‘While the so-called doctrine of promissory estoppel was developed to alleviate the unfair effect of the requirement for consideration, the doctrine now appears well placed as an alternative to consideration.' Discuss.

Before the doctrine of promissory estoppel was resurrected by Denning J in the case of Central London Property Trust Ltd v High Trees House Ltd (1947), the general rule is that pay...ment of a smaller on due day is not a satisfaction for a debt of a larger sum. Therefore, consideration must be provided to discharge the balance, if not the creditor can sue for the balance even if he had promised not to do so: Foakes v Beer (1884). However, the English common law and equity developed two exceptions of this rule in order to alleviate the unfair effect of the requirement for consideration. One of the exceptions is the doctrine of accord and satisfaction (Common Law), and the other is the doctrine of promissory estoppel (Equity). After the doctrine of promissory estoppel was reutilized, it has successfully alleviated the unfair effect of the doctrine of consideration in number of cases. However, the doctrine cannot be depicted as an alternative to consideration because the doctrine is not as flexible as the application of consideration and their nature and purpose are utterly disparate.

As a general rule in English law, a promise is only enforceable if it is supported by consideration. It raises a question that if A owe B a debt, B promise A to accept half of the debt in full satisfaction of the debt, can B sue for the balance because the promise does not provide any consideration for the promise? In Pinnells case (1602) which was reaffirmed in the case of Foakes v Beer (1884), it was held that part payment of a debt does not constitute good consideration for the discharge of the entire debt. However, the Foakes case is not a popular decision and has been subject to much criticism over time. Lord Blackburn in Foakes criticized the rule and recognized that there is indeed a form of practical benefit received when a creditor agrees to accept part payment. A promise had provided consideration as the promisor had received practical benefits: Williams v Roffey Bros. & Nicholls (Contractors) Ltd (1990). Therefore, it is unfair that a promise to accept part payment for the discharge of the entire debt is not enforceable whereas the practical benefit is operating. Despite the criticisms, in the case of Re Selectmove (1995), the Court of Appeal confirmed that if there is a promise to perform an existing duty in the form of services, the practical benefit of this nature will constitute good consideration. On the other hand, if the obligation is to pay money, then the practical benefit in this sense will not constitute as sufficient consideration. This indicated the doctrine of practical benefit has not been extended to part payment of a debt.

Surely, a rigid insistence upon consideration can lead to inequitable result. Therefore, the doctrine of promissory estoppel is developed to alleviate such injustice. In the case of Hughes v Metropolitan (1877), A landlord gave a six-month notice to a tenant, requiring him to carry out certain repairs. The tenant responded by inquiring whether the landlord wished to purchase his interest in the premises for £3,000. The landlord entered into negotiations for the purchase of the lease but, when these negotiations broke down, he sought to forfeit the lease because the tenant had not carried out the repairs within six months of his original notice. The House of Lords held that the tenant was entitled to equitable relief against forfeiture of the lease on the ground that the running of six-month period was suspended during the negotiations to purchase the lease and did not recommence until the negotiations broke down. The decision lay in obscurity for many years until it was resurrected by Denning J in the famous case in Central London Property Trust Ltd v High Threes House Ltd (1947), In this case, the plaintiffs let a block of flats in London to the defendants on a 99-year lease at an annual rent of £2,500. In 1940, the defendants discovered that as a result of the outbreak of war and the evacuation of people from London they were unable to let many of the flats. So the plaintiffs agreed to reduce the rent to £1,250. At the end of the war, the property market had returned to normal and the flats were fully let. The plaintiffs demanded that the defendants resumed payments of the entire rent from 1945 but the defendants refused to pay. It was held by Denning J that the agreement in 1940 was intended to be temporary and ceased to operate after the war. It raised another question here: Can the plaintiffs claim for the period of 1940 to 1945 according to the ratio decidendi of the Foakes case that part payment of a debt does not constitute good consideration for the discharge of the entire debt? Denning J held orbiter dictum that had the plaintiffs claimed for the period of 1940 to 1945, the promisor would be estopped from going back on his words even though the promise had not provided consideration to enforce the promise.

So, after the High Trees case, if A owes B a debt, B promises A to accept half of the debt in full satisfaction of the debt, can B sue for the balance even it is inequitable? The answer is that it depends on five elements which must be satisfied prior to the courts invoking promissory estoppel. The first is that there must be a clear and unequivocal promise or representation that existing legal rights will not be fully enforced: Hughes v Metropolitan Railway (1877). The second is that the doctrine can only be used as a defence and not a cause of action: Combe v Combe (1951). The third is that the representation or promise was intended to be binding and acted upon and was in fact acted upon: E. A. Ajayi v R. T. Briscoe (Nigeria) Ltd (1964). The forth is that it must be inequitable to allow the promisor to go back on his promise: D & C Builders Ltd v Rees (1966). The final is that promissory estoppel is merely suspensory, and that the promisor can resume his rights under the contract after giving reasonable notice of his intention to do so: Tool Metal Manufacturing Co. Ltd v Tungsten Electric Co. Ltd (1955). 

The doctrine of promissory estoppel may be poised to act as an alternative to consideration. However, that situation has not yet been realised. The exact scope of promissory estoppel is unclear. In particular, questions have been raised as to whether it can be extended to give rise to a cause of action, whether it can be applied where there is no existing legal relationship between the parties, the exact scope and meaning of its suspensory effect, and the extent to which the concept of inequitable conduct will affect the estoppel. In the case of Baird Textile Holdings Ltd v Marks & Spencer plc (2001), the Court of Appeal held that the alleged obligation on the part of Marks & Spencer to acquire clothing from Baird was insufficiently certain to found either a contractual obligation or a claim based on estoppel. The court agreed that the estoppel claim had no real prospect of success since English Law did not currently create or recognize the right contended for on these facts. Thus the reconsideration of the scope of the category or categories of estoppel by the House of Lords is still awaited.

Promissory estoppel is designed to alleviate the unfair effect of the requirement for consideration. According to the five elements of how it operates, the doctrine appears only in the cases where a rigid insistence upon consideration causes inequitable judgment. On the one hand, the doctrine may be poised to act as an alternative to consideration sometimes. On the other hand, because the exact scope of the doctrine is unclear and the application of the doctrine is not flexible, the doctrine is not easy to be poised to act as an alternative to consideration in any occasion. Therefore, I personally believe that it is fairer to say that the doctrine of promissory estoppel is just a subordinate option for the court to uphold justice. The doctrine can never have an extinctive effect to the doctrine of consideration.