Promissory Estoppel, Waiver-a distinction without difference? – Solomon Adeseun Esq.

The legal profession is a sober one. So, the saying, “as sober as a Judge,” is an expression that encapsulates this notion. Don’t bank on this however; there is much that is funny in law, law men and in legal expositions.

Now consider these two definitions or shall we say descriptions?

First of all, imagine yourself as the interlocutor of the great Lord Denning, then you decide to pose the following questions to him, you are likely to do it as follows:

Question:                May it please your Lordship, what is Promissory estoppel?

Lord Denning:         Why, that has been explained a long time ago. Have you never heard of the case of Central London Property Co.  V. High Trees House Ltd? There, I said that Promissory estoppel arises in “cases in which a promise was made, which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made, and which was in fact so acted on. In such cases, the Courts have said that the promise must be honoured.[1]

Question:                Much obliged, my Lord. But may it please your Lordship again, what is Waiver?

Lord Denning:         Good, I will oblige you an answer. He who does not refrain from asking for directions shall not miss his way. I explained waiver in WJ Alan Ltd V. El Nasr Co.,[2]as follows:“The Principle of Waiver is simply this: if one party, by his conduct, leads another to believe that the strict rights arising under the Contract[3] will not be insisted on, intending that the other should act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict legal rights when it would be inequitable for him to do so.”[4]

There you are. But not to be pre-emptive of the discussion as to whether there is any difference in these descriptions, we need to look closely at examples and decided cases to see whether we can spot any difference, in substance between the two concepts.

Promissory Estoppel

The original principle was known simply as estoppel and it was expressed in West V. Jones[5] by Lord Cranworth as follows: “Where a party has, by words or by conduct, made a representation to another, leading him to believe in the existence of a particular fact or state of facts, and that other person has acted on the faith of such representation, then the party who made the representation shall not afterwards be heard to say that the facts were not as he represented them to be.” But the representation referred to here must be of an existing fact. The estoppel established in this case does not cover or apply to promises or undertakings, not supported by consideration, of what parties intend to do at a future date. Promissory Estoppel was first clearly isolated as an independent principle in Central London Property Trust Ltd. V. High Trees House Ltd.[6] It was an extension of the original principle of estoppel in that the principle of estoppel was now made applicable to representations regarding future conduct. In the case, the Plaintiff Company leased a block of flats to the Defendants at a rent of £2,500 per annum. Due to the 2nd World War, many of the flats were not occupied. Therefore, the Plaintiff agreed to reduce the rent. The Defendants paid the reduced rent up to the end of the war when the Plaintiff claimed the full rent both retrospectively and for the future. It brought this action claiming rent at the original rate for the last two quarters of 1945 when the war ended and also to resume its full right to receive rent at the original rate. Estoppel, in the original form would not have applied to assist the Defendant because the representation made by the Plaintiff not to claim the full rent related to the future. However, Denning J[7] held that where a promise was made, which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made, and which was in fact so acted on, in such cases, the Courts have said that the promise must be honoured.[8] So, the Plaintiff was not allowed to claim the balance of the full rent for the years that have passed.

In order to reach this decision, Denning J relied on an older case in which a similar decision had been made even though the House of Lords which decided the case did not call the applicable principle Promissory estoppel. That case was Hughes V. Metropolitan Railway Co.,[9] where the Lessor gave the Lessee six months’ Notice to repair, it being understood that the Lessor would be entitled to an order of ejectment if the Lessee failed to comply with the Notice. Before the expiry of the Notice, the Lessor entered into negotiation with the Lessee for the sale of the property but the transaction fell through. The Lessee did not effect any repair; and on the expiry of the Notice, the Lessor brought an action seeking an ejectment order against the Lessee. He claimed that the Lease had been forfeited for non-compliance with the Notice to repair. But the House of Lords upheld the Lessee’s contention that the negotiations amounted to a promise by the Lessor that he would not enforce the Notice, at least not during the currency of the negotiation and that it was that representation that induced the Lessee not to comply with the Notice to repair. The Court held that the Notice would start to run only from the termination of the negotiations. Based on what principle? Lord Cairns L.C., said: “It is the first principle upon which all Courts of Equity proceed, that if parties who have entered into 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.”[10]

The situation was similar in Salisbury (Marquees) V. Gilmore,[11] where the Defendant was the tenant of the Plaintiff. When his tenancy yet had two years to run, he applied for a renewal but it was refused. The landlord told him that the premises were to be demolished at the expiration of the term. When the Defendant left the premises unrepaired, the Plaintiff brought this action claiming damages for breach of the covenant to repair. The trial Court awarded damages to the Plaintiff but the decision was reversed by the Court of Appeal. It was held that it was the representation made by the Plaintiff to the Defendant that the premises would be demolished at the expiration of the term that had induced the Defendant to leave the premises unrepaired and it would be inequitable to allow the Plaintiff to claim damages having regard to the representation which the Plaintiff had made to the Defendant.

Thus, in simple terms, Promissory estoppel applies where:

  1. a promise or representation was made, though without consideration flowing from the Promisee;
  2. but the promise or representation was acted on by the Promisee;
  • thereby the Promisee altered his position, that is he acted differently from what he would have done[12]and it would be unconscionable not to hold the Promisor to the promise or representation.

Doctrine of Waiver

Let us now give consideration to the doctrine of Waiver with a view to seeing what difference, if any, the two concepts may throw up.

Waiver may be described as a voluntary surrender of a right or advantage. The surrender may be express or implied from conduct supporting an inference that the right has been abandoned. Contractual rights and subject to qualification, Statutory rights and Constitutional rights,[13] are all capable of being waived.

In AG. Bendel State V. AG. Federation & Ors,[14]Idigbe, JSC, adopted the description of Waiver as follows: “Where A dealing with B is confronted with two alternatives and mutually exclusive courses of action relating to such dealing between which he may make his election and A so conducts himself as reasonably to induce B to believe that he is intending definitely to adopt one course and definitely reject the other and B in such belief alters his position to his detriment, A is precluded as against B from afterwards resorting to the course which he has thus deliberately declared his intention of rejecting.”[15] In other words and in simple terms, if A is makes representation to B that out of Black and White alternatives, he is choosing Black and not White, and B alters his position in reliance on A’s representation, A is precluded from afterwards saying he is now choosing White.

Question: How is this principle different from what we have considered under Promissory estoppel?

In the case under reference, Bendel State[16] whose Counsel was Chief Rotimi Williams challenged the constitutionality of Allocation of Revenue (Federation Account) Act 1981. An argument was raised, spear headed by Chief Richard Akinjide, then Attorney-General of the Federation, against the Plaintiff that it had waived the right to complain about the Statute since it had been collecting its share of revenue allocated under its provisions. In rejecting this argument on waiver, this is what Bello, JSC said: “It is significant, however, to observe that estoppel is an equitable doctrine which rests on substantial grounds of prejudice or change of position and not on mere technicalities… the learned Attorney–General of the Federation has not shown that the Federal Government has in any way been prejudiced by reason of the fact that Bendel State has been receiving its share of the revenue under the Act in dispute or that the Federal Government has altered its position in a way that it would not have done if Bendel State had not been receiving its share of the revenue under the Act”[17] thereby invoking the same principles of Promissory estoppel.

In WJ Alan Ltd V. El Nasr Co.,[18]Lord Denning, MR claimed to be applying Waiver which his Lordship described in terms practically indistinguishable from Promissory estoppel as follows:-“The Principle of Waiver is simply this: if one party, by his conduct, leads another to believe that the strict rights arising under the Contract will not be insisted on, intending that the other should act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict legal rights when it would be inequitable for him to do so.” Based on what authority? The cases cited by his Lordship for this proposition were the same usual cases on Promissory estoppel: Hughes V. Metropolitan Railway Co.,[19] High Trees Case.[20]In fact, his Lordship’s statement quoted above, is a paraphrase of the statement of Lord Cairns, LC in Hughes which we have referred to earlier, as providing an important foundation upon which Promissory estoppel rests.

Indeed, in the case of Tika Tore Press Ltd. V. Abina,[21] the two terms met together when the Supreme Court described Promissory estoppel as estoppel by Waiver. In this case, the Defendant acted on the representation by the Plaintiff whereby the Plaintiff waived part of the sum it was entitled to. The Defendant having paid the lesser sum, it was held that the Plaintiff could not claim the balance.

According to the 2nd American Re-statement of the Law of Contracts, it is Waiver quite alright when you relinquish a right; but then it goes ahead to say “reliance on a waiver or promise as to the future is sometimes said to create Promissory estoppel.” However, relinquishment of a right alone is not what has legal significance. What makes the act important is the impact it has on the other party and this circumstance is what the other authorities have been describing either as Waiver or Promissory estoppel.

Conclusion

A careful or even cursory analysis of the facts of the cases, both on Promissory estoppel and Waiver reveals that they are all cases involving some promise or some representation. They also usually involve acceptance by the Promisor or the Representor of something lesser or something different from what they are otherwise entitled to, in circumstances in which it would be found unconscionable if they are not held bound by their representation or promise, in most cases because the Promisee has altered his position. Where then lies the difference between Promissory estoppel and Waiver? With all due respect, we see no point in making the distinction, except perhaps for variety of terminologies, sometimes useful as antidote for monotony!

 

 

[1] (1947) K.B. 130 @134.

[2] [1972] 2 All ER 127CA @139–140h-g.

[3] The rights to which Waiver applies are not limited to Contracts.

[4] See United Calabar Co. V. Messrs Elder Dempster Lines Ltd. [1972] NSCC 490 @497.

[5] (1851), 1 Sim. (N.S.) 205 @207; 61 E.R. 79.

[6] (1947) K.B. 130.

[7] As he then was.

[8] (1947) K.B. 130 @134.

[9] (1877) 2 App. Cas. 439.

[10] Ibid., @448.

[11] (1942) 2 K.B. 38.

[12] WJ Alan Ltd V. El Nasr Co. [1972] 2 All ER 127CA @139–140h-g.

[13] Ariori V. Elemo [1983] NSCC 1.

[14] [1981] NSCC 314.

[15] Ibid., @385 paras 40-50, relying on Lissenden V. C.A.V. Bosch Ltd. (1940) AC 412 @418-9 and other authorities.

[16] Since broken down to Edo and Delta States.

[17] [1981] NSCC 314 @344, paras 10-20.

[18] [1972] 2 All ER 127CA @139–140h-g.

[19] Supra.

[20] Supra.

[21] (1973) 1 All N.L.R. (Part II) 244.

 

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