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Requirements of Promissory Estoppel

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Promissory estoppel is a reliance based doctrine that suffices to protect detrimental reliance in whose favor an undertaking is made (Gordon, 1965). Brennan J in the Waltons case stated that it is sufficient for the defendant to have induced the plaintiff into the assumption that they will do or refrain from doing something and the plaintiff subsequently does so, and the plaintiff’ s action or inaction will occasion detriment if the assumption or expectation is not fulfilled. According to Gordon (1965), estoppel cannot operate unless the promisee had changed their position on the reliance of that promise.

Further, it was held that the detriment must not be conjectural or speculative but substantive. In Walton’ s stores' case, the court held that the plaintiff had relied on the promise by starting to execute the work with the knowledge of the defendant and that it would be unconscionable to allow him to go back on the promise. Pham (1994) argues that detrimental reliance is composed of two things: reliance and injury. He argues that a promissory estoppel claim can fail either because the promisee did not rely on the promise at all, or even if he did rely upon, no injury resulted from such reliance.

In Combe V Combe, the House of Lords stated that promissory estoppel can only be used as a shield but not a sword. In essence, promissory estoppel can only be used as a defense but not to find a course of action, to enforce the promise by the promisor. The court in holding so maintained the importance of consideration in establishing a binding agreement. Promissory estoppel should only operate as an evidential rule, to bar the defendant from denying the truth of a representation he made to the plaintiff(Sharma, 1994).

However, in Australia, this position was changed in the Walton Stores case. In this case, the High Court held that promissory estoppel could suffice to establish a course of action, and therefore could be used both as a shield and as a sword.

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