Keenan and Riches’BUSINESS LAW

2 The rule will only operate if the promisee has relied
upon the promise so that it would be inequitable to
allow the promisor to insist on his strict legal rights. At
first it was thought that the promisee must have acted to
his detriment. However, Lord Denning MR argued that
detrimental reliance is not essential and that it is suffici-
ent that the promisee has altered his position by acting
differently from what he otherwise would have done.

3 It is a principle of equity that whoever seeks the help
of equity must himself have acted equitably or fairly.
Thus, the promisee must have acted according to his
conscience if he is to rely on promissory estoppel as
a defence.

4 The rule does not as yet extinguish rights: it only sus-

pends the rights of the promisor. So if the promise refers

to a particular period of time or a state of affairs (e.g.

war conditions), the promisor can revert to the original

position at the end of the stated time or when conditions

change by giving notice to the promisee.

Part 3Business transactions

220

Baird Textile Holdings Ltdv Marks and

Spencer(2002)

The claimant B had supplied garments to the defendants

M & S for 30 years, when M & S terminated the agree-

ment with effect from the end of the then current

production season. B brought an action against M & S

arguing that: (i) the termination was in breach of a con-

tract, which could be implied from the long-standing

relationship between the parties, that obliged M & S to

continue to place orders unless and until the contract

was ended by giving reasonable notice, and B contended

that a notice period of at least three years was reasonable;

and (ii) M & S were estopped from giving less than three

years’ notice. The Court of Appeal held that the alleged

contract obliging M & S to continue to place orders with

B failed for uncertainty. (The requirement of certainty will

be discussed in more detail in Chapter 9 .) The court

confirmed that estoppel did not create the type of enfor-

ceable right claimed by B. It could not be used to found

a cause of action.

D & C Buildersv Rees(1965)

D & C Builders, a small building company, had com-

pleted some work for Mr Rees for which he owed the

company £482. For months the company, which was in

severe financial difficulties, pressed for payment. Even-

tually, Mrs Rees, who had become aware of the com-

pany’s problems, contacted the company and offered

£300 in full settlement. She added that if the company

refused this offer, it would get nothing. The company

reluctantly accepted a cheque for £300 ‘in completion of

the account’. The company later sued for the balance.

The Court of Appeal held that the company was entitled

to succeed. Mr Rees could not rely on promissory estop-

pel to resist the claim because his wife had held the

company to ransom and could not be said to have acted

equitably. Moreover, the different method of payment,

i.e. by cheque rather than by cash, did not release

Mr Rees from the obligation to pay the full amount owed.

Tool Metal Manufacturing Co Ltdv

Tungsten Electric Co Ltd(1955)

Tool Metal granted a licence to Tungsten Electric to deal

in products protected by patents owned by Tool Metal.

Tungsten Electric agreed to pay ‘compensation’ if it

manufactured more than a specific amount. In 1942 Tool

Metal indicated that it wished to prepare a new licence

agreement and in the meantime would not claim com-

pensation. Tool Metal later gave notice that it wished to

resume its claim to compensation. The House of Lords

held that Tool Metal was entitled to claim compensation

after giving reasonable notice of its intention to do so.

The Court of Appeal had a recent opportunity to con-

sider the rule in Pinnel’s case and the doctrine of pro-

missory estoppel in the following case.

Collierv P & M J Wright (Holdings)

Ltd (2007)

C and his two partners B and F, had obtained a loan

from W, for which the partners were jointly liable. W

obtained a judgment against C, B and F for £46,800 in

1999. The partners were ordered to pay £600 a month
      and initially the payments were made from the partners’
      joint bank account. However, the partnership came to an
      end in 2000. At a meeting between C and W towards the
      end of 2000, W told C that B and F had not been paying
      their shares. C alleged that when he asked W what he
      should do, W said that it was his (W’s) responsibility to
      pursue B and F and that C should carry on paying £200
      per month. C continued making monthly payments for
      the next five years until he had paid one-third of the total
      judgment debt. In 2006, W served a statutory demand