SYSTECH SOLICITORS LEGAL UPDATE

London Property Trust Ltd v High Trees House
Ltd (1947) 1
“Estoppel…….is a principle of justice and
of equity. It comes to this: when a man, by his words
or conduct, has led another to believe in a particular
state of affairs, he will not be allowed to go back on
it when it would be unjust or inequitable for him to do
so.” He further stated that “a promise made which
was intended to create legal relations and to the
knowledge of the promisor would be acted upon by
the promisee and was in fact acted upon would be
binding.”
So long as the promise was not made under duress
then estoppel may be available to prevent the
promisor going back on his promise (D & C Builders
v Rees (1966) 2 QB 617 (CA)).
So we are in the clear?
Not if you are in England or Wales. For then you
find yourself in one of the very few jurisdictions in
the world which is out of step with everyone else
and refuses to use Estoppel in a situation like the
example above.
Why should this be?
When other common law jurisdictions including
Canada, South Africa, Australia and the USA already
afford protection to a main contractor in this situation
and the House of Lords when judging cases from
Commonwealth countries also have applied
Estoppel why should things be different in regard to
cases in England and Wales? Are we out of step
and should a remedy of Estoppel be available to
main contractors caught in the above quandry?
It is evident that many other jurisdictions, both civil
and common law, apply obligations during the precontractual
negotiations phase. They do this in
different ways but there are obligations none-theless.
The fact that English courts are loathed to enforce
pre-contractual obligations eminates from the
doctrine of freedom of contract with its roots in the
formation and rise of the British Empire since 1770.
There is also the problem of accepting a duty to act
in good faith during negotiations, unlike many other
jurisdictions where good faith and fair dealing have
been in ascendance. In many other countries there is
a sense of “fair trade” rather than the English concept
of “free trade”, with English law viewing a duty to act
in good faith as “utterly repugnant to the adversarial
nature of contractual negotiations” (Watford v Miles
(1992) 2 AC 128) coupled with a belief in freedom to
negotiate contracts without incurring legal liability.
The issue then boils down to the way the courts
view contractual relationships in England and Wales
compared to other jurisdictions. Pistols at dawn to
secure an advantage over the other party rather
than a partnership to secure mutual advantage. The
implications are not only relevant here but in general
during the development of contractual negotiations.
The question is whether this attitude can persist in
light of the growth of international companies and
projects and the way such relationships will be
viewed in the future.
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