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and evaluate equitable estoppel
If the relevantassumption was simply that a lease would come into existence between the partiesthen, after , such an assumption would provide anuncontroversial foundation for an equitable estoppel. The notion that anestoppel can arise from an assumption that another party will pay the cost ofwork to be performed is, however, inconsistent with the proposition that anequitable estoppel must be founded on an assumption that a particular legalrelationship will come into existence between theparties. The assumption referred to bySpence is not an assumption relating to an existing or expected legalrelationship between the parties. Similar problems arise in applying equitableestoppel to the ‘battle of the forms’ situation, and firm offers inthe construction industry. In each case Spence frames the relevant assumption interms of the way in which the representor will act in the future, rather than interms of a particular legal relationship arising between theparties. The analysis of these problemareas in chapter three, therefore, leads us back to the important question whichwent unconsidered in chapter two; namely, whether an assumption relating tofuture conduct outside a legal relationship is capable of founding an equitableestoppel.
Spence, above n 1, 69. Thisapproach is carried through into chapter three of the book, where Spence arguesthat equitable estoppel will not usurp the doctrine of part performance, anddoes not provide a rival to contract, because ‘awards in the expectationmeasure ought not normally to be the measure of relief in equitableestoppel’: at 77.
Both equity and Common law envisage the equitable right of estoppel.
In (1999) 196 CLR 101, 112–13, Gleeson CJ, McHugh, Gummow andCallinan JJ applied the principles of equitable estoppel to the facts athand, noting that unification was not accepted by Dawson, McHugh orBrennan JJ in , and that Mason CJ, Brennan, Dawson,Toohey and Gaudron JJ referred in (1993) 177 CLR 485, 506 to‘an equitable estoppel of the kind upheld in ’. InSupreme and Federal Court decisions since , judges have continuedto apply discrete principles of common law estoppel to assumptions of fact andequitable estoppel to assumptions of future conduct.
While this review has taken issue with several omissions and arguments madein , such differences of opinion are almost inevitablein relation to equitable estoppel. As the subtitle of Spence’s booksuggests, equitable estoppel is an emerging doctrine, and there remainsconsiderable scope for debate about its philosophy, mode of operation and scopeof application. At this stage in the development of the doctrine, there is alsoa great need to debate these issues. is a valuablecontribution to that debate, particularly for its attempt to formulate aconscience-based approach to liability, and its exploration of the roleequitable estoppel might play in situations the law of obligations has longfound troublesome.
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The remainder of chapter three consists of an examination of the use ofequitable estoppel in four situations that the law of contract has notadequately been able to deal with: first, work undertaken in anticipation of acontract that does not materialise;secondly, the ‘battle of theforms’; thirdly, firm offers in theconstruction industry; and, fourthly,variations of contract unsupported byconsideration. These issues are given arelatively detailed treatment. Spence spends several pages, for example,explaining why contract, tort and restitution all fail to explain the cases inwhich compensation has been granted for work done in anticipation of a contractwhich does not materialise. Spence arguesthat equitable estoppel is capable of providing more satisfactory results in allof the problem areas he discusses. In doing so, Spence assumes withoutdiscussion that equitable estoppel is capable of operating in relation to anassumption that a person will act in a particular way in the future. Spenceargues, for example, that equitable estoppel would be capable of arising on thefacts of two cases in which lessors undertook alteration work in anticipation ofa lease, and . Spence describes the relevantassumption in these cases as follows:
Spence argues that, while contract law is incapable of dealing adequatelywith the contract modification problem, equitable estoppel may provide asolution. Spence acknowledges that the crucial question here is whether theparty requesting the variation, A, could establish that they stood to sufferdetriment as a result of their reliance on the promise made by B, if B did notfulfil their promise. Spence argues that it is possible for A to show that theyhad suffered detriment as a result of their reliance on B’s promise,because A might have been better off had they breached thecontract. A might, for example, havebeen able to find work elsewhere which would have been sufficiently wellremunerated to enable A to pay damages to B for breach of contract, and still bebetter off. This raises the question whether the performance of a contractualobligation can ever be regarded as detrimental action for the purposes ofequitable estoppel. Spence’s analysis is based on the assumption that acontracting party has a choice as to whether or not to perform his or hercontractual obligations:
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EQUITABLE ESTOPPEL – Academic-Paper
The requirements of reasonable reliance and unconscionable conduct areessentially alternative means of limiting the scope of application of equitableestoppel. Each provides a basis for rejecting undeserving claims. Unconscionableconduct is a limiting factor which is considered from the point of view of therepresentor, while reasonableness of reliance is considered from the point ofview of the representee. The choice between the two is important from the pointof view of the philosophy of the doctrine, and whether its primary concern iswith the conduct of the representor or the representee’s plight. Inembracing the requirement of unconscionable conduct as the limiting factor forequitable estoppel, Spence rejects the requirement of reasonable reliance,taking issue with the reviewer’s argument that an estoppel can arise atcommon law or in equity where four basic elements are satisfied: assumption,inducement, detrimental reliance andreasonableness. I have argued that anestoppel arises where one person (the representor) induces another (therepresentee) to adopt an assumption, the representee acts on that assumption insuch a way that the representee will suffer harm if the representor actsinconsistently with it, and the representee has acted reasonably in adopting andrelying on the assumption.
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I have argued elsewhere that equitable estoppel is part of the law ofwrongs. If this is so, Spence asks, thenwhat identifiable wrong has been committed if those four elements areestablished? The answer is that a wrong iscommitted only when the representor departs from, or acts inconsistently with,the assumption, without ensuring that the representee does not suffer harm as aresult of that action. The unconscionable conduct lies in departing from theassumption, but that departure is only regarded as unconscionable if therepresentor bears responsibility for inducing the assumption, and therepresentee has reasonably relied on it in such a way that he or she will sufferdetriment if the assumption is not adhered to. If one were describing theelements of the cause of action in equitable estoppel, or the elements of thewrong, one would add to the four elements listed above the requirement that therepresentor must also have departed or threatened to depart from the assumptionin question, thus raising the prospect of detriment. It is more accurate,however, to say that an estoppel arises both at common law and in equity merelyby virtue of the assumption, inducement, detrimental reliance andreasonableness, even before the representor threatens to depart from theassumption. At common law, an estoppel then arises which prevents therepresentor from denying the truth of the assumption. In equity, an estoppelthen arises which prevents the representor from acting inconsistently with theassumption, without taking steps to ensure that the departure does not causeharm to the representee. Appropriate steps might include compensating therepresentee for any financial loss, or giving the representee reasonable noticeof the intention to depart from the assumption so that his or her originalposition can be resumed.
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Closely connected with the cause of action question is whether an assumption,which does not relate to an existing or expected legal relationship between theparties, is capable of founding an equitable estoppel. Although this issueraises fundamental questions about the nature and scope of the doctrine, it isnot addressed in . A restrictive interpretation wasadopted by Brennan J in , when he articulated theelements necessary to establish an equitable estoppel. Brennan J held thatit was necessary for a plaintiff to prove that he or she assumed that aparticular legal relationship existed or would exist between the plaintiff andthe defendant, and the defendant would not be free to withdraw from thatrelationship. Although it is not clear whatconstitutes a ‘legal relationship’ for this purpose, it is difficultto see how this requirement could have been satisfied in .This raises the important question whether an equitable estoppel can arise whereone person relies to their detriment on an assumption which is simply that apromise will be performed, or that a person will act in a particular way. InPriestley JA indicatedthat it could. He observed that an equitable estoppel could operate in relationto ‘an assumption that a contract will come into existence or an interest granted to the plaintiff by thedefendant’.
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