Problem Solving Assignment Questions

Problem Solving Assignment Questions

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Introduction

The presented legal submission is a memorial drafted on behalf of the legal counsel of the respondent. The appeal lies before the Hon’ble Supreme Court in the case of Travel-Hut Ltd v. Estates Ltd in which the High Court delivered its judgment in favour of Travel-Hut Ltd. Thus, an appeal is sought before this court by Estates Ltd to set aside the judgment of the High Court.

As per the facts of the given case, there are two parties in this appeal where the appellant is the hotel company named Travel-Hut Ltd and the respondent is the company named Estates Ltd. Initially the matter has been by the High Court where the claim of the company Estates Ltd has been declined and the judgment was rendered in the favour of the Hotel company Trave-Hut Ltd. Hence, an appeal in the Supreme Court has been made by Estates Ltd on the ground that doctrine of promissory estoppel operates to suspend the legal rights of the promisor and also operates the execution and enforcement of the same.

Promissory estoppel explained

• Meaning:
  • It is a legal principle
  • A promise is enforceable by law
  • It is enforceable even if there is absence of formal consideration

As per the doctrine and definition provided of promissory estoppel, it can be stated that under this doctrine, the promisor cannot act inconsistently to the promise which he has made to the other party as the promisor is estopped by his words.

The doctrine of promissory estoppel works on three important elements which are:

• A promisor who makes the promise
• Promisee who is accepting the promise
• A promise made which can be upheld in the court through legal action

Question 1:

How appropriate is it to apply the principles established in Central London Property Trust Ltd v. High Trees House Ltd [1947] KB 130 to this appeal? Explain your reasoning.

Answer:

• Facts:
  • Landlord accepted reduced rent post WWII from the tenant.
  • But landlord will resume the original payment once there is full occupancy and also at any time after giving due notice.
  • Promissory estoppel effective for future governance but not to recover past rent.

In this case the landlord agreed under a lease of 99 years to accept reduced rent from the tenant post World War II as there was less occupancies.But the landlord asked for full rent once the occupancies were full. Hence, the court held that the promise was only enforceable and the landlord was only estopped until a specific period where there was detriment factor.The landlord is entitled to full rent after giving reasonable notice to the tenant.

Reasoning:

• Court gave the reason of the factor of detriment.
• In case of absence of such factor, the promisor is allowed to act accordingly.

If the party relying on the promise of the promise relies to its detriment, the promisor is estopped from acting inconsistently.

If the factor of detriment is missing, the promisor may act as per the original contract on giving reasonable notice.

Application of the above judgment on the instant case

• Promisor Estates Ltd was bound only for a specific period for which it has promised
• Absence of detriment factor on the side of Hotel company.
• Thus, promisor can give notice for resuming the original rent.

Question 2:

Explain how the decision in Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1326 may apply to this appeal.

Answer:

• Facts:
  • Respondent terminated the contract as the appellant failed to achieve the target for which the contract was done.
  • The issue was whether the respondent can terminate the contract without paying any damages to the appellant.
• Held:
  • Judgment was in favour of respondent and court held that respondent could terminate the contract after due notice.
  • Hence, appeal was preferred questioning the judgment on the ground that respondent was estopped to terminate the contract.

As per the facts of this case, the respondent company was an electricity system operator company who terminated its contract with the appellant company which was a renewable energy company as the appellant failed to achieve commercial operation for solar power facilities as mentioned in their contract.

Hence, in the case before the lower court, the decision was in favour of the respondent company where the court held that the respondents are allowed to terminate the contract after giving due notice to the appellants.

Reasoning:

• The decision of the above case applies in this appeal on the following ground:
  • When one party makes the promise and the other party relies on his to detriment, the promisor is estopped from acting inconsistently.
  • But the promisor is precluded from acting inconsistently only to the extent necessary to protect the rights and position of the promisee.

As a general rule, the promisor is not allowed to act inconsistently to the words and promise he has made to the other party. But the promise and the doctrine of estoppel is effective only to the extent where the necessity is protection of the rights of the other party.Hence, the promisor is allowed to act beyond the extent of this necessity.In the above provided case, the court reasoned the judgment and mentioned in its findings that the promisor can give reasonable notice to the other party before terminating the contract as doctrine is only enforceable where the factor of detriment of the other party is present.

Court pointed out two aspects of estoppel that is

• Estoppel by convention
• Promissory estoppel

Court also held that there is no application of either of the estoppel. The court also held that promissory estoppel applies when the promiser makes a promise to the other party and other party agrees to its detriment. The court stated that the doctrine of estoppel works on two aspects which is estoppel by convention and promissory estoppel.

In the given case, the court stated that there is no application seen of either of the aspect.

The court justified its statement observing that the doctrine of promissory estoppel is applied on the promisor when the other party is agreeing to the terms of the promisor to its detriment.

In case there is no disadvantage to the other party, there is no application of promissory estoppel.