08_Estoppel - Contracts 01 Estoppel PART VIII ESTOPPEL I A...

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Contracts 01 – Estoppel P ART VIII E STOPPEL I I NTRODUCTION A The Principle of Estoppel An estoppel is a principle that prevents a party from asserting a contrary position to that which has already been established. An estoppel can create rights when non-contractual promises or representations are relied upon by a party to their detriment. It does so by obviating technical difficulties encountered when attempting to enforce agreements. B Types of Estoppel 1 Common law estoppel Common law estoppel operates in relation to representations or assumptions of existing fact . It is a rule of evidence. This type of estoppel can only act as a shield, not a sword. That is, it is only a way to establish evidence and not a cause of action in itself. Common law estoppel only determines the facts by which a court will determine the dispute. An example of the application of common law estoppel is in the representation that ‘the contract is signed’. Here, the party relying on this assumption may use common law estoppel to establish that the contract is signed for the purposes of another action in contract. 2 Equitable estoppel Equitable estoppel operates in relation to representations or assumptions as to future conduct. Its scope of application is substantially wider, because it does not just determine evidence but can be a cause of action. The effect of equitable estoppel is to prevent the representor from acting inconsistently with the assumption without taking steps to ensure that the departure does not cause harm to the relying party. This type of estoppel can act as both a sword and a shield. It is a cause of action in itself, and can be used offensively. Synonyms for equitable estoppel include promissory estoppel and proprietary estoppel. This type of estoppel is our focus. An example of the application of equitable estoppel is in the representation that ‘I will sign the contract’. The party relying on this statement may bring an action on the basis of their detrimental reliance upon it. © Jaani Riordan 2004 Page 1 of 18 http://www.jaani.net/
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Contracts 01 – Estoppel 3 Estoppel by convention This is a common law principle that applies when parties to a contract use a particular state of affairs as the basis of their contractual relationship. C Circumstances of Application An estoppel can arise where one party leads another to assume that A contract was formed A verbal contract will be performed notwithstanding non-compliance with writing requirements A contractual provision has a particular meaning Particular conduct will not constitute breach of contract A particular excuse or vitiating factor will not be asserted A contract will not be terminated In all these cases, the party suffers loss as a result of their reliance upon a particular semantic representation induced by the other party. In short, anything someone says or makes representations about can be used as a basis for an
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This note was uploaded on 08/17/2010 for the course BUSLAW 730-202 taught by Professor N/a during the Three '07 term at Melbourne Business School.

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08_Estoppel - Contracts 01 Estoppel PART VIII ESTOPPEL I A...

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