the equity of the case
demands." and "If parties to a contract, by their course of dealing, put a particular interpretation on the
terms of it -- on the faith of which each of them -- to the knowledge of the other -- acts and conducts
their mutual affairs -- they are bound by that interpretation just as much as if they had written it down
as being a variation of the contract. "

Chitty 3-108:

A had negotiated with the X Bank for a loan to B (one of A’s subsidiaries) for property development. It
was agreed that the loan was to be secured by a mortgage on that property and also by a guarantee
from A. In the guarantee, A promised the X Bank, in consideration of the Bank’s giving credit to B, to
‘‘pay you . . . all moneys . . . due to you’’ from B. This was an inappropriate form of words since the loan
to B was not made directly by the X Bank but by one of its subsidiaries, the Y Bank, with money provided
by the X Bank: hence, if the guarantee were read literally, it would not apply to the loan since no money
was due from B to the X Bank.

-- The Court of Appeal, however, took the view that this literal interpretation would defeat the intention
of the parties, and held that, on its true construction, the guarantee applied to the loan made by the Y
Bank.

-- But even if the guarantee did not, on its true construction, produce this result, A was estopped from
denying that the guarantee covered the loan by the Y Bank, since, when negotiating the loan, both A
and the X Bank had assumed that the guarantee did cover it; and since the X Bank continued
subsequently to act on that assumption in granting various indulgences to A in respect of the loan to B
and of another loan made directly by the X Bank to A. It made no difference that the assumption was
not induced by any representation made by A but originated in the X Bank’s own mistake: the estoppel
was not one by representation but by convention.

Estoppel by representation

(1) A person who makes a precise and unambiguous representation of present fact may be prevented
from denying the truth of the statement if the person to whom it was made was intended to act on it,
and did act on it to his detriment.

(2) This estoppel has permanent effect, while promissory estoppel only suspends the right of one party
to enforce his strict legal rights at most times.

(3) Estoppel by representation prevents a party from establishing facts, i.e. from alleging that the facts
represented by him are untrue, even where that is actually the case. Promissory estoppel, on the other
hand, is concerned with the legal effect of a promise.

(4) It does not give rise to any case of action.

9. Part payment of a debt

Pinnel’s Case (1602) 5 Co Rep 117a: “Payment of a lesser sum on the day in satisfaction of a greater sum
cannot be any satisfaction for the whole.”

Foakes v Beer (1884) 9 App Cas 605 (HL)

In 1875 Mrs. Beer obtained judgment against Dr. Foakes for L2,000+ (principal sum) plus interest at 4%.
F asks for more time to pay. F and D enter into agreement in 1876 whereby F pays L500 and agrees to
pay L150 in January and July every year until principal fully paid. In consideration of that, B agrees not to
take proceedings against F. When F fully paid principal, B sought interest.

Contrast: Collier v P & MJ Wright (Holdings) Ltd [2007] EWCA Civ 1329 [Part-payment of a debt]

The Court of Appeal applied promissory estoppel to override Foakes v Beer. Arden LJ reformulated the
promissory estoppel doctrine as follows [42]:

“[I]f (1) a debtor offers to pay part only of the amount he owes; (2) the creditor voluntarily accepts that
offer, and (3) in reliance on the creditor’s acceptance the debtor pays that part of the amount he owes
in full, the creditor will, by virtue of the doctrine of promissory estoppel, be bound to accept that sum in
full and final satisfaction of the whole debt. For him to resile will of itself be inequitable. In addition, in
these circumstances, the promissory estoppel has the effect of extinguishing the creditor’s right to the
balance of the debt....To a significant degree it achieves in practical terms the recommendation of the
Law Revision Committee chaired by Lord Wright MR in 1937.”

Limitation at common law

(1) The rule that part payment cannot release the debtor for the obligation of paying the full sum does
not apply where the creditor’s claim is disputed in good faith.

(2) The value of the creditor’s claim is doubtful and the debtor therefore provides consideration by
paying something even though it is less than the amount claimed.

(3) A debt can only be truly released by agreement for valuable consideration or under seal.
(Commissioners of Stamp Duties v Bone [1977] AC 511)

-- E.g. A smaller sum requested by the creditor before the due date (Pinnel’s Case), or other valid
considerations

-- Part payment by a third party, if accepted by the creditor in full settlement of the debtor’s liability, is a
good defence to a later claim by the creditor for balance. [Vicarious performance] (Welby v Drake)

Hirachand Punamchand v Temple [1911] 2 KB 330 (D was indebted on a promissory note to P, who
accepted a smaller sum from D’s father in full settlement)

(4) Collateral contract

Brikom Investments Ltd v Carr [1979] QB 467 (Tenant’s liability to contribute to the maintenance costs
was reduced by a collateral contract under which the landlord undertook to repair the roof at his
expense.)
The extension of promissory estoppel to cover part payment

Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 (Denning J). During war,
landlord agrees to accept less rent (L1250 for L2500) from tenant. In 1945 landlord (in receivership)
claims full rent.

"[T]he case of Hughes v Metropolitan Ry Co... afford a sufficient basis for saying that a party would not
be allowed in equity to go back on such a promise [that is, a promise intended to be binding]. In my
opinion, the time has now come for the validity of such a promise to be recognised. The logical
consequence, no doubt is that a promise to accept a smaller sum in discharge of a larger sum, if acted
upon, is binding notwithstanding the absence of consideration; and if the fusion of law and equity leads
to this result, so much the better."

But cf. D & C Builders Ltd v Rees [1966] 2 QB 617 (CA): Builders sends bill for work done to R's shop. R
fails to pay L480 of invoice. R's wife says to B that R will pay L300 in full settlement or pay nothing at all.
B (in financial difficulty) accept. R pays L300. B then sue for balance. Lord Denning MR rejects R defence
on account of "intimidation" of B by R wife. Other judges (Danckwerts and Winn LJ) follow Foakes.

Treitel in Some Landmarks, p. 33 refers to Lord Denning's dilemma in D & C Builders: "[H]e in effect says
that Foakes v Beer has been trumped by the High Trees case but that the reasoning of the latter case
applies only where it would be 'inequitable' for the creditor to go back on his promise; and that this
requirement was not satisfied because the debtor (or his wife) had extracted the promise by 'putting
undue pressure on the creditor'."

Brikom Investments Ltd v Carr [1979] QB 467

Landlords of 99 year lease flats promise to would-be lessees that cost of repairing roof would be borne
by landlords. Landlords later seek to charge costs of repair on lessees and assignees.

Lord Denning MR: "Mr. Bernstein submitted that the doctrine of promissory estoppel (as enunciated in
the High Trees case [1947] K.B. 130) was personal to the person to whom the representation or promise
was made. So the original tenants - Mr. Harris (in the Roddy case) and Mr. Kavanagh (in Miss Hickey's
case) could rely on the estoppel, but no one else. Mr. Bernstein said that the assignees could not rely on
it. They took their assignments in the usual conveyancing way. They take the benefit and burden of the
covenants in the lease itself which run with the land at law or in equity, but not of estoppels such as this.

The judge did not accept that contention. We have had it elaborately argued before us today. It was
suggested that if assignees are able to rely on an oral or written representation (not contained in the
deeds) it would cause chaos and confusion among conveyancers. No one buying property would know
where he stood.

I am not disturbed by those forebodings. I prefer to see that justice is done: and let the conveyancers
look after themselves. Suppose that the landlords here (before or after doing the repairs to the roof)
had assigned their reversion to a purchaser: and then that purchaser sought to recover the contribution
from the tenants - contrary to the promise made by the original landlords. Surely the assignee of the
reversion would be bound by the promise made by the original landlords. It would be most unjust and
unfair if he could go back on the promise. Equity would not allow him to do it.

Now if the assignee of the reversion takes subject to the burden of the estoppel, so also the assignee of
the tenant should take subject to the benefit of it. As Lord Coke said long ago in his Commentary upon
Littleton, vol. II, p. 352, a.b. '... every estoppel ought to be reciprocal ... privies in estate, as the feoffee,
lessee &c. ... shall be bound and take advantage of estoppels; ...' So when the original tenant assigns the
lease over to an assignee, the benefit of the promise passes to the assignee. The burden and the benefit
run down the line of assignor and assignee on each side. Especially in this case, because it is plain (as the
judge found) that when the landlords made this promise they intended it to be for the benefit of all
those from time to time holding the leases, realising that each in turn would tell his successor that the
landlords were going to repair the roofs at their own expense. The landlords, having made a
representation of that kind, knowing that it would be passed on, cannot escape from it by simply saying:
'These people are assignees.'

So it seems to me that the judge was quite right in the way he put the case. He held that in all these
cases the landlords could not go back to the strict rights under the lease. They had given the tenants
their promise or representation to repair the roofs at their own cost, and the tenants relied on it. That
gives rise to an equity which makes it unjust and inequitable for the landlords to seek to charge the
tenants for a contribution; and the benefit of this equity avails the assignees of the tenants also."

Roskill and Cumming-Bruce LLJ decide case on basis of waiver.

10. The position in Hong Kong

Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1 per Ribeiro PJ

55. A promissory estoppel may be said to arise where

(1) the parties are in a relationship involving enforceable or exercisable rights, duties or powers;

(2) one party (“the promisor”), by words or conduct, conveys or is reasonably understood to convey a
clear and unequivocal promise or assurance to the other (“the promisee”) that the promisor will not
enforce or exercise some of those rights, duties or powers; and

Woodhouse AC Israel Cocoa SA v Nigerian Produce Marketing Co [1972] AC 741 per Lord Hailsham:

“The meaning is to exclude far-fetched or strained, but still possible, interpretations, while still insisting
on a sufficient precision and freedom from ambiguity to ensure that the representation will… be
reasonably understood in the particular sense required.”

-- Cannot be generally founded on silence (Allied Marine Transport Ltd v Vale do Rio DoceNavegacao SA
(The Leonidas D) [1985] 1 WLR 925)

Victor Star Ltd v Ng Fung Ying [2004] 2 HKLRD 518

Silence could amount to a representation giving rise to promissory estoppel where there was a legal
duty on one party to make a statement to the other party but where they failed to do so. In other
words, it might be said that silence or conduct may give rise to estoppel but only where that silence or
conduct can create no other reasonable inference than the existence of a promise.

(3) the promisee reasonably relies upon that promise and is induced to alter his or her position on the
faith of it: it is enough that he acted in some way different than to how he otherwise would have done,

WJ Alan & Co Ltd v El Nasr Export & Import Co [1972] 2 QB 189: Lord Denning MR found no authority for
the requirement of detriment; the promisee merely had to show that he was “led to act differently from
what he otherwise would have done”.

(4) so that it would be inequitable or unconscionable for the promisor to act inconsistently with the
promise.

The Post Chaser [1982] 1 All ER 19 per Robert Goff J: “to establish such inequality it is not necessary to
show detriment”

Dixie Engineering Co Ltd v Vernaltex Co Ltd t/a Wing Wo Engineering Co [2003] HKEC 180: It was
accepted that detriment was not a requirement to establish estoppel, rather an alteration of the party’s
position is sufficient.

Cf. Bestkey Development Ltd v Incorporated Owners of Fine Mansion [1999] 2 HKLRD 662 (CA)

-- “Detriment would be required to feed an estoppel”; “the test of detriment can be broadly put as
whether it would be unjust or unconscionable for the promisor now to be allowed to resile…”

56. While it is necessary for the purposes of exposition to identify the separate elements of the doctrine,
it should be borne in mind that when applying them to the facts, each element does not exist in its own
watertight compartment to be kept separate from the others. Each element acquires its meaning and
content in the context of the other elements. This was emphasised by Robert Walker LJ in Gillett v
Holt in relation to proprietary estoppel in the following terms:

“... the doctrine of proprietary estoppel cannot be treated as subdivided into three or four watertight
compartments. ... [The] quality of the relevant assurances may influence the issue of reliance, ... reliance
and detriment are often intertwined, and ... whether there is a distinct need for a ‘mutual
understanding’ may depend on how the other elements are formulated and understood. Moreover the
fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the
elements of the doctrine. In the end the court must look at the matter in the round.”