Concerning an expectancy based remedial theory of promissory estoppel.
I. INTRODUCTION II. BACKGROUND ON PROMISSORY ESTOPPEL III. RELIANCE-EXPECTATION DEBATE i. Reliance Theorists ii. Expectation Theorists IV. EMPIRICAL STUDIES AND JURISPRUDENTIAL ANALYSES i. Empirical Studies ii. Jurisprudential Analyses a. England b. Canada c. Australia d. US V. JUSTIFYING EXPECTATION i. Proposition A: A right may be transferred donatively through a gratuitous contract ii. Proposition B: Promisor licences promisee to exercise her freedom unconstrained by the contract VI. CONCLUSION
In a case comment on Central London Property Trust Ltd v High Trees House Ltd, (1) Cheshire and Fifoot wrote on estoppel: "few doctrines are at once so potentially fruitful and so practically unsatisfying. It is more often cited than applied, and more often applied than understood." (2) While promissory estoppel has been refined in the decades since High Trees, this statement continues to hold force. Perhaps in part due to the somewhat tortuous development of the doctrine, (3) it is often difficult to understand precisely what judges are attempting to do when they invoke promissory estoppel. This lack of clarity has given rise to a number of important debates in the literature, both with respect to the causative event and the legal response. The focus of this paper is on the latter debate.
The question of the proper remedy when an estoppel has been raised has relatively recently found itself at the centre of much academic attention. (4) Prominent scholars in England, Canada, Australia, and the US have presented arguments in favour of limiting relief to the reliance loss of the promisee. (5) This view is not universal, however, and other leading academics have argued that, once raised, a promissory estoppel should prevent (estoupe) the promisor from acting inconsistently with the promise. (6) This debate is accented by the judicial reality that the courts in these four jurisdictions generally--or, in some cases, always--adopt the latter approach. (7) While there is very little explanation or justification for this position in the jurisprudence, numerous empirical and jurisprudential studies confirm the judiciary's proclivity toward treating gratuitous promises as binding in certain circumstances, thereby protecting the expectation interest engendered by them. (8) The purpose of this paper is to explain the latent reasons behind this judicial preference. My argument is that the cases identified in this paper that support expectation as a proper measure of relief are justifiable within a corrective justice framework.
In the next part of this paper, I briefly set out the doctrine of promissory estoppel as it is currently understood in England, Canada, Australia and the US. Then, in Part III, I set out the reliance-expectation debate in more detail. In Part IV, I present the jurisprudence on the proper measure of relief in promissory estoppel cases, concluding that there are authoritative cases in England and the US in favour of the expectation theory. In Part V, I turn to justifying the cases that stand for expectation as a proper measure of relief. In this endeavour, I present two plausible justifications. First, I argue that a gratuitous promise can transfer an enforceable right to direct the outcome of one of the promisor's choices. I conclude that this may explain the cases in which promissory estoppel operates as a cause of action, namely in the US, and, to some extent, in Australia. Second, I suggest that a promisor may, through a promise, licence the promisee to exercise her freedom of choice unconstrained by some pre-existing contract. Once the subject choice is exercised, the promisor's original contractual right has no content. The result of this is equivalent to the protection of expectations, and I argue this proposition justifies the doctrine in those jurisdictions (Canada and England) in which promissory estoppel can never operate on its own to create a cause of action. Finally, in Part VI, I conclude. (9)
II. BACKGROUND ON PROMISSORY ESTOPPEL
Like many doctrines of the law, promissory estoppel is not defined uniformly between jurisdictions. Scholars and jurists operating in England, Australia, Canada, and the US identify different definitions and elements. The purpose of this section is to briefly set out the state of the law in these jurisdictions in order to lay the foundation for the discussion of the proper measure of relief found in the next section.
In England, Canada, and Australia, promissory estoppel derives from the case of Hughes v Metropolitan Railway (10) In that case, the plaintiff and the defendant were landlord and tenant respectively. The lease contained a provision under which the tenant was required to make any repairs requested by the landlord within six months of the delivery of formal notice. On October 22, 1874, the plaintiff issued a formal notice of repair, and the defendant replied with the proposal of (a) a sale of the lease back to the landlord, and (b) the deferral of the repairs while the parties negotiated. The plaintiff responded that it was willing to negotiate for the purchase of the remainder of the leasehold; the reply did not mention, however, the deferral of the repairs. On December 30, 1874, the defendant made an offer, and, the following day, the plaintiff rejected it. No further negotiations took place. On April 22, 1875, the original six-month repair notice expired. Six days later, the plaintiff brought a writ of ejectment, and the defendant commenced the repairs. Repairs were completed in June of that year. In considering the writ, the House of Lords concluded that equity would not allow the plaintiff to assert its strict contractual right to eject the defendant. (11) The ratio as set out by Lord Cairns LC is as follows:
[I]t is the first principle upon all Courts of Equity to proceed, that if parties who have entered into definite and distinct terms involving legal results--certain penalties or legal forfeiture--afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties. (12)
Stemming from this ratio, the English and Canadian courts have developed a doctrine of promissory estoppel with the following four component parts: (1) a promise not to enforce an existing legal (generally contractual) right; (13) (2) an intention of the promisor to affect binding legal relations through the promise; (14) (3) an intention of the promisor for the promise to be acted on; (15) and (4) the detrimental reliance of the promisee. (16) When these elements are met, a promissory estoppel is raised in favour of the promisee. The effect of this is discussed below.
It is sometimes said of this doctrine of promissory estoppel that it operates as a "shield," but never as a "sword." (17) While this maxim is occasionally interpreted to mean that a plaintiff may never raise an estoppel, (18) this view has been criticized or rejected in both Canada and England. (19) It is more correct to say that the maxim means simply that--because the promise must have regard to the non-enforcement of an existing right--promissory estoppel cannot operate independently as a cause of action. (20) The cause of action must be based on some pre-existing right held against the defendant, and a promissory estoppel may either complete the plaintiff's case (say, by negating one of the defendant's contractual defences), or it may be invoked by a defendant to defend against the assertion of the plaintiff's strict legal rights. In other words, a promise can only raise an estoppel if the promisor and the promisee have a pre-existing legal relationship. (21) Without such a relationship, no cause of action can lie. The doctrine should not be considered as turning on whether the party seeking to raise the estoppel is a defendant or a plaintiff. (22)
While this interpretation of the sword-shield maxim is good law in England and Canada, (23) it has been rejected in Australia. (24) In Waltons Stores (Interstate) Ltd v Maker, (25) the majority of the High Court of Australia rejected the requirement that there be a pre-existing contractual or legal relationship between the parties. In that case, the plaintiff conducted extensive work on his property in the anticipation that a lease would be formed between himself and the defendant. The timeline set out in the proposed lease was such that, if the plaintiff was to complete the required building operations on time, he had to start work under the contract in November 1983 at the latest. On November 7, 1983, the defendant's solicitor represented that the defendant would let the plaintiff know by the next day if it did not assent to any of the terms of the proposed lease; the defendant, however, was not prepared to execute the lease until it had finalized its retail strategy. On November 10, 1983, the defendant became aware that the plaintiff had begun the demolition and construction work contemplated under the unexecuted contract. On November 11, the plaintiff's solicitor sent an executed copy of the lease "by way of exchange" to the defendant. The defendant did not reply until January 19 when it finally informed the plaintiff that it would not be executing the lease. By this time, the buildings on the plaintiff's property had been entirely demolished, and the new building required under the terms of the proposed lease was 40% complete. While the plaintiff and the defendant were not in a contractual relationship, the High Court nevertheless found for the plaintiff. The Court reasoned that a promisee has an equitable cause of action or defence against a promisor if she can establish (a) that the promisor induced an assumption or expectation about the future (i.e., made a promise to perform some future act), (b) that she relied on the promise, assumption or expectation to her detriment, and (c) that it would be unconscionable for the promisor not to put the promisee back into her pre-reliance position. (26)
The Australian courts have, therefore, abandoned the requirement that the promise must concern the non-enforcement of an existing legal right. This move has been specifically rejected in England, (27) and, as no Canadian court has accepted Waltons Stores, it is likewise not authoritative in that jurisdiction. (28)
Like the Australian doctrine, the US version of promissory estoppel does not require a pre-existing legal relationship between the promisor and the promisee. (29) As the US case law upon which the doctrine is based does not find its genesis in Metropolitan Railway, the doctrine has taken a substantively different form from any of the jurisdictions discussed above. The modern US law of promissory estoppel turns around section 90 of the Restatement of the Law, Second--Contracts (the Restatement (Second)), (30) which has been judicially approved on a number of occasions. (31) The section reads:
A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. (32)
A few features of the doctrine enshrined in this section should be noted. First, while promissory estoppel was originally thought to be limited to enforcing non-commercial gratuitous promises, (33) there is authority for the applicability of section 90 in the commercial context. (34) Second, the language of "action or forbearance" in section 90 was originally qualified in the Restatement (First) as having to be "of a definite and substantial character." (35) While this language was removed in the Restatement (Second), the US courts have nevertheless maintained this more stringent standard. (36)
Having briefly set out the current state of the law on promissory estoppel in England, Australia, Canada and the US, this paper may now turn to its primary focus, namely, the proper measure of relief when a promissory estoppel is raised.
III. RELIANCE-EXPECTATION DEBATE
Fuller and Perdue identified the conceptual distinction between the reliance and expectation interests in the context of contract remedies. (37) The former interest, they explained, has to do with quantifying the change of the promisee's position between the pre- and post- promise universes. When the promisee has, in reliance on the promise, changed her position in some way--say, by incurring expenses, expending time, or missing opportunities--the reliance interest describes the value of that which is thereby lost. By restoring this loss to the promisee, she is put back into the pre-promise position. The expectation interest, on the other hand, describes the promisee's expectation as to the content of the promise. This interest is protected where the expectation engendered by the promise is fulfilled. This distinction applies equally in the context of promissory estoppel, and there are two primary positions in the scholarship on the question of what interest promissory estoppel properly does and should protect: (38) the reliance-theorists and the expectation-theorists. The reliance-theorists take the position that promissory estoppel operates in the law to protect the reliance loss of the promisee and that the doctrine should do no more. (39) The expectation-theorists, on the other hand, argue that the courts should invoke the doctrine to ensure that the promisee's expectation in the content of the promise is fulfilled--i.e., to treat the promise as binding. (40) While this debate has both normative and descriptive elements, (41) in this section I will discuss its normative dimensions. The case law will be discussed in Part IV.
i. Reliance Theorists
Following the US scholars, there is a strong movement in Canada, England and Australia in favour of the recognition that promissory estoppel should protect the reliance interest of the promisee, but no more. This view is generally premised on one of two propositions. First, it is sometimes suggested that the relief in promissory estoppel cases should be connected to the elements of its causative event. As one element of the event centres around the detrimental reliance of the promisee, the relief ought to be measured by the extent of the detrimental reliance. Second, reliance theorists often connect their remedial arguments to their views as to the purpose of promissory estoppel. If the purpose of promissory estoppel is to protect the promisee from the harm caused by relying on a subsequently resiled from promise, ex hypothesi the doctrine ought to restore the promisee to the pre-reliance state of affairs. It was in reference to the scholars who fall into this camp that Yorio and Thel first applied the term "reliance theorists." (42) This position is often, (43) although not always, (44) tied to an argument that promissory estoppel is part of the law of torts (or, depending on the jurisdiction, the law of wrongs).
The first approach can be seen in the writing of Wilken. (45) Although he does not engage with this debate in these terms, Wilken argues that there is no justification for fulfilling the promisee's expectation if she can be restored to her original position by the promisor. (46) His argument centres on the relationship between the causative event and the response. In his words, the reliance approach "links the remedy with the factors which trigger the operation of the doctrine." (47) As detrimental reliance is a factor of the causative event, it follows that it should be--at least presumptively--the measure of relief when an estoppel is raised.
Turning to the second approach to the reliance argument, this view permeated the US literature following the publication of the Restatement (First), and it is well exemplified by the work of Seavey. (48) Referring to section 90 of the Restatement (First), (49) Seavey wrote that "[e]stoppel is basically a tort doctrine." (50) The harm, according to him, is not in breaching the promise per se, but in breaching a duty not to cause another to detrimentally rely on one's promise. (51) From this, it follows that promissory estoppel is a tort triggered by detrimental reliance. Seavey went on to argue that the damages should be limited to the reliance loss of the promisee. (52) This argument was based on the direct application of tort principles and not the language of section 90 itself, as, at that time, the section's only reference to relief stated that the promise was "binding if injustice can be avoided only by enforcement of the promise." (53)
The normative underpinnings of Seavey's argument are very much reflected by Weinrib in his work on remedies. (54) To be consistent with the structure of corrective justice, any remedy granted by the court must be the exact inversion of the injustice. (55) If the liability is justified because the defendant wrongfully deprived the plaintiff of something to which he was entitled (namely, the pre-reliance position), justice must involve the restoration of that which has been taken--viz., the reliance. While this assumes that the juridical significance of reliance is as a loss to which justice responds (an assumption challenged below in Part V), this position has a great deal of intuitive appeal. This position is also consistent with the redrafting of section 90, which now adds that "[t]he remedy granted for breach may be limited as justice requires." (56)
The reliance theorists form a strong movement in the literature. In addition to the scholars discussed supra, many others provide that promissory estoppel should protect reliance interests. Included in this camp are the editors of Spencer Bower, 4th, (57) Benson, (58) Fuller and Perdue, (59) and Eisenberg. (60)
ii. Expectation Theorists
The expectation theorists argue that the court should fulfil the expectation engendered by the promise and not limit itself to the reliance loss of the promisee. The most prominent of these theorists was Williston, the reporter of the Restatement (First). In a session of the American Law Institute, Williston famously stated that "[e]ither the promise is binding or it is not. If the promise is binding it has to be enforced as it is made." (61) In other words, if the law is going to treat a promise as binding, it must do so in full, or not at all. In the face of much criticism, Williston took the position that gratuitous promises are binding when the promisor could reasonably expect definite and substantial reliance and such reliance is caused in fact. (62) While the American Law Institute partially rejected this view in the Restatement (Second), Yorio and Thel have argued that Williston's position can be explained by the real judicial policy of enforcing serious promises. (63) Where a promise is made in a serious--meaning non-casual--manner, it ought to be enforced. While Yorio and Thel limit their discussion to a descriptive analysis of the law, (64) they argue that this is, in fact what lies behind the Court's treatment of promissory estoppel cases. (65) Similarly to Williston, Burrows has argued for the protection of expectation in England. (66) In one of his essays on the categorization of the private law, he argued that,
in terms of policy the law should now be prepared to protect the expectation interest for promissory estoppel, both as a defence and as a cause of action. The basic reason for this is that [...] the expectations engendered by a promise particularly worthy of protection. (67)
This conclusion is based on Burrow's view that promises should be enforceable when they engender a strong (68) expectancy as to some future position into which the promisor will put the promisee. (69) This expectation, according to Burrows, is deserving of protection regardless of whether the promise is supported by consideration or has engendered detrimental reliance. This argument is not premised on any transferred entitlement from the promisor to the promisee. Rather, the thing to which the promisee is entitled is simply the protection from having his emotional expectation disappointed. Burrows goes on to suggest that the reason why the court has traditionally required consideration or reliance or some other constraint on promise enforcement has had to do with the prevailing social policy of the court. In the late Eighteenth and Nineteenth Centuries--when the strictures of consideration and the elements of promissory estoppel developed--the court, which could be characterized as having a policy of noninterference with the private affairs of individuals, constrained the number of promises that it would enforce. (70) As Burrows took the position that the social policy of the court was now consistent with larger scale interference and paternalism, he argued that it was time for the judiciary to protect the expectancy interest created by all promises.
Like Burrows, Pratt has argued that promissory estoppel should give rise to the protection of expectancy. (71) Arguing in the context of the Australian doctrine, Pratt suggested that the harm caused by the breach of a promise is in the disappointment of expectations that have been relied upon, not in the detrimental reliance itself. In his words, "[e]xpecting is logically prior to relying, and the basic harm supporting an estoppel is not induced reliance but disappointed expectations." (72) In other words, while Pratt takes a similar wrongs-based approach to that of Seavey, he defines the wrong as Burrows does. (73) The weakness of all three of these arguments is that they each disregard the relational nature of rights and duties within a corrective justice framework. (74) As Weinrib explains, "the duties of private law have the additional feature of being correlative to the expectation thesis to work, expectation theorists would have to establish a coherent argument for why the promisor has a right not to have her expectation frustrated, and why the promisor has a duty not to interfere with the expectation once engendered. However, Williston, Burrows and Pratt focus only on the promisee's entitlement to her expectation. They each fail to connect this entitlement to the duty of the promisor not to resile from the promise. Assuming that the intellectual expectation of the promisor is, as suggested by Burrows, "worthy of protection," (75) as Weinrib explains, "the duties of private law have the additional feature of being correlative to the rights of others." (76) For the expectation thesis to work, expectation theorists would have to establish a coherent argument for why the promisor has a right not to have her expectation frustrated, and why the promisor has a duty not to interfere with the expectation once engendered. However, Williston, Burrows and Pratt focus only on the promisee's entitlement to her expectation. They each fail to connect this entitlement to the duty of the promisor not to resile from the promise. Assuming that the intellectual expectation of the promisor is, as suggested by Burrows, "worthy of protection," this argument does not explain why the promisor must protect it. The protection of the expectation may, on this argument, be obtained equally well through the constitution of a state insurance fund.
Although none of these scholars are able to justify an expectation-based remedy within a corrective justice framework, the law appears to be more consistent with this thesis, at least in England, Canada, and the US. It is to the law that I now turn. I will first set out the empirical studies that have been conducted in the relevant jurisdictions. In each, it was found that the courts predominately favour the protection of expectation. Second, I will turn to the jurisprudence. Then, in Part V, I will present two original theories in support of the expectation theory.
IV. EMPIRICAL STUDIES AND JURISPRUDENTIAL ANALYSES
i. Empirical Studies
Empirical studies of promissory estoppel cases have been conducted in Canada, England, Australia and the US. These studies look at both the actual relief granted by courts when a promissory estoppel is successfully raised and at the language in which the relief is framed. (77)
According to a recent study conducted by Ship, the primary remedy in promissory estoppel cases is expectation. In his words,
[a]s a precedential matter, promissory estoppel has operated to protect reasonable expectations engendered in the representee. Although there is some support for a reliance approach to relief in England, Australia, the US, and Canada, the weight of authority endorses expectancy. (78)
Ship goes on to note that his empirical research indicates that, in every appellate level case featuring a successful promissory estoppel pleading in Canada, the remedy was consistent with expectation. (79) Ship's work is consistent with that of Cooke. In her study of English and Australian cases, she found that (with a few exceptions) the English courts protected the expectation interest of successful estoppel raisers. (80) She went on to note that, as promissory estoppel is rooted in equity, the remedial discretion of the court was such that, in limited circumstances, it had done something less than protect the expectation of the promise raiser. She argued, however, that "the starting-point for that equitable jurisdiction, and the courts' default option, is the fulfilment of expectations." (81)
Further, according to Pratt, despite the strong authority for a reliance-based remedy, (82) the Australian courts generally protect the expectation interest of the promisee by enforcing the promise. (83) This is supported by a study conducted by Robertson in which he found that, of the twenty-four Australian cases of promissory estoppel following Verwayen v Commonwealth, all granted expectation remedies. (84)
Finally, according to Yorio and Thel, the usual remedy in the US when a promissory estoppel is successfully raised is either expectation damages or specific performance, and the remainder of the cases are such that the expectancy is either difficult to quantify or is otherwise problematic. (85) Of the 29 cases cited in the Restatement (Second) in which a gratuitous promise was enforced, 24 fulfilled the expectation engendered by the promise by way of specific performance, expectation damages, or an injunction, and the remaining five cases were either such that expectation could not be established, or there was some problem with the proof of the promise. (86) This trend has continued after the Restatement (Second), even though it specifically endorses reliance relief. Yorio and Thel cite several empirical studies of US jurisprudence published between 1984 and 1987, and each confirms their conclusion that the courts do, in practice, protect expectations. (87)
ii. Jurisprudential Analyses
While there is authoritative support for the expectation theory in England, Canada, Australia and the US, scholars have argued in each of these jurisdictions that the case law supports reliance as a proper measure of relief. (88) While this is difficult to reconcile with the studies cited above, these claims must be examined before attempting to justify expectation as a measure of relief in promissory estoppel cases.
While there are no cases in English law in which the Court says explicitly that it is protecting expectation rather than reliance, there are numerous cases in which the court asserts that the promise is binding once a promissory estoppel is raised. (89) This is consistent with the etymology of the word "estoppel", and it does not cohere to the reliance theory set out above. To say that a promisor is bound to the promise is equivalent to saying that the expectation of the promisee will be protected. It amounts to the same thing in different words. This is reflected in the common usage of the word 'binding' in the context of contracts.
The language of the promisor being 'bound' to the promise was famously demonstrated in High Trees. (90) In that case, the plaintiff promised to reduce by half the rental rate on a block of flats leased to the defendant. The motivation for the promise was the fact that, due to World War II, two-thirds of the apartments lay vacant. (91) During the War, the plaintiff went into receivership, and, in 1945, the receiver claimed the full amount of the unpaid wartime rents from the defendant. Justice Denning, as he then was, following, among other cases, Metropolitan Railway, refused to grant the action, holding in effect that the plaintiff was estopped from resiling from the promise of a lower rent. The ratio that emerges from that case is the principle that "a promise intended to be binding, intended to be acted on and in fact acted on, is binding so far as its terms properly apply." (92) In other words, where a promissory estoppel is found, the promisor cannot resile from the promise and hold the promisee to the original obligation. This was reflected in the disposition of the court in that case. Justice Denning, as he then was, found that the promise was intended to reduce the rent payable so long as the rental market was depressed as a result of the War. His Honour therefore held that the receiver could not recover the deficiency for the period between when the promise was made and the end of the War. The extent to which the defendant changed its position was not determined by Denning J, as he then was, in his capacity as fact finder, strengthening the argument that the effect of the estoppel was not to protect the defendant's reliance interest. If it were, Denning J, as he then was, would have found this fact, held the promisee to the original contractual terms, and discounted the amount of the deficiency by the amount of the reliance. But his Honour did not do this.
Further support for holding the promise to be binding can be found in Combe v Combe (93) A husband promised his estranged wife 100 [pounds sterling] per year for maintenance. The husband resiled from this promise and the wife sued for the enforcement. At trial, Byrne J followed High Trees and granted the action. While the Court of Appeal refused to raise an estoppel on the basis that there was no pre-existing legal relationship between the promisor and the promisee, Denning LJ, as he then was, clearly articulated that estoppel raising promises are binding. His Lordship explained this with the following two hypothetical examples:
[A] creditor is not allowed to enforce a debt which he has deliberately agreed to waive if the debtor has carried on business or in some other way changed his position in reliance on the waiver. (94) [...] A landlord who has told his tenant that he can live in his cottage rent free for the rest of his life is not allowed to go back on it if the tenant stays in the house on that footing. (95)
This position is further strengthened by Baird Textile Holdings Ltd v Marks & Spencer plc. (96) The plaintiff was a supplier of the defendant's retail stores for thirty years. The defendant abruptly ended the relationship between the two organizations and the plaintiff brought an action on the basis that the defendant was contractually obligated to give it reasonable notice before terminating the relationship, or, in the alternative, that it was estopped from doing so on the basis of an implied promise to continue the relationship. The plaintiff in that case attempted to "bypass" the rule in England that estoppel can never constitute a complete cause of action by "limiting itself" and "seeking to protect its reliance interest" rather than the expectation engendered by the alleged promise. (97) Implicit within this line of argument is that the expectation interest is protected by promissory estoppel when the constituent elements of the English doctrine are met. After noting some problems with the relief actually claimed--and, more particularly, its closeness to the expectation interest on the facts--Mance LJ went on to reject this line of argument. Like the plaintiff, Mance LJ assumed that the promissory estoppel protects expectation: "but no authority in this jurisdiction supports the submission that estoppel can here achieve so expanded an application, simply by limiting recovery to reliance loss." (98)
Notwithstanding these cases, (99) there are several authoritative dicta in the jurisprudence that reliance theorists put forward in support of the proposition that the relief for promissory estoppel is presumptively reliance, subject to the equitable discretion of the court. First, Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd and Ajayi v RT Briscoe (Nigeria) Ltd are often cited for the proposition that a promisor may resile from a promise if he gives the promisee reasonable time to resume her position. From this it is occasionally inferred that the promisor need only restore the promisee to her original position to resile from the promise.
Second, the statement in Crabb v Arun District Council by Scarman LJ that the remedy in proprietary estoppel cases should be the "minimum equity to do justice" (100) has been applied in the promissory estoppel context in support of the theory that the proper relief turns on the reliance interest. (101)
Turning to the first line of argument--namely, that Tool Metal and Briscoe can be used in support of the reliance approach--this view is exemplified by Waddams. In his text on contract law, Waddams cites these cases for the proposition that the promisor may resume his rights on reasonable notice. (102) From this Waddams concludes that this "is one way of protecting the promisee's reliance without enforcing the promise to its full extent." (103) If the promisor may resume his rights on reasonable notice unless it is impossible for the promisee to be put back into her original position, ex hypothesi the doctrine protects the promisee's reliance interest. Only where the promisee cannot be put back into her original position short of enforcing the promise will the doctrine enforce the promise to its full extent. This being said, however, I suggest that any support for this proposition that may be drawn from Tool Metal and Briscoe requires qualification. The relevant quotation of Lord Hobson from Briscoe, which refers to Tool Metal, is as follows:
Their lordships are of opinion that the principle of law as defined by Bowen L.J. [in Birmingham (104)], has been confirmed by the House of Lords in Tool Metal Manufacturing Co. Ltd. v. Tungsten Electric Co. Ltd. where the authorities were reviewed, and no encouragement was given to the view that the principle was capable of extension so as to create rights in the promisee for which he has given no consideration. The principle, which has been described as quasi estoppel and perhaps more aptly as promissory estoppel, is that when one party to a contract in the absence of fresh consideration agrees not to enforce his rights an equity will be raised in favour of the other party. This equity is subject to the qualifications that (1) the other party has altered his position; (2) that the promisor can resile from his promise on giving reasonable notice which need not be formal notice, giving the promisee reasonable opportunity of resuming his position; and (3) the promise only becomes final and irrevocable if the promisee cannot resume his position. (105)
While this passage makes it clear that a promisor may, under certain circumstances, resile from his promise, it does not, I submit, suggest that the relief following a promissory estoppel is limited to reliance. This dictum only says that the promisee must be given a reasonable opportunity to resume his position, not that the promisor must return the promisee to his original position should he want to revoke the promise. All this passage does is reaffirm that the promisor may resile from the promise unless it is impossible for the promisee to put himself back into his original position without prejudice. If the promisor were able to 'buy out' the estoppel and put the promisee back into his original position, the promise itself would virtually never be final and binding in law. If this is what the passage is attempting to establish, it is not consistent with the rest of the English law on promissory estoppel. (106) I suggest that Briscoe stands for the much narrower proposition that the promisor may revoke the promise if the promisee's reliance was such that the promisee could resume her original position unilaterally with the provision of additional time. I will explain in Part V why this rule is consistent with my theory of why the Anglo-Canadian doctrine of promissory estoppel supports the enforcement of the content of the promise.
Turning to the second line of argument, Robertson has suggested that the "minimum equity to do justice" dictum in Crabb supports the proposition that promissory estoppel is limited to reliance losses where they are quantifiable. (107) In his terms, "[t]he notion that the courts should give effect to equitable estoppel by protecting against the harm resulting from the claimant's reliance emerged from Scarman LJ's reference in Crabb [...] to satisfying the 'minimum equity' to do justice to the plaintiff." (108) I suggest that this does not support the reliance approach to relief in response to a promissory estoppel for two reasons. First, Scarman LJ's dictum arose in the context of a proprietary estoppel case. But Anglo-Canadian courts maintain a distinction between promissory and proprietary estoppel. (109) Second, even if promissory estoppel remedies are defined in terms of raised equities, the 'minimum equity to do justice' is not necessarily reliance. If the injustice were defined as the detrimental reliance suffered by the promisee, as Robertson suggests, (110) the minimum equity would indeed be quantified by the reliance loss; however, if the injustice were the derivation of some expectancy to which the promisee is entitled, the restoration of reliance losses would often be insufficient to do justice between the parties. The 'minimum equity' dictum has no content without some presupposition about what kind of injustice gives rise to a promissory estoppel.
In conclusion, the state of the law in England is consistent with the empirical studies cited above. Even when given a clear opportunity to quantify the reliance loss, the courts treat the promise as binding. And the various attempts to find support for the reliance theory in the jurisprudence are inconclusive.
The Canadian courts have not moved far from the English jurisprudence on promissory estoppel. As put by Glenn, "[c]ommon law Canada [...] has tended to ignore estoppel, being content to import English examples without more." (111) According to Manwaring, the Supreme Court generally engages in an "invocation of doctrine method" of legal analysis in promissory estoppel cases. (112) The Court has adopted many of the English cases discussed above, including High Trees (in Conwest Exploration Co Ltd v Letain), (113) and Combe v Combe and Tool Metal (in John Burrows Ltd v Subsurface Surveys Ltd). (114) Given the unqualified approval, a strong argument can be made that the analysis of English law above applies equally to Canadian law.
Unlike in England or Canada, there is strong authority for the reliance theory in Australia. In Waltons Stores itself, the joint opinion of Mason CJ and Wilson J and the reasons of Brennan J each support the proposition that promissory estoppel (as part of the combined doctrine of equitable estoppel) operates to restore the promisee to the position she was in before she relied on the promise. (115) Brennan J in Waltons Stores nicely expresses this view:
The object of the equity is not to compel the party bound to fulfil the assumption or expectation; it is to avoid the detriment which, if the assumption or expectation goes unfulfilled, will be suffered by the party who has been induced to act or to abstain from acting thereon. (116)
The mystery of that case is, however, why the court actually protected the expectation interest of the promisee. (117) Rather than awarding the plaintiff the amount that he had expended on his land and any lost opportunity cost, the court awarded damages in lieu of specific performance of the contract. (118) In other words, the plaintiff got the full benefit of the promise (complete with lost profits) even though his reliance losses were presumably quantifiable and lesser than the expectation damages awarded.
The High Court of Australia reaffirmed its semantic approach in Waltons Stores two years later in Commonwealth v Verwayen (119) In that case, the plaintiff was injured when the navy vessel on which he was stationed collided with another naval ship. Before the statement of claim was delivered, the defendant represented to a solicitor acting on behalf of a number of the injured sailors, including the plaintiff, that it would not enforce its rights under the limitations act or plead a common law public policy defence available on the facts. Seven months after the filing of the defendant's statement of defence, which admitted liability, the defendant changed its policy and successfully moved to have its statement of defence amended to plead the limitations act and public policy defence. The plaintiff argued that the defendant was estopped from pleading these defences. The majority of the High Court of Australia agreed, albeit for widely differing reasons. Only two of the majority justices (Deane and Dawson JJ) found for the plaintiff on the basis of estoppel, the other two basing their decision on waiver. All three of the dissenting justices addressed the issue of estoppel, however, meaning that a total of five of the seven members of the court addressed the issue. (120)
The majority of the Court granted the plaintiff his expectation: the Court estopped the defendant from relying on the limitations and public policy defence points. (121) The justices of the majority selected this remedy for a variety of reasons, not all having to do with estoppel. Only Deane J took the position that equitable estoppel supported a presumptively expectancy-based remedy:
Prima facie, the operation of an estoppel by conduct is to preclude departure from the assumed state of affairs. It is only where relief framed on the basis of that assumed state of affairs would be inequitably harsh, that some lesser form of relief should be awarded. (122)
By preventing the defendant from pleading the substantive defences, Deane J sought to directly protect the expectation engendered by the promise. This is significant because, as noted by Brennan J in his dissent, the extent of the plaintiff's reliance loss was not determined as a matter of fact by the trial judge. (123) Although Deane J was in the majority on the disposition, however, the majority of the Court nevertheless held that reliance was the proper avenue of relief under the head of estoppel.
While the High Court of Australia cited the above-quoted passage of Deane J with apparent approval in Guimelli v Guimelli, (124) the Court did not explicitly overrule its previous decisions in Waltons Stores or Verwayen. (125) Therefore, it appears that the current state of the law in Australia is that equitable estoppel should only protect the reliance interest of the plaintiff.
As noted above, however, empirical studies have indicated that most, if not all, Australian promissory estoppel cases result in the full enforcement of the promise. Robertson has attempted to explain this divergence. In connection with his study of the twenty-four cases of promissory estoppel following Verwayen, he argued that three of them were wrongly decided and that reliance damages, which were quantifiable, should have been awarded. (126) As for the rest, he explained them on the basis that the reliance loss could not be quantified with precision. (127) In other words, the most effective way of compensating reliance in most cases is through the protection of expectancy, and it is only in cases where the reliance can be calculated and is disproportionate to the expectation that the difference is critical. (128)
Yorio and Thel engaged in a detailed and sustained examination of the US jurisprudence on promissory estoppel and concluded that expectation is the most common form of relief. (129) In this section, I will look closely at two exemplar cases addressed by Yorio and Thel. The first case strongly supports the argument that promissory estoppel is contractual in nature and exists to protect the promisee's expectation interest. The second case, in contrast, is often considered to be one of the strongest statements in support of the reliance theory. Both of these cases are from the highest courts in their respective states.
One of the strongest statements in favour of expectation as the proper measure of relief is found in Tomerlin v Canadian Indemnity Company. (130) In that case, the plaintiff was sued for assault and battery of one Villines, and the defendant--the plaintiff's insurer--agreed to defend the case on condition that this did not prejudice its rights against the plaintiff. The plaintiff secured personal counsel to supervise the defendant's handling of the case; after counsel for the defendant represented that the defendant would accept liability without reservation (based on his (mis-)interpretation of a recently released case), however, the plaintiff's personal counsel stepped down off the file. The plaintiff lost the tort case, and the defendant resiled from its representation and refused to indemnify the plaintiff. The Supreme Court of California, McCombe J dissenting, held for the plaintiff on the basis of promissory estoppel. On the question of the proper measure of recovery, Tobriner J, for the majority, relied on section 90 of the Restatement (First), holding explicitly that the award should be based in the plaintiff's expectation:
[A]s frequently happens in promissory estoppel cases, the value of the plaintiff's detrimental reliance need not be identical with, or equated to, the value of the defendant's promise. The cases hold that the appropriate remedy lies in the enforcement of the defendant's promise [...] The detrimental reliance serves as a substitute for consideration, giving rise to a contractual right in the plaintiff. (Rest., Contracts, supra, section 90.) (131)
While the extent of the plaintiff's detrimental reliance in Tomerlin would have been difficult, if not impossible, to calculate--as it would be difficult to establish the counterfactual turning around how the tort action would have gone had the plaintiff's personal counsel been involved--the judgment of the Supreme Court is clear in its support of an expectation based award. Moreover, the decision is unambiguous insofar as it considers promissory estoppel to be part of the law of contracts. While Tobriner J did not engage specifically with Seavey's 1951 article positing that promissory estoppel is more properly construed as part of the law of torts, he did cite it in recognition of differing approaches to the measure of relief in section 90 cases. (132)
While Yorio and Thel argue that none of the cases cited in the Restatement (Second) provide strong support for a reliance-based remedy in cases of clear, distinct, and serious gratuitous promises, there is support in the US case law for the proposition that promissory estoppel properly protects the reliance interest of the promisee. Hoffman v Red Owl Stores, Inc (133) is often cited in support of this claim. (134) In that case, the Supreme Court of Wisconsin opined that section 90 of the Restatement (First) may be limited to the actual losses suffered by the estoppel raiser. (135) In that case, the plaintiff sought to establish a Red Owl grocery store franchise. The defendant represented that the plaintiff would need $18,000 of capital to start the business, (136) and, in reliance on this representation, the plaintiff sold his long-standing bakery and a smaller grocery store, and he put a deposit on a parcel of land. The defendant later upped the required capital investment to $26,100, and the negotiations broke down. The plaintiff sued and Currie CJ, for a unanimous panel of the Supreme Court of Wisconsin, held for him on the basis of section 90 of the Restatement (First). (137) Of pertinence to this discussion, Currie CJ held that the remedial relief under section 90 was flexible, and that, in some cases, restoring the plaintiff's losses incurred as a result of the promise would do justice. (138) This was the actual disposition in this case. Even though the expectation losses--namely, lost profits--were measurable (although the matter was not put to the jury at trial nor was it argued on appeal), the Court only granted the plaintiff financial compensation for his various acts of reliance.
Red Owl is an example of a case that Yorio and Thel argue exhibits a defective promise. (139) Likewise, Fried averred that the disposition of this case was satisfactory on the basis that there were no sufficiently defined promises to enforce. (140) On the facts of this case, it is manifest that the promise was not sufficiently clear to give rise to a contract, even if promissory estoppel could theoretically have that effect (as held in Tomerlin). However, the Court reasoned that the fact that certainty was not an element of section 90 meant that it could not be seen as equivalent to contract, (141) and justice could be met by restoring the promisor's reliance loss, at least when the subject promise is too weak to support a contractual analysis. (142)
Attempting to reconcile these cases, it is possible that the doctrine that we call 'promissory estoppel' actually consists of at least two separate and distinct doctrines in the US: one responding to a wrong, and the other responding to a promise. As Yorio and Thel note, in all of the US cases in which reliance has been granted, there is either (a) some problem with calculating the expectation, or (b) there is some deficiency with the promise. (143) The first grouping is not problematic for a contract approach, as the court occasionally resorts to reliance losses where expectation is unquantifiable in bilateral contract situations. (144) In the second group of cases, however, there is either no promise or the promise is too vague to enforce (145) (or the promise could not form part of a contract for statutory reasons). (146) This may represent the domain in which a tort of detrimental reliance operates. This would explain both the remedy (reliance), and the fact that, in these cases, an unequivocal promise as to future performance is not required. (147) It would also provide an explanation for why cases like Red Owl look more like negligent misrepresentation than promissory estoppel. Just as contract and negligent misrepresentation coexist, these doctrines are not necessarily precluded from coexisting in the same jurisdiction. They may overlap to some extent without being conceptually the same. It remains to be seen whether the expectation-based cases can be justified.
V. JUSTIFYING EXPECTATION
It is clear that there is jurisprudence in England, Canada and the US that supports expectation as the proper measure of relief. And, while the High Court jurisprudence in Australia seems to support reliance, most cases nevertheless award expectation. The reliance theorists discussed above would argue that these cases are incorrectly decided (or are approximating reliance by using expectation as a proxy); (148) however, it is my argument that an expectancy-based remedy is justifiable within a corrective justice framework. For the reasons given in Part III, the existing theories in support of the expectation thesis are inadequate for this purpose.
As the Anglo-Canadian formulation of promissory estoppel requires a preexisting legal relationship whereas the US and Australian doctrines do not, a different justification will be required for each set of jurisdictions.
In this Part, I will first present a justification tailored for the jurisdictions in which a gratuitous promise may give rise to an estoppel absent any preexisting legal relationship. I examine the proposition that a right to the causality of the promisor's choice--the interference of which will give rise to expectation damages--may be transferred through a gratuitous contract with reliance standing in for consideration ("Proposition A"). I conclude that this proposition may justify the US case law in favour of the expectation measure of relief cited above, at least in cases like Tomerlin. While the Australian considerations of unconscionability do not fit into this justification, it may underlie the judicial preference for an expectancy-based award.
As the Anglo-Canadian doctrine cannot function as a cause of action on its own, the English and Canadian cases discussed above cannot be explained by Proposition A. If reliance were a substitute for consideration, there would be no reason to limit promissory estoppel to promises regarding the non-enforcement of existing legal rights. For this reason, I explore the justifiability of the proposition that, through the promise, the promisor licences the promisee to exercise her freedom of choice unconstrained by the pre-existing contract, and, once the choice is exercised, the promisor's original right has no content ("Proposition B"). For the reasons set out below, I suggest that this justifies the remedial position of the English courts.
For reasons that will be made clear below, the acceptance of Proposition A for one jurisdiction does not negate the role that Proposition B may play for another. While both are theoretically justifiable, a legal system may reject Proposition A for positive reasons of judicial policy. A critical step of the analysis in support of Proposition A is that the court must recognize the sufficient manifestation of the change of control of a power of choice through an act of reliance. While I suggest that a court may recognize the sufficiency of this display (and that it does in some US jurisdictions, such as California), it need not. If a legal system does not consider such an act to be sufficiently clear to perfect a transfer of right (as in England), it should require a pre-existing legal relationship between the parties to raise a promissory estoppel, as justified by Proposition B. The purpose of this paper is not to make an argument for whether a legal system should or should not allow reliance to act as a substitute for consideration. I aim merely to suggest that, if it does, it can be justified, and, if it does not, the doctrine of promissory estoppel should require a pre-existing legal relationship.
i. Proposition A: A right may be transferred donatively through a gratuitous contract
According to Burrows, private law doctrines can be classified by remedy. (149) Doctrines to which the court responds by fulfilling an expectation created by a promise fall within the province of contract; where the court restores the consequences of wrongful harm, it is dealing within the sphere of tort. (150) Based on this classification scheme, it would seem to follow from the observations above that promissory estoppel is part of the law of contract. It remains to be seen, however, whether or not promissory estoppel could be part of the law of contracts in the sense that it is capable of vesting an in personam right in a contractual manner. This is the origin of Proposition A, to wit, that a gratuitous promise may create a contractual right in the promisee when the elements of promissory estoppel are met. If it may, the general principle that contractual breaches give rise to expectation damages should apply equally to promissory estoppel. This proposition does, of course, go against the grain of most modern systems of contract law. If this proposition can be proven, it would have the effect of supplanting the doctrine of consideration. While both common law and civil jurisdictions recognize gratuitous contracts that do not require consideration, such as gifts, these contracts generally require actual delivery of a corporeal thing to be perfected. (151) As I will explain below, however, I believe that this proposition is at least theoretically possible.
To test this proposition, one must first set out exactly why a contract is capable of creating (or transferring) enforceable rights and duties. To fit within a corrective justice model, the exercise must be aimed not only at the moral duty of the promisor, but also at the correlative right of the promisee. (152) The natural starting place for this discussion is Kant. In the Metaphysics of Morals, Kant sets out a rights-based theory of contract that stems from the freedom of self-determining persons. (153) Capacitated individuals are free to act such that their action does not interfere with the freedom of other choosing selves. "[R]ights are the juridical manifestations of [the] freedom" of rightsholders, and duties are the correlative constraints on the freedom of dutyholders. (154) In this way, rights and duties mark the normative relationships between persons. Such relationships may have regard to persons' physical bodies or external objects. A right with respect to an external object--meaning anything that can be used, but which is not also a self-determining agent--is the freedom to use the said object in a particular manner. Correlative to this freedom is a duty of other persons (all persons, in the case of a right in rem, or a particular individual, in the case of a right in personam) not to interfere with this usage. This concept of ownership is set out in more detail in the next section.
For Kant, external objects of choice--namely the things with respect to which rights and duties mark the relationships between individuals--include not only those things that can be possessed in an empirical manner, such as a book, but also objects that can only be possessed intelligibly, such as a promise. (155) In Kantian legality, a promise is considered an undertaking of one self-determining agent, following from his own conception of the good, to allow another agent to direct the outcome of some yet to be exercised choice. (156) This power of direction over a choice is an external object that can be possessed (intellectually), exercised, or alienated by the promisee. Binding promises are in this sense owned by the promisee. In Kant's words,
[b]y a contract I acquire something external. But what is it that I acquire? Since it is only the causality of another choice with respect to a performance he has promised me, what I acquire directly by a contract is not an external thing but rather his deed, by which that thing is brought under my control so that I can make it mine.--By a contract I therefore acquire another's promise (not what he promised), and yet something is added to by external belongings; I have become enriched (locupletior) by acquiring an active obligation on the freedom and means of the other.--This right of mine is, however, only a right against a person, namely a right against a specific physical person, and indeed a right to act upon his causality (his choice) to perform something for me. (157)
Hence, if A has a right to B's promise, A has the freedom to direct a certain outcome of B's choice, and B does not have a freedom to direct any other outcome, either at the time for performance or before. On this reading of Kant, contracts transfer powers of choice that can be rightfully owned by the transferee.
The promisor must give, and the promisee must accept, the power of choice in a manner consistent with their respective freedoms as self-determining and purposive agents. While an individual may unilaterally impose a duty of noninterference on another by originally acquiring a physical thing--meaning that one takes into one's dominion and control a thing that was previously not owned--the acquisition of direction over another's freedom and means can never be original, as it would be inconsistent with the freedom of a person for another to unilaterally take dominion over her choice. Therefore, the acquisition of a promise must be bilateral. (158) In Kant's words, "what belongs to the promisor does not pass to the promisee (as acceptant) by the separate will of either but only by the united will of both." (159) It follows from this that a contract is a transfer of a power of choice from one purposive agent to another. While the right and the duty are created by the contract to mark the normative relationship between the parties, the object of the right--namely, the choice--is not newly-created by the promise. Rather, it is the intellectual possession of the promisor before the contract, and it is an external object of the promisee's choice after the contract.
If the promisor breaches his promise, namely if he denies the promisee the power to direct his choice, he has wrongfully interfered with the rightful entitlements (external holdings) of the promisee. As justice requires the restoration of that to which the promisee was entitled before the wrongful interference with her intelligible possession, any such breach would require the restoration of either the choice, if possible, or its equivalent. For this reason, as suggested by Weinrib, a Kantian theory of contract explains why the proper measure of relief for contractual breach is expectation. (160) Once the promise is held by the promisee as an object of control, the interference with this possession can only be corrected through the restoration of the promise or something that is its equivalent.
Bringing all of this together, a contract creates rights and duties because, as purposive beings, self-determining agents may transfer the power to direct their choices to other persons, and rights and duties are required to mark the resultant scope of the parties' freedom after the transfer. To effect such a movement, according to Kant, several conditions must be met. First, as a preparatory matter, there must be a course of negotiations that includes both an offering and an assent to the terms of the offer. (161) Second, there must be a promise and an acceptance thereof. (162) This condition must be met if the transfer is to be affected by the united will of both the promisor and the promisee. For the wills of the parties to be united, however, the promisor's will to sever the object from her freedom and to transfer it to the promisee, and the promisee's will to accept the object, must be simultaneous. (163) As this is impossible in fact--as the promise must come before the acceptance--one must abstract away from the empirical reality and consider the relationship of the wills on a transcendental plane. (164) "[B]oth acts, promise and acceptance, are represented not as following one another but [...] as proceeding from a single common will." (165) According to Benson, this requirement can only be met when the character of the promise and the acceptance is such that the temporal sequence is irrelevant. (166) If the promise can be both the cause and effect of the acceptance, and vice versa, they necessarily abstract from the empirical ordering of the expressions. (167) This condition is related to the third set out by Kant, namely, that the object of choice transferred by the contract must be continuously possessed by the parties to the transfer. (168) As a promise cannot be acquired originally, there cannot be any moment at which it is not owned, and, therefore, at some moment, both the transferor and the transferee must own it simultaneously. (169) This is the law of continuity, and it follows from the required transcendental union of wills.
Benson has argued that the intersection of these requirements precludes promissory estoppel from transferring ownership. (170) Because the promise only invites reliance and is not made for the reliance (as otherwise it would be a unilateral contract), the promise can only be cognizable as the cause of the reliance, but not also as its effect. (171) Invitation and the doing of that which is invited can only be temporally related to one another; the former must come before the latter, and, therefore, it is impossible to see promise and reliance as mutually inducing. (172) In Benson's words: "The reliance must, and can only, be conceived as coming after the promise [...] [T]he idea of inducement sets up a causal relation between the promise and reliance that is one-way, not mutual." (173) The promise may foreseeably induce reasonable reliance, but the promise and the reliance cannot be simultaneous on this view. This is in contrast to a contract with consideration: the promise and the requested consideration are both sequential and simultaneous. (174) This is because the consideration is independent of the promise, and it can be both the cause and the effect of the promise. (175) And, as Benson puts it, "insofar as each is both cause and effect of the other, the relationship necessarily abstracts from temporal sequence." (176) This meets Kant's second requirement: both acts proceed from a single common will; neither the promise nor the acceptance precedes the other in abstraction from time. (177, 178)
But if Benson is correct, the second requirement of Kant's analysis cannot be met for promissory estoppel. If the promise and the reliance cannot be simultaneous and part of a united will of the promisor and the relying promisee (as in the case of contracts with consideration), it would follow that the doctrine does not fall into the province of contract. Indeed, Benson, like Seavey, argued that promissory estoppel is part of the law of torts. (179) Benson's analysis would seem to be fatal to the idea that promissory estoppel is capable of transferring a contractual right from the promisor to the promisee within a Kantian framework. If both parties cannot consent to the transfer with a simultaneous and united will, any transfer would not respect the freedom of both parties.
Reliance, however, may have juridical significance other than as the induced effect of a promise. While it is true that it must come after the promise empirically, reliance may be simultaneous with the promise in the relevant sense if (a) the promisor intended the promise to exist continuously until either accepted or revoked, and (b) both the promisor and the promisee intended the promise to be accepted through reliance. This can be demonstrated by the fact that a unilateral contract is capable of transferring a contractual right. If a promise can be construed to be requesting the reliance, then the reliance can be seen as an act for the promise, namely as consideration. However, while in practice it is often difficult to distinguish between a promise intended to be relied upon and a promise for an act of reliance, the distinction is nevertheless real. (180) As noted by Wilken, "detrimental reliance will only amount to consideration where it is extracted as the price of the promise." (181) Therefore, while some cases of promissory estoppel may be properly characterized as unilateral contracts cases, the doctrine does not collapse into unilateral contract. It may be possible to argue that promissory estoppel independently meets the requirements for transfer set out above: a continuously made promise, and the mutual intention that the promise be accepted through reliance.
Starting with the first requirement, Benson notes that "an unexpired offer is reasonably taken by the offeree to be presently and continuously made unless or until it is retracted." (182) I suggest that the same is true in the context of promissory estoppel. As suggested in Spencer Bower, 4th, it follows from Briscoe that it is reasonable to rely on a promise up until such time as it is revoked. If it is reasonable to rely on a promise until it is revoked, it is reasonable to take it as being continuously made until such time. The notion that the promise exists until it is revoked supplies the necessary continuity of the promise, which is, after all, a possible external object.
Turning then to the second branch, for promissory estoppel to be capable of transferring a right from the promisor to the promisee, the promisee must be able to accept the promisor's choice by way of reliance. As the promise is not for the reliance, this acceptance must be gratuitous. As the law has developed a mechanism through which a corporeal thing may be accepted gratuitously--the law of gifts--an analogy to physical gifting would be helpful at this point. As noted above, a physical thing and a promise are equally capable of being possessed (the first physically and the second intellectually) as external objects.
A gift is a gratuitous contract (183) whereby ownership of a thing is transferred from one party to another. There are three requirements: "(i) an intention to donate; (ii) an acceptance; and (iii) a sufficient act of delivery." (184) Where the object of the gift is a corporeal thing, a sufficient act of delivery generally requires actually giving the object to the donee. (185) For a chose in possession, this is easy; the donor physically transfers possession of the thing to the donee. With a chose in action, the same may be accomplished where the right is represented in some physical manner (such as a share certificate), which may be delivered or put into a trust. (186) Where such an act of delivery is affected, there is no need for reliance to perfect the transfer of right.
Where the object to be gifted is neither physical nor represented in a physical manner, however, there cannot be a physical act of delivery. The "gifting" of a purely intellectual promise through the mechanism of promissory estoppel does not fit squarely into the common law conception of gift. However, if one determines why the law requires delivery to perfect a gift, one may be able to identify a normative equivalent that works in the context of intelligible objects, such as pure promises. I suggest that reliance may serve this function within the test for promissory estoppel.
It is important to appreciate that the exercise is in determining whether elements may be present in a gratuitous intellectual transfer that have the same normative significance as those which are found in a gratuitous physical transfer. The argument is not that promissory estoppel is a physical transfer, but merely that it is normatively equivalent to one. For this reason, it is irrelevant whether the promise is memorialized in writing or set forth in a deed. Throughout this discussion, the focus is on the transfer of a promise as an intellectual and nonphysical object.
In the context of discussing the juridical significance of delivery to the transfer of ownership generally, Benson described the role of delivery as follows:
the requisite physical acts are justified on the ground that, in given circumstances, they are needed to signal reasonably to others the taking or giving of control [of the object transferred]. The fact of their being physical has no intrinsic significance. (187)
This is consistent with the history of the delivery requirement (known originally as 'livery of seisen,' meaning 'delivery of possession'), which was, according to Ziff, "designed to give notoriety to the transaction." (188) It would seem to follow that the gift of an intellectual possession could be transferred without embodying it in something physical if the transfer were such that the promisor's will to donate her choice, and the promisee's will to accept the same, were sufficiently manifested in the external world. (189) If the function of delivery is to embody the will to alienate the object on behalf of the promisor and the will to appropriate the thing on behalf of the promisee, presumably physical delivery is a sufficient but not necessary element of gifting. Rather, anything that sufficiently manifests the change of control over the object--whether it be a physical thing or a promise--should be sufficient to fulfil the purpose of the delivery requirement. If the promisor makes it sufficiently clear that she intends to transfer the right to direct some aspect of her free choice to the promisee, and the promisee makes it sufficiently clear that he intends to take control of that choice, actual delivery of something physical should not be required to perfect the gift. In the language of the law, the manifestation of this change of control should itself be a 'sufficient act of delivery', or at least it should be considered normatively equivalent thereto. (190)
It can be argued that the elements of promissory estoppel may be sufficient manifestations of the united will of the promisor and the promisee to gratuitously transfer the former's promise to the latter. As suggested above, the promise is made continuously as an intention of the promisor to be bound in some choice by the promisee; the promise is held out by the promisor, "intend[ing it] to be binding." (191) All that is necessary to complete the simultaneous meetings of the wills to perfect the transfer is for the promisee to externally manifest her acceptance of the promisor's decision to bind himself to her will. The object of the transfer--the promise--is a continuously existing object, and, if the promisee is able to sufficiently signal that she has taken control of it, the gift can be completed. At the moment of the promisee's manifestation of this appropriation, the promisor and the promisee both simultaneously own the promise.
How can the promisee reasonably signal the taking of control of the promisor's right without actual delivery of some physical object? (192) One possibility is for the promisee to rely on the promise. By substantially and distinctly (193) relying on the promise, the promisee signals to the external world that she has taken intellectual possession of the same. As suggested by Pratt, expectation is prior to reliance. (194) Just as a reasonable person would not rely on the happening of some event if she did not at least believe that the event would happen, a reasonable person would likewise not rely on her ability to control another person's choice if she did not at least subjectively possess that power of control. Hence, a legal system could say that substantial reliance is sufficient to objectively manifest a promisee's internal acceptance of control over a choice that the promisor intended to give on a donative basis. A promise intended to be binding is an external manifestation of a will to alienate the promisor's choice, and reliance is an external act that evidences the internal appropriation of that choice. If the legal system did recognize the sufficiency of this display, a direct gratuitous transfer of the power to direct the promisor's choice would be possible without consideration, just as ownership of a physical thing may be transferred without exchange. Moreover, the interference with the right acquired by the promisee would properly give rise to an expectancy-based remedy, as in contract law generally.
The degree of clarity that a legal system requires before it recognizes the transfer of a promise from one party to another is not a question that can be determined by reference to the relationship between any two given parties before the Court. It is a matter of judicial policy. (195) As manifestation is a matter of degree, it may be instructive to consider the various forms of external manifestation as lying on a spectrum ranging from unambiguous to ambiguous. Every legal system must select the point along this spectrum at which it will start recognizing the sufficiency of the external manifestation of a wilful transfer. On the unambiguous end of the spectrum, one might place a physical exchange. When physical things change hands from one party to another, the transfer can be observed in the material realm. The clarity of such an objective manifestation is undeniable. Less clear than this--albeit still quite unambiguous--might be an oath or solemn affirmation taken by both the promisor and the promisee that control of the former's choice is to transfer to the latter. Slightly further toward the ambiguous end of the spectrum, one might find the sale of one promise for another (or for an act). When parties signal their united will to transfer an intellectual possession by communicating their assents and by undertaking to do something that their counterparty may objectively be taken to want (by offer, acceptance and consideration), (196) this manifests the change of control of promises. (197) Given that both parties may be objectively taken to have wanted that for which they sold their promises, the common intention to effect a transfer will be more clearly apparent to a third-party observer (or a court) than when one party makes a gratuitous promise to another. (198) Finally, further toward the ambiguous end of the spectrum, but not at its end, (199) one may find the conception of reliance discussed above. While it is less clear than a sale of a promise for a promise that the parties intended a transfer, it does nevertheless manifest a transfer to some degree. The promisor has held out a promise, intending it to be binding (that is, intending it to be transferred to the direction of the promisee), and the promisee has not only taken mental and intelligible possession of it, but she has expressed this to the world by acting as if she had the power to direct the promisor's choice.
While many legal systems draw the line of sufficiency of manifestation at the point of the sale, I argue that there is no theoretical reason why a system of law could not draw the boundary line of enforceability further toward the ambiguous end of the spectrum. In support of this proposition, I wish to return to the conception of promissory estoppel enunciated by the Supreme Court of California. As discussed above, the highest court in California has opined that detrimental reliance may act as a "substitute" for consideration. (200) In other words, when the promisee has detrimentally relied on a promise, the right to direct the choice that is the subject of the promise may move from the promisor to the promisee. As the Tomerlin case was an application of section 90 of the Restatement (First), the Court must have found that the reliance was "distinct and substantial." As noted by Yorio and Thel, Williston added the requirement that the reliance be distinct and substantial to section 90 of the Restatement (First) because the cases on which that section were based were all such that there was a considerable degree of foreseeable and evidenced reliance. Yorio and Thel posited that this requirement was to prove that the promise was sufficiently serious to warrant enforcement. (201) The theory presented above is consistent with this observation. The normative distinction between a serious and a casual promise may have to do with the degree to which the transfer is evidenced: a serious promise, intended to be binding, together with serious reliance is a sufficient external manifestation of the promisee's acceptance of the promisor's choice. (202) The same external manifestation is not present where the promise is casual or the reliance is ambiguous. This distinction may be what was really latent in cases like Tomerlin. The Supreme Court of California in Tomerlin did not say this directly; rather, we are left with a short and rather mysterious opinion. For the reasons presented in this section, however, I suggest that it can be justified within a Kantian framework.
This may also animate the proclivity of Australian courts toward the expectation thesis. While High Court jurisprudence supports reliance as a proper remedy, (203) the courts (including the High Court itself) (204) tend to remedy the promisee's lost expectation. (205) This may be explained by the latent recognition of judges that a right may be transferred by a gratuitous promise. While no court has ever expressed the desire to grant expectation in these terms, the foregoing process may form part of the unarticulated reasons of the judges (deciding cases as rational actors). If this is the case, the Australian courts should expressly endorse the expectation thesis and recalibrate the injection of unconscionability into the test for promissory estoppel. While the precise meaning of unconscionability in this context is presently nebulous, if the foregoing analysis is correct, the "unconscionability" of resiling from a promise collapses into the injustice of denying the promisee her right to the promisor's choice. In other words, the language of conscionability becomes the language of corrective justice.
ii. Proposition B: Promisor licences promisee to exercise her freedom unconstrained by the contract
Proposition A is not capable of explaining the Anglo-Canadian doctrine of promissory estoppel. The Canadian and English courts have maintained the strictures of consideration for contract formation, if not for modification or discharge. (206) While there is no reason in theory why the positive law could not recognize a promise intended to be binding, intended to be relied upon, and which is relied upon as effecting sufficient delivery of a gratuitously transferred object of choice, it does not. The positive law generally requires that contractual counterparties must signal their united will to transfer an intellectual possession by communicating their assents and by mutually undertaking to do something that their counterparty may objectively be taken to want as a purposive being, through the provision of some benefit or the undertaking of some detriment. (207) In other words, for intellectual possessions that are not embodied in something physical, the law only considers a sale to be a sufficient manifestation of the united will to transfer. Promissory estoppel is reconciled with this doctrine of consideration by the added requirement of a pre-existing legal relationship. Given this position of the law, it is necessary to attempt to find a different theory to explain the English and Canadian cases.
The purpose of Proposition B--that the promisor licences the promisee to exercise her freedom of choice unconstrained by the pre-existing contract, and, once the choice is exercised, the promisor's original right has no content--is an attempt to connect the pre-existing legal relationship requirement with the other elements of the Anglo-Canadian doctrine and the remedial treatment of promises as binding.
This section will proceed as follows. First, the pre-existing legal relationship requirement will be set out in a little more detail. Second, I will discuss what is transferred by a binding contract. I take the position that the transferred object is the choice of the promisor. Third, I will set out the argument in favour of Proposition B and test it according to the foregoing discussion. Finally, I will argue that a conception of promissory estoppel as a licensor/licensee relationship is capable of supporting a theory of promissory estoppel in which the promise, reliance, and preexisting legal relationship requirements cohere. In other words, I will conclude by setting out the coherence of the theory presented in this section.
It was presented in Part II that the Anglo-Canadian jurisprudence requires a pre-existing legal relationship of some form in order to give rise to a promissory estoppel. (208) A legal relationship between the promisor and the promisee is required because the promise must have regard to the non-enforcement of a right held by the promisee. (209) To give rise to a promissory estoppel, the promise must be to forego the performance of the duty-holding counterparty. (210) The legal relationship is therefore significant in that it informs the content of the promise. It must be for the "downward modification of existing legal relations." (211) More importantly, this observation tells us something about the requisite form of the relationship. For the promisor to be able to promise not to enforce a right held against the promisee, the relationship must be such that the promisor's right is held correlatively with the promisee's duty. (212) It would make no sense for the promisor to promise not to insist upon his strict legal right unless the promisee held some correlative duty to the promisor; otherwise, such a promise would be of no matter to the promisee. Moreover, the relationship must be personal to the promisor and the promisee. If the right that the promisor promised not to enforce were held in rem, the promised non-enforcement would engage the doctrine of proprietary estoppel. (213) Therefore, the pre-existing legal relationship must be an in personam relationship of correlative rights and duties. While such a relationship is not necessarily contractual, (214) it would fall into the phrase of the editors of Spencer Bower, 4th: "analogous to [...] contract." (215) In other words, it must have the principal features of such a relationship. In examining the nature of the pre-existing relationship, I will focus on contractual relationships.
As discussed above, I read Kant as saying that a contract is the rightful transfer of the power to direct one party's choice to another. This is discussed in connection with Proposition A. (216) Here, I wish to stress the point that a contract transfers the ownership of a choice, not anything physical to which that choice refers. For example, if A agrees to sell B his horse, A's choice of whether or not to transfer the horse into B's possession is no longer held by him. Rather, B holds the power to make this choice for A.
What does the concept of choice mean in this context? A choice is a power for a self-determining agent to elect between possible universes. While any given choice may be with respect to either a present or future power of election between empirical worlds, the choice itself--being an intelligible object--does not have any physical existence. The present freedom of the choosing self consists of the innumerable elections with respect to her person and those external things to which she is entitled at any point along the temporal continuum in which she and her external holdings exist. For example, the ownership of a physical thing, such as a book, is shorthand for the various elections that an owner may make with respect to the book, both at the present, and at any future time during which she remains the owner of the same. The owner may choose to passively possess the book; she may choose to destroy the book; she may choose to alienate the book, and so forth. The present freedom of the owner with respect to the book consists of the infinity of possible choices that constitutes that ownership; each choice with respect to the physical thing is owned intelligibly, and, together, the ownership of these choices amounts to what we contemplate as the ownership of property.
As each present or future election is one aspect of present freedom, choices qua intelligible possessions are necessarily present. It is for this reason that contracting parties can transfer future performances (choices to act) to each other at the time of contract formation. A contract involves at least one party wilfully severing at least one unexercised choice from her present freedom and transferring it to another (in the sense that the other obtains, as an external object, a power to choose for her counterparty). It does not matter if the performance contemplated by the contractors is de futuro, for the choices of how to act in the future are constituent of present freedom. While many choices cannot be exercised until some future time (for example, a choice of whether to perform a particular act at time 2 may not be exercisable at time 1), such objects nevertheless exist presently as part of the freedom of the holder of the choice until such time as they are alienated or extinguished.
Choosing is a continuous concept, and a choice, once made, persists through time. (217) When the present self makes a choice, it continues in an exercised state and binds the future self. This is necessary because a choosing agent can only make any given choice once. The consequences of a made choice become bound up with the post-choice universe. This point may seem obvious, but it requires some further exposition for the purposes of this section. While an exercised choice continues in time, the power to make it is extinguished after it has been made. For example, if our owner from above holds the power to elect, at time 1, between possessing the book (Universe 1) and alienating the book to B (Universe 2), the choice of Universe 1 precludes the choice of Universe 2, and the choice of Universe 2 precludes the choice of Universe 1. If the former is chosen, the owner can no longer alienate the book to B at time 1. The power is vitiated after the choice is made, and the consequences of the choice continue, bound up with all postchoice universes. This is not to say that the owner could not later change her mind and choose to bring into being some universe materially similar to Universe 2, say, by giving B the book at time 2, but this is a separate and distinct exercise of choice. The original choice between Universe 1 and Universe 2 ceases to be part of the scope of the owner's freedom once it has been made. This same analysis applies if, at time 0, our owner transferred her power over this limited choice over what to do with the book at time 1 to B. In that case, B would have the power to elect between Universe 1 and Universe 2 on the original owner's behalf, and the selection would be binding on her.
With this understanding of contract and choice set out, we are prepared to return to promissory estoppel. As set out above, for a promissory estoppel to lie in Anglo-Canadian law, there must be a pre-existing contractual (or similar) relationship between the promisor and the promisee. The existence of this pre-existing relationship tells us something about the distribution of choices between the promisor and the promisee. As a contract is a transfer of a power of choice from one party to another, and as contract formation in England and Canada clearly requires consideration, each party must have held--at contract formation--at least one choice of his counterparty. At the time of the promise which gives rise to a promissory estoppel, some of these choices may have already been exercised. But there must be at least one that is yet unmade. Specifically, the promisor must hold an unmade choice of the promisee. This is because, as established above, promissory estoppel requires a promised forbearance of some right held against the promisee. This right is the power to direct some choice. Therefore, the promise must be to allow the promisee to exercise the choice free of the contractual constraint.
I suggest such a promise is aptly described as a waiver of the promisor's right to choose for the promisee. I do not mean here waiver in the strict legal sense. (218) Unlike promissory estoppel, the substantive doctrine of waiver requires knowledge of the right being waived. (219) Additionally, the doctrine of waiver does not require reliance or detriment, (220) and it can only arise at the time for performance. (221) I am using the word 'waiver' in a looser sense, more closely in line with the use of the term by the editors of Spencer Bower, 4th, who use it to describe the result of a successfully raised estoppel (or an exercised election). (222) By using this term, I mean to capture two aspects of the promise that gives rise to a promissory estoppel. First, as noted above in connection with the discussion of Briscoe, the promisor may resile from the promise on reasonable notice up until the time that the promisee can no longer put herself back into her original position. (223) The promise is therefore revocable at least for a period of time after it is made. Second, the promisor cannot be said to abandon the right held against the promisee through his unilateral promise. Unlike a physical object, a contractual right cannot be originally acquired; rather, it can only be transferred bilaterally by the voluntary union of wills of both the transferor and the transferee. (224) That which may be acquired unilaterally (a corporeal thing) may be abandoned unilaterally by returning it whence it came (to the world of ownerless things), but that which may only be acquired bilaterally may only be disposed of in a like manner. Ownership of a promise cannot be 'returned' to the promisor without her consent, and, as the promise only exists in and through the relationship between the promisor and the promisee, it cannot be abandoned into the world. For these reasons, the promisor cannot fully divest herself of her contractual right unilaterally. As we are assuming in this part that no contractual right can be transferred by way of a promissory estoppel (as Proposition A does not seem to explain the Anglo-Canadian case law), the requisites for a rightful bilateral transfer must be absent. A waiver, however, implies a much weaker interaction than an abandonment or a transfer.
Implicit within this concept of a waiver is the idea of a licence, or a permission. While the promisor maintains his right to determine the promisee's choice, by promising that he will not enforce it, he grants a licence--a privilege--to the promisee to exercise her freedom clear of the contractual constraint. This licence does not have to be accepted; it exists at the promisor's sufferance, and he may cancel it. The ownership of the subject promise is not affected, only the scope of the promisee's power to use that which is part of the promisor's external holdings. Once the promisor revokes the promise, at least prior to reliance, both the waiver and the licence terminate and the right and the duty continue unmodified.
A licence is not a right. It is a privilege that exists at the pleasure of the licensor, (225) and it is correlative to waiver. While the licence does not immediately modify the freedom of the licensor, it does expand the present freedom of the licensee. It does not modify the freedom of the former because the waiver is revocable, but it does expand the freedom of the licensed party insofar as she may exercise the choice that she transferred to her counterparty free of the contractually imposed constraint. In other words, while the waiving party (the promisor) may still make the choice if she resiles from the promise, the beneficiary of the licence (the promisee) may also exercise that choice irrespective of the duty. So long as the waiver and licence are outstanding, the promisee is not bound to choose in the manner contemplated by the contract; he or she may choose an inconsistent path without interfering with the freedom of the promisor.
Where the promisee does choose a course inconsistent with that contemplated in the contract, the promisee's choice--originally granted to the promisor as an external object of choice, but now available for execution by the promisee--is made, in reliance on the promise. In other words, when the promisee makes the choice licensed back to him through the promisor's promised forbearance, this act of choosing is an act of reliance.
As explained above, however, a choice can only be made once. After a choice has been executed, it cannot be made a second time. Hence, if the beneficiary of the licence exercises her freedom of choice pursuant to the licence, the waiving party--who held the power to control her counterparty's choice under the contract--may no longer exercise that power of control. Once the content of the right--the choice--is exhausted, there is no need for it to continue to mark the relationship between the parties. The promisor's external object of the promisee's choice becomes vitiated, as the promisor can no longer hold the power to choose for the promisee if the choice has already been made by the promisee (in a manner consistent with the promisor's freedom). Therefore, after the promisee relies on the promise by choosing in a manner that would otherwise not be permissible under the contract, if the promisor purports to resile therefrom, it will not affect the freedom of the promisee to continue on the changed course.
The promisor no longer holds the unexercised choice of the promisee in his or her intellectual possession, and in that sense--and in that sense only--the promise not to hold the promisee to the contractual term has become binding on the promisor. It cannot be meaningfully revoked because the right to which it refers no longer has any content. The corollary of this is that the promisee's expectation of being able to control the consequences of his exercised choice is protected by the law from the interference of the promisor. It is here that we find the explanation for the observations in Part IV. Once the choice underlying the right has been made by the promisee in reliance on the promise, the promisor cannot resile and purport to remake the choice, even if he compensates the promisee for her reliance. As such, the promise has become binding and the expectation of the promisee is protected.
Take the case of High Trees, (226) for example. The plaintiff had a right against the defendant to cause it to pay 2500 [pounds sterling] on an annual basis. Absent the contract, the defendant had the freedom to dispose of its money as it saw fit; under the contract, however, the plaintiff had the power to cause the defendant to pay a specified sum to it on specified dates. The defendant's choice was thereby constrained. If he chose inconsistently with the plaintiff's power of direction, the contract would have been breached and the plaintiff would have been able to invoke the power of the state to interfere. In such a case, the defendant makes and extinguishes the choice inconsistently with the plaintiff's freedom to direct its outcome, that is, wrongfully, and the role of the court is to restore the financial equivalent of the now lost power to direct the breaching party's choice to the innocent party. (227) As it was, however, the plaintiff promised that it would accept a sum of 1250 [pounds sterling] annually until the end of the War. In other words, it waived its power to compel the defendant to transfer 1250 [pounds sterling] to it for a number of years, thereby licensing the defendant to do with this object of its choice as it freely chose. Between 1941 and 1945, the defendant chose to use the 1250 [pounds sterling] for other purposes. In other words, it changed its position and exercised the relevant choices. When the plaintiff sued for the deficiency not paid during this period, the claim amounted to an attempt on the part of the plaintiff to exercise the choices--originally held by it as external objects of its choice, but which were subsequently licensed back to the promisee--that had already been properly made.
If reliance were the proper measure of relief in cases such as this, the plaintiff in High Trees would have been able to compel the defendant to re-exercise the choices (which had already been made by it) with compensation for the extent of the loss suffered in having to remake these choices. But if these choices could only be properly made once, their causality persisting through time, such a remedial order would amount to compelling the defendant to transfer the power to direct a new choice to the plaintiff: the choice to transfer the deficiency to it. As the defendant never consented to this, such an order would be inconsistent with its freedom vis-a-vis the plaintiff. The order would not be compensatory for the plaintiff, as it would amount to giving it something that it never rightfully held.
This analysis works equally well with cases such as Metropolitan Railway where the right was not completely waived but was rather suspended or held in abeyance. To promise to suspend the operation of a right is to grant a time-delimited licence to the promisee. Take the example of a contract for delivery of a specific thing on a specific date. If A contracts to deliver a horse to B on Friday, B holds the power to direct A's choice of what to do with the horse on that date. This power over choice includes two elements: a what and a when. The what is the choice of what to do with the horse (e.g., to deliver it to B, to alienate it to another, to keep it); the when is the time at which B may direct A's choice. Holding a right in suspension or abeyance is to temporarily waive this latter element of the power of choice. B may licence A to choose to deliver the horse on either Friday or Monday. While B could not direct A to deliver on Monday rather than Friday, as this would be tantamount to demanding a new choice from A, he may licence A to choose between these dates by lifting the stricture of the when element of his counterparty's promise. Hence, when B extends the time for delivery until Monday, the extension is a temporary waiver of part of A's contractual right to performance. Correlative to this waiver is a temporally-limited licence for the promisee to choose free of the contractual constraint. The limited nature of this licence, however, prevents A from choosing in a manner that is inconsistent with B's ultimate right to command delivery. A could not use this licence to kill the horse, for example, as this would not be within the scope of the licence, which is simply the privileged restoration of part of A's freedom with respect to the horse. In this example, if, on Friday, A chooses to hold onto the horse until Monday, B could not complain on Saturday that A failed to perform. A's choice was perfectly within the scope of his freedom--and it was not an interference with B's freedom--because it was made pursuant to the licence. If the delivery of the horse on Friday was a prerequisite to some contractual benefit, A cannot be faulted for having not delivered on that date.
So far in this discussion I have dealt with the situation where the time for performance has arrived and, at that time, the promisee has exercised his choice--in reliance on the licence--to act in a different manner than that contemplated by the contract. I now wish to show that the analysis works where certain acts are done in reliance before the time for performance. Take the following hypothetical: at time 0, A contracts to sell B a cow, alive, with delivery at time 3. At time 1, B promises to A that he no longer expects the cow to be alive, and, in reliance thereon, A kills the cow. In this scenario, B cannot demand a live cow at time 3. While the power of choice that A sold to B was the ability to direct him to deliver a live cow at time 3, the waiver carried with it a licence not only to not deliver a live cow at time 3, but also a licence for A to exercise his free choice to slaughter the cow prior to time 3. Absent the waiver and licence, this would have been an anticipatory breach. However, when A acted to make the exercise of the choice transferred under the contract impossible, pursuant to the licence, he thereby also extinguished it in the same way that he would have had he exercised it. (228)
Finally, I suggest that the decision prior to the date of performance does not have to be such that it renders the contractual performance impossible in order for one to say that the promisee made the choice originally transferred to the promisor under the contract. If the promisee materially changes her position in reliance on the promise such that she cannot unilaterally return herself to the prepromise position, she has made the choice contemplated under the contract. (229) Returning to the hypothetical about the cow, imagine that the purchase price was $1000, payment at time 5, and, for whatever reason, at time 4, A promised that he would accept $500 in satisfaction of the debt. If B promptly goes out and spends, in reliance on the promise, an extra $250 than he otherwise would have, he has changed his position in reliance on the promise in the manner contemplated in High Trees. (230) Moreover, in doing so, he made his choice not to transfer the full $1000 to A at time 5. B cannot unilaterally put himself back into the pre-promise position--as the $250 is lost--and his choice, pursuant to the promise and the freedom of the promisor, to dispose of part of this asset at time 4 is an expression of his decision to only transfer $500 to A at time 5. As B's choosing self is continuous, his decision at time 4 to change his position such that he cannot unilaterally resume his original position is an exercise of his choice not to comply with the original contractual term. If, when time 5 comes, B decides for whatever reason to pay the full $1000 anyway, this is a separate and distinct choice from that transferred under the contract (as that was made at the time of reliance), and the payment is gratuitous. (231) This being the case, after B has acted in reliance on the promise in this manner, A can only demand the $500 at time 5. The reliance has rendered the promise binding.
The preceding discussion, I would argue, explains the four most important features of promissory estoppel in Anglo-Canadian law, other than the preexisting legal relationship, which has been presumed. First, we have seen that a promise is revocable on reasonable notice. (232) The discussion in this section is consistent with this idea; it is implicit in the idea of both waiver and licence that the waiving party may in some circumstances revoke the privilege granted to the promisee. Second, we have seen that after the time for performance has come, if the promisee relied on the promise and did not perform, the promisor may not resile, whether the failure to perform on the given day would have disqualified the promisee from some contractual benefit or not. (233) Once the promisee exercises his choice--thereby changing his position--without interfering with the freedom of the promisor, there is nothing left for the promisor to do or demand. He may not resile from the promise because he has no right to control the direction of a choice that has already been made, the consequences of which now persist through time. Third, even before the time for performance, if the promisee has made it so that performance has become impossible, the promisor may not resile from the promise. (234) By purposively acting now to render it impossible to act in a manner consistent with the contractual terms in the future, the promisee's choice to act inconsistently with the contract can be exercised before the time set for performance. Fourth, the Court should not limit relief to the extent of the reliance by the promisee once the promisee has already exercised the choice originally granted to the promisor under the contract. (235) If it did, it would be equivalent to giving the promisor a new power to control the promisee, and this would be super-compensatory.
This conception of promissory estoppel attempts to link the elements of the English doctrine--pre-existing legal relationship, promise intended to be binding and relied upon, and reliance--with the effect created by the law: namely, the binding nature of the promise. According to Smith, any theory of promissory estoppel that attempts to explain why the courts ought only to enforce relied upon promises (a 'mixed-view' in his nomenclature) is necessarily incoherent in that it "presents estoppel as an ad hoc mixture of incompatible elements." (236) Because the 'moral significance' of promises and reliance are different, the argument goes, they cannot both feature in the same theory of promissory estoppel. (237) However, I suggest that Smith ignores the natural connection between reliance and promise in this context. As established in this section, to trigger a promissory estoppel, a promise must have to do with the nonenforcement of some contractual (or similar) right held against the promisee. In other words, it must involve the provision of a licence to the promisee to choose free of some particular aspect of a pre-existing legal relationship that constricts a particular choice. Reliance, properly understood, is an act of choice in response to some trigger, and, therefore, when the promisee chooses pursuant to such a licence, this is an act of reliance. When a promissory estoppel is raised, the reliance and the promise elements are both with respect to the same choice, which is also the choice with respect to which the pre-existing legal relationship refers. This structure, I suggest, is coherent. The pre-existing legal relationship, the promise, and the reliance all cohere in that they connect to the parties' interaction with respect to some particularized choice. Accordingly, I reject Smith's contention that the interaction of promise and reliance in the same theory is necessarily incoherent.
While leading legal figures in England, Canada, Australia, and the US support the view that promissory estoppel properly protects the reliance loss of the promisee, (238) the courts in these four jurisdictions generally favour the protection of the promisee's expectations. (239) Within the body of law known as "promissory estoppel," there are cases that support the theory that promissory estoppel, once raised, should operate to render the subject promise binding and protect the expectation interest engendered in the promisee. And empirical studies show that the courts generally reach this result, even in jurisdictions where the reliance theory finds judicial support.
In this article, I have attempted to explain the judicial preference for treating relied on gratuitous promises as binding within a corrective justice framework. While the US case law does not uniformly support this position, there is evidence of cases in which promissory estoppel operated to create contractual rights and duties. (240) I have argued that these cases can be explained on the basis that, underlying the courts' discussions of section 90 of the Restatement (First or Second) is the latent recognition that a gratuitous promise may transfer a right to direct the promisor's choice to the promisee. In support of this, I argued that the US courts have recognized that reliance upon a promise may sufficiently manifest an intention to take a promise into one's intelligible possession. These cases require a sufficiently clear promise, the absence of which prevents the operation of any contractually-based doctrine of promissory estoppel, leaving only the possibility of a tort action for detrimental reliance and the protection of the reliance interest.
While the expectation theory has even more support in Anglo-Canadian law, unlike with the US cases, the substantive doctrine of promissory estoppel is prevented from operating independently as a cause of action. Rather, the cases support the proposition that a pre-existing legal relationship is required before the courts should enforce a gratuitous promise as a matter of estoppel. To explain this version of promissory estoppel, I have presented a theory based on waiver and correlative licence of choice. While the proposition presented for the US case law is theoretically applicable in these jurisdictions, the court has heretofore not recognized the sufficiency of the manifestation of an intellectual delivery absent the express or implied sale of a promise for consideration. However, even without a transfer of rights, a promise for the nonenforcement of a right may create a privilege in the promisee to act free from contractual constraint. Once a choice that has been previously transferred to the promisor, through a contract, for example, is made under this licence, it cannot be made a second time by the promisor after she resiles from the promise. As a consequence, the promise appears for the purposes of the law to be binding. This explanation, I suggest, creates a coherent theory of promissory estoppel that connects the promise, the reliance, and the pre-existing legal relationship together with the judicial response, to wit, the enforcement of the promise.
This article has presented two theories for two incarnations of the same doctrine. Which one is correct? Perhaps both. While both are theoretically justifiable, a legal system may reject the first theory for reasons of judicial policy: the analysis requires that the court recognize the sufficient manifestation of the change of control of a power of choice through an act of reliance.
But the court need not recognize this. If it does not (as in England), it should require a preexisting legal relationship between the parties to raise a promissory estoppel, and the second theory should govern. The purpose of this article was merely to suggest that, if a legal system treats relied on gratuitous promises as binding, this can be justified, and, if it does not, the doctrine of promissory estoppel should nevertheless protect the promisee's expectations, provided that the pre-existing legal relationship requirement is maintained.
(1)  1 KB 130,  1 All ER 256 [High Trees].
(2) GC Cheshire and CHS Fifoot, "Central London Property Trust Ltd v High Trees House Ltd" (1947) 63 LQR 283 at 286.
(3) Lord Hailsham of Marylebone LC once wrote, "The time may soon come when the whole sequence of cases based on promissory estoppel [...] may need to be reviewed and reduced to a coherent body of doctrine by the courts" (Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd,  AC 741,  2 WLR 1090 (HL) [Woodhouse]).
(4) See the discussion in A Ship, "The Primacy of Expectancy in Estoppel Remedies: An Historical and Empirical Analysis" (2008) 46 Alta L Rev 77.
(5) See e.g. Warren A. Seavey, "Reliance upon Gratuitous Promises or Other Conduct" (1951) 64 Harv L Rev 913; Peter Benson, "The Unity of Contract Law" in Peter Benson, ed, The Theory of Contract Law: New Essays (Cambridge: Cambridge University Press, 2001) [Benson, "Unity"]. LL Fuller & William R Perdue, Jr, "The Reliance Interest in Contract Damages: 2" (1936-1937) 46 Yale LJ 373 [Fuller and Perdue, "Reliance: 2"]; MA Eisenberg, "The Word of Contract and the World of Gift" (1997) 85 Cal LR 821 at 836.
(6) See e.g., AS Burrows, "Contract, Tort and Restitution--A Satisfactory Division or Not" (1983) 99 LQR 217 [Burrows]; Michael Pratt, "Identifying the Harm Done: A Critique of the Reliance Theory of Estoppel" (1999) 21 Adel LR 209 [Pratt].
(7) Ship, supra note 4.
(8) See Part IV, below.
(9) Before reaching the discussion, a note on terminology is required. Promissory estoppel goes by several different names in the jurisprudence and literature. The early cases do not use the term 'promissory estoppel', and Lord Denning MR, who restored promissory estoppel to the forefront of legal thought in England in 1947, did not himself use the term 'promissory estoppel' until 1952 (Dean v Bruce,  1 KB 11 at 14,  2 All ER 926 (CA); P Feltham, Daniel Hochberg and Tom Leech, eds, Spencer Bower: The Law Relating to Estoppel by Representation, 4th ed (London: LexisNexis UK, 2004) [Spencer Bower, 4th]). The doctrine variously goes by equitable estoppel and equitable forbearance (S Wilken, Wilken and Villiers: The Law of Waiver, Variation and Estoppel (Oxford: Oxford University Press, 2002) at 8.06), and it is occasionally referred to as (or confused with) waiver (See e.g., WJ Alan & Co Ltd v El Nasr Export and Import,  2 QB 189 at 212H,  2 All ER 127 (CA) [El Nasr]). In Australia, 'equitable estoppel' refers not only to promissory estoppel, but also proprietary estoppel (Waltons Stores (Interstate) Ltd v Maher (1988), 164 CLR 387, 76 ALR 513 (HCA). [Waltons Stores]). In Canada and England, a distinction is maintained between these two areas of estoppel (Crabb v Arun District Council,  EWCA Civ 7,  Ch 179 (CA) [Crabb]).
(10) (1877), 2 AC 439, 42 JP 421 (HL) [Metropolitan Railway]. This is generally considered the locus classicus; however, it should be noted that the Court of Equity reasoned in a similar manner in Skidmore v Bradford (1869), LR 8 Eq 134 [Skidmore].
(11) Ibid at 448.
(13) Combe v Combe,  2 KB 215,  1 All ER 767 (CA) [Combe]; Baird Textile Holdings Ltd v Marks & Spencer plc,  EWCA Civ 274,  1 All ER (Comm) 737 (CA) [Baird]; Brikom Investments v Carr,  QB 467,  2 All ER 753 (CA) [Brikom]. See also Spencer Bower, 4th, supra note 9 at XIV.2.25. This requirement--the promised forbearance of a legal right--is generally described simply as the requirement of a pre-existing legal relationship. While the weight of authority is in favour of this requirement, there is some authority in England for the proposition that there does not need to be a preexisting legal relationship between the parties. See Lord Denning MR's opinions in Brikom, supra, at 758-759 and Evenden v Guildford City Association Football Club Ltd,  QB 917,  3 All ER 269 (CA) [Evenden], overruled by the House of Lords in Secretary of State for Employment v Globe Elastic Thread Co Ltd,  AC 506,  2 All ER 1077 (HL) [Globe Elastic]. In Evenden, in response to counsel's argument that promissory estoppel is limited to promises regarding contractual rights, Lord Denning MR responded that, "I do not think it is so limited [...] It applies whenever a representation is made, whether of fact or law, present or future, which is intended to be binding, intended to induce a person to act upon it and he does act upon it" (at 256). As Lord Denning MR did not refer to his decision in Combe in either Brikom or Evenden, it is not clear what distinction he was attempting to draw.
(14) High Trees, supra note 1.
(16) While the requirement of reliance is generally accepted, there is a debate in the common law regarding the extent to which the reliance must be detrimental. According to one stream of jurisprudence, all that is required is that the change in position be somehow "material" (Thornton Springer v NEM Insurance Co Ltd,  2 All ER 489,  13 LS Gaz R 42 [Thornton]; Spencer Bower, 4th, supra note 9 at XIV.2.33;). Under this approach, no detriment--when defined in terms of real expenditures or missed opportunities--is required (El Nasr, supra note 9 at 213F; High Trees, supra note 1; Ajayi v RT Briscoe (Nigeria) Ltd,  1 WLR 1326,  3 All ER 556 (PC) [Briscoe]). The view that only material reliance is required is sometimes contrasted with the approach taken by the House of Lords in Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd,  1 WLR 761,  2 All ER 657 (HL) [Tool Metal] and the High Court of Australia in Waltons Stores, supra note 9. In those cases, detriment was said to be a required ingredient of promissory estoppel. However, detriment was not defined as real expenditures of time or money or missed opportunities, as Lord Denning MR seemed to define the term in El Nasr. Rather, a liberal definition of detriment was adopted that defines it as prejudice that would be suffered if the promisor were entitled to revoke the promise without compensating the promisee. Chief Jusice Mason in Commonwealth v Verwayen (1990), 170 CLR 394, 95 ALR 321 (HCA) [Verwayen], defined this approach to detriment as the "broad approach" (see Spencer Bower, 4th, supra note 9 at XIV.2.42). The reliance is categorized as "detrimental" because "the promisee's change of position will leave it in a worse position" (Wilken, supra note 9 at 8.46). These two approaches can be reconciled as follows: actual expenditures or missed opportunities are not required to establish detriment, but, if the promisee will suffer some prejudice as a result of the combined effect of her changed position and the withdrawal of the promise, the reliance will be sufficiently detrimental.
(17) This maxim comes from the pleadings in Combe, supra note 13.
(18) See e.g., Gilbert Steel Ltd v University Construction Ltd,  OJ 2087, 67 DLR (3d) 606 (CA) [Gilbert Steel].
(19) See e.g., Re Tudale Explorations Ltd and Bruce,  OJ 2466, 20 OR (2d) 593 (Ont Div Ct) [Re Tudale]; Combe, supra note 13.
(20) Combe, supra note 13.
(21) Spencer Bower, 4th, supra note 9 at XIV.2.23.
(22) SM Waddams, The Law of Contracts (Toronto: Canada Law Books Inc, 2005) at para 200 [Waddams, Contracts]. Contra Gilbert Steel, supra note 18.
(23) While there are cases that criticize this maxim (See e.g., Re Tudale, supra note 19), they are really rejecting the interpretation of the maxim set out in Gilbert Steel, supra note 18, to wit, that it cannot be employed by a plaintiff.
(24) Waltons Stores, supra note 9.
(25) Supra note 9.
(26) Waltons Stores, supra note 9. Spence has identified 14 elements of the Waltons Stores principle, as it has developed in the Australian courts (M Spence, Protecting Reliance (Portland, Oregon: Hart Publishing, 1999) at 25-26).
(27) Baird, supra note 13.
(28) The decision of the British Columbia Court of Appeal in M(N) v A(AT), 2003 BCCA 297,  BCJ 1139 [A(AT)] can be read as being fairly sceptical of Waltons Stores. In refusing to follow Waltons Stores, Hubbart JA said the following about the suggestion that the common law is moving away from the requirement of a pre-existing legal relationship:
"While it may be, as Professor Waddams suggests, that the law is moving slowly toward a more generous approach to promissory estoppel than that said by Sopinka J, at para 13, in [Maracle v Travellers Indemnity Co of Canada,  2 SCR 50,  SCJ 43 [Maracle]] to be well settled, I can see little evidence of that movement in Canadian authorities or, for that matter, in English authorities" (A(AT), supra, para 18).
Waltons Stores has been cited in a reported Canadian court decision only one other time: in 1991 by the British Columbia Court of Appeal in Revell v O'Brian Financial Corp,  BCJ 3696, 86 DLR (4th) 15 (BCCA). The Court did not comment either positively or negatively on Waltons Stores.
(29) Spencer Bower, 4th, supra note 9 at XIV.5.4.
(30) Restatement of the Law, Second--Contracts 2d: As Adopted and Promulgated by the American Law Institute at Washington, D.C., May 17, 1979, The American Law Institute (St Paul, Minnesota: American Law Institute Publishers, 1981) [Restatement (Second)].
(31) See e.g., Green v Interstate United Mgt Serv Corp, 748 F (2d) 827 (3d Cir 1984).
(32) Restatement (Second), supra note 30, section 90.
(33) Spencer Bower, 4th, supra note 9 at XIV.5.2.
(34) See e.g., Hoffman v Red Owl Stores, Inc, 26 Wis (2d) 683, 133 NW (2d) 267 (Wis Sup Ct 1965) [Red Owl].
(35) Restatement of the Law of Contracts: As Adopted and Promulgated by the American Law Institute, The American Law Institute (St Paul, Minnesota: American Law Institute Publishers, 1933), s 90 [Restatement (First)].
(36) Spencer Bower, 4th, supra note 9 at XIV.5.4.
(37) LL Fuller and William R Perdue, Jr, "The Reliance Interest in Contract Damages: 1" (1936-1937), 46 Yale LJ 52 at 54.
(38) It should be noted that it has been quested whether this is a legitimate debate, at least in the jurisdictions preserving the swordshield maxim. Glenn, for example, argues that promissory estoppel is a defence, or a defence to a defence, and, therefore, it does not raise any remedial issues (Jane Matthews Glenn, "Promissory Estoppel, Proprietary Estoppel and Constructive Trust in Canada: "What's in a name?"" (2007) 30 Dal LJ 141 at 157). The defence is either successful, in which case the promisor is prevented from resiling from the promise, or it is not. This argument may have some merit with respect to the use of promissory estoppel in practice; as noted by Thompson, the doctrine is often "seen as a defensive mechanisms within the sphere of contract" (MP Thomson, "From Representation to Expectation: Estoppel as a Cause of Action"  CLJ 257 at 266). This does not, however, lead to the conclusion that the relief attached to the doctrine is necessarily binary. Even if promissory estoppel is strictly a defence, legal and equitable defences are not necessarily all or nothing. The doctrine of comparative negligence is a prime example (See Froom v Butcher,  QB 286,  3 All ER 520 (CA)). On the successful invocation of a promissory estoppel, the court must determine the extent of the operation of the doctrine.
(39) See e.g., Waddams, Contracts, supra note 22.
(40) See e.g., Burrows, supra note 6.
(41) The editors of Spencer Bower, 4th, for example, suggests that the Court is "probably" bound to treat promises as binding when an estoppel is successfully raised; however, they argue that it should only restore the reliance loss of the promisee (Spencer Bower, 4th, supra note 9 at XIV.3.12).
(42) Edward Yorio and Steve Thel, "The Promissory Basis of Section 90" (1991) 101 Yale LJ 111 at 115.
(43) See e.g., Seavey, supra note 5.
(44) See e.g., Waddams, Contracts, supra note 22.
(45) Wilken, supra note 9.
(47) Ibid at 8.69.
(48) Seavey, supra note 5. Seavey was followed by other scholars making similar arguments. See the references cited by Yorio and Thel, supra note 42 at fn 8.
(49) Section 90 of the Restatement (First), supra note 35, was slightly different from that in the Restatement (Second). It read: "A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which induces such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise." Note that the remedial consequences of this provision are different from in the Restatement (Second).
(50) Seavey, supra note 5 at 926.
(53) Restatement (First), supra note 49, s 90 [emphasis added].
(54) Ernest J Weinrib, "Two Conceptions of Remedies" in Charles EF Rickett, ed, Justifying Private Law Remedies (Oxford: Hart Publishing, 2008) 3 [Weinrib, Remedies].
(55) Ibid at 6.
(56) Restatement (Second), supra note 30, s 90. Elements of Seavey's argument have appeared in the work of several Australian theorists working in this area. According to Robertson, for example, the purpose of promissory estoppel is to restore the detrimental reliance suffered as a result of an induced representation (Andrew Robertson, "Towards a Unifying Purpose for Estoppel" (1996) 22 Monash UL Rev 1 [Robertson, Unifying]). Equity provides a "duty to prevent harm resulting from reliance on one's conduct," as the argument goes, and promissory estoppel is triggered when this duty has been breached (ibid). If promissory estoppel is based on a duty to prevent detrimental reliance, it follows that justice requires the restoration of such detrimental reliance. This view is closely related to Robertson's argument that promissory estoppel is part of the law of wrongs (Andrew Robertson, "Situating Equitable Estoppel Within the Law of Obligations" (1997) 19 Sydney L Rev 32 at 40, 57-60 [Robertson, Situating]).
(57) Spencer Bower, 4th, supra note 9.
(58) Benson, "Unity", supra note 5.
(59) Fuller and Perdue, "Reliance: 2," supra note 5.
(60) Eisenberg, supra note 5.
(61) Proceedings at the Fourth Annual Meeting (1926), 4 ALI Proc, as reported in Yorio and Thel, supra note 42 at 117.
(63) Yorio and Thel, supra note 42 at 113.
(64) Ibid at 115.
(65) Ibid at 162.
(66) Burrows, supra note 6.
(67) Ibid at 262.
(68) As opposed to a 'weak' expectation, as is created where a person makes a representation as to an intention to do something. An expectation is created, but it is weaker than that created by a promise because a statement of intention is such that a reasonable person would allow for a change of intention (ibid at 259).
(70) Ibid at 260.
(71) Pratt, supra note 6.
(72) Ibid at 214.
(73) This view that disappointing expectations is per se wrong is not supported elsewhere in the private law. The argument is therefore lacking.
(74) Ernest Weinrib, Idea of the Private Law (Cambridge: Harvard University Press, 1995) [Weinrib, Idea]; Peter Benson, "Abstract Right and the Possibility of a Nondistribrutive Conception of Contract: Hegel and Contemporary Contract Theory" (1989) 10 Cardozo L Rev 1077 at 1116.
(75) Ibid at 262.
(76) Weinrib, Idea, supra note 74 at 2.92.
(77) Ship, supra note 4. Ship included language of preventing the promisor from resiling from the promise as falling into the language of expectancy. This view is accepted in this article.
(78) Ibid at para 59 [footnotes omitted].
(80) Elizabeth Cooke, "Estoppel and the Protection of Expectations" (1997) 17 LS 258. Cooke's conclusions with respect to the Australian courts is somewhat more nuanced, given that the majority of the opining justices in Verwayen, supra note 16, accepted the reliance approach.
(81) Cooke, Ibid at 258.
(82) See the text accompanying note 115, below.
(83) Pratt, supra note 6 at 210.
(84) Andrew Robertson, "Satisfying the Minimum Equity: Equitable Estoppel Remedies after Verwayen" (1996) 20 Monash UL Rev 805 [Robertson, Satisfying].
(85) Yorio and Thel, supra note 42. Yorio and Thel's methodology was impugned by Eisenberg, supra, note 5 at 853. Specifically, Eisenberg has argued that (1) Yorio and Thel do not adequately define their scope, as they never define what is meant by a "Section 90" case, and (2) Yorio and Thel's attempt to keep their analysis strictly descriptive is flawed because it is impossible to condense an area of law without taking a normative perspective of what that area of law ought to accomplish. This first ground of criticism is not convincing. Yorio and Thel were responding to cases cited in the Restatement (Second) and by other scholars in support of the proposition that the case law supports reliance. Hence, many of the cases selected for analysis were those cited in support of this proposition. The second ground of criticism would apply to any attempt to condense the law into its parts, including the first and second Restatements.
(86) Yorio and Thel, supra note 42 at 130-131.
(87) Ibid at 131.
(88) The doctrine of promissory estoppel is almost universally regarded as a component of the court's equitable jurisdiction, and it should therefore be noted that the court retains a discretionary power to modify the remedy as it considers appropriate in the circumstances (Spencer Bower, 4th, supra note 9 at XIV.3.13; Civil Aviation Authority v Internationale Nederlanden Aviation Lease BV,  1 Lloyd's Rep 96 (CA)). The exercise of this section is to explore what the prima facie remedy is in the aforementioned jurisdictions. The fact that the court may modify or deny this remedy if the estoppel-raiser does not come before the court with clean hands, or because the remedy will do some disproportionate prejudice to the promisor or some third party, is not the concern of this article.
(89) See e.g., High Trees, supra note 1.
(91) It may also be relevant that the defendant was a wholly owned subsidiary of the plaintiff; this fact, however, was not material to the decision.
(92) Ibid at 136.
(93) Combe, supra note 13.
(94) Lord Denning MR took the view that waiver and promissory estoppel were one and the same (El Nasr, supra note 9 at 212H).
(95) Combe, supra note 13 at 219.
(96) Baird, supra note 13.
(97) Ibid at paras 80, 82.
(98) The rest of this quotation should be noted: "(assuming that reliance loss could anyway be distinguished satisfactorily from expectation loss--an apparent difficulty which I have already mentioned). Any development of English law in such a direction could and should, in my view, now take place in the highest court" (ibid). On the facts of this case, the 'reliance interest' claimed by the plaintiff was arguably indistinguishable from the expectation engendered by the promise.
(99) See also Brikom, supra note 13, Lord Denning MR.
(100) Crabb, supra note 9.
(101) Andrew Robertson, "Reliance and Expectation in Estoppel Remedies" (1998) 18 LS 360 at 362 [Robertson, Reliance].
(102) Waddams, Contracts, supra note 22 at para 204.
(104) Birmingham and District Land v London and North Western Railway (1888), 40 Ch D 268, [1886-90] All ER 620 (CA).
(105) Briscoe, supra note 16 at 1330. There were problems with the pleadings in this case, and the court did not discuss the second two points with regard to the facts. The Privy Council was of the opinion that the defendant had not proven that it had changed its position (as these facts were not properly pleaded), and, therefore, no promissory estoppel could be raised.
(106) Take the case of High Trees, supra note 1, for example. In that case, the promisee could not have put himself back into his original position because the time for performance had already passed when the promisor resiled from the promise (see Part V, below, where I explain why the promisee could not have resumed his position). If the promisor could have given the promisee compensation (not reasonable time, but some financial payment less than the promisor's expectation interest under the original contract) for any losses that it suffered as a result of making the choice to pay only half of the rent during the War, then the promisor could have recovered in that case. The Court did not take this approach, however.
(107) Robertson, Reliance, supra note 101 at 362.
(109) Crabb, supra note 9. Proprietary estoppel concerns in rem rights; promissory deals with in personam rights. As explained by Wilken, "[t]he difference in spheres of operation of the two doctrines is that proprietary estoppel concerns promises that property rights will be forgone whereas equitable forbearance [promissory estoppel] concerns contractual rights" (Wilken, supra note 9 at 8.81).
(110) Robertson, Situating, supra note 56 at 40.
(111) Glenn, supra note 38 at 142.
(112) JA Manwaring, "Promissory Estoppel in the Supreme Court of Canada" (1987) 10 Dalhousie LJ 43 at 74.
(113)  1 SCR 20,  SCJ 64 [Conwest].
(114)  1 SCR 607,  SCJ 41 [John Burrows].
(115) See e.g., Waltons Stores, supra note 9.
(116) Ibid at 423.
(117) Cooke, supra note 80 at 279.
(119) Verwayen, supra note 16.
(120) Spence, supra note 26 at 24.
(121) Verwayen, supra note 16.
(122) Ibid at 443.
(123) Ibid at 430.
(124)  HCA 10, 196 CLR 101.
(125) According to Spencer Bower, 4th, supra note 9 at XIV.5.12, the court "expressed a preference for Deane J's approach." I do not consider this a correct interpretation of Guimielli.
(126) Robertson, Satisfying, supra note 84.
(127) Ibid. It is interesting to note that several US scholars have attempted to make similar arguments to explain the results of the US empirical studies. See John E Murray, Murray on Contracts, 3d ed (Charlottesville: Michie Co, 1990) at 284. See Yorio and Thel, supra note 42 at 134 for a rebuttal.
(128) Robertson, Reliance, supra note 101 at 366.
(129) In response to Yorio and Thel, Eisenberg, supra note 5 at 856 suggests that the opposite argument can be made by stressing the cases that favour reliance. Eisenberg goes on to suggest that the cases used by Yorio and Thel can be "explained away" in one of seven ways. Eisenberg does not address Tomerlin v Canadian Indemnity Company, 394 P (2d) 571, 61 Cal (2d) 638 (Cal Sup Ct 1964) [Tomerlin], and he suggests as one of his explanations that cases before the late 1940s cannot be used as support because the courts "assumed, like Williston" that expectation was the only measure of damages available to them until the 1950s, presumably referring to the release of such work as Seavey's 1951 article in the Harvard Law Review. This is unconvincing, as it requires the rejection of over a century and a half of case law on the basis that it is not consistent with the weight of contemporary academic authority.
(130) Tomerlin, ibid.
(131) Ibid at 578 [emphasis added].
(132) Ibid at 578, n 6.
(133) Red Owl, supra note 34.
(134) See e.g., Restatement (Second), supra note 30.
(135) Ibid at 277.
(136) This is a statement of fact, not a promise of some future performance. The interesting thing about this case is that it appears on its facts to be more conducive to a negligent misrepresentation analysis than promissory estoppel. See also Yorio and Thel, supra note 42 at 143 where they make the same point.
(137) Red Owl, supra note 34 at 274.
(138) Ibid at 276-277.
(139) Yorio and Thel, supra note 42 at 143.
(140) Charles Fried, Contract as Promise: A Theory of Contractual Obligations (Cambridge: Harvard University Press, 1981) at 24.
(141) Red Owl, supra note 34.
(142) Ibid at 276-277. It should be noted that the court also cited Seavey, supra note 5, with approval (Red Owl, supra note 34 at 277).
(143) Yorio and Thel, supra note 42 at 131. Yorio and Thel also include in this category cases decided under a different legal principle, such as negligent misrepresentation.
(144) See e.g., Anglia Television Ltd v Reed,  1 QB 60,  3 All ER 690 (CA).
(145) Yorio and Thel, supra note 42 at 166.
(146) See Imperator Realty Co, Inc v Tull, 228 NY 447, 127 NE 263 (NY CA 1920).
(147) See e.g., Red Owl, supra note 34.
(148) See Robertson, Satisfying, supra note 84.
(149) Ibid at 218.
(150) Ibid at 217.
(151) See e.g., Dobia v Canada, 2009 TCC 479,  TCJ 378 at para 10 [Dobia].
(152) Weinrib, Idea, supra note 74.
(153) Immanuel Kant, The Metaphysics of Morals, trans Mary Gregor (Cambridge: Cambridge University Press, 1996).
(154) Ernest J Weinrib, "Punishment and Disgorgement as Contract Remedies" (2003) 78 Chicago-Kent L Rev 55 at 65 [Weinrib, Punishment].
(155) Kant, supra note 153 at 37-38.
(156) Ibid at 59.
(157) Ibid [translator's notes excluded].
(158) Ibid at 57.
(159) Ibid at 58.
(160) Weinrib, Punishment, supra note 154 at 68.
(161) Kant, supra note 153 at 57.
(163) Ibid at 58.
(166) Benson, Unity, supra note 58 at 173.
(168) Kant, supra note 153 at 59.
(170) Benson, Unity, supra note 58 at 175.
(174) Ibid at 173.
(178) The foresight that a promise may reasonably cause reliance will come before the promise, but the antecedent anticipated effects of the promise and promise itself cannot be simultaneously abstracted from time. In some situations, the foresight of reliance may be the cause of the promise (although it need not be), but it cannot also be the effect of the promise (although the reliance will be the effect). While the foresight of reliance and the reliance itself are normatively related (in that they may connect the promisor and the promisee as the doer and suffer of the same injustice in a manner sufficient to bring the situation into the province of tort law), they cannot be compounded and said to proceed from the common will of the promisor and the promisee (which would be required to fall into the contractual analysis presented in the text). Note that Benson, who espouses the analysis presented in the text, takes the view that promissory estoppel is part of the law of torts, but not contract (ibid at 175).
(179) Benson, Unity, supra note 58 at 175.
(180) Wilken, supra note 9, n 14. See also Re William Porter & Co Ltd,  2 All ER 361 (Ch D).
(181) Wilken, supra note 9 at 8.08 [emphasis added].
(182) Peter Benson, "Contract as a Transfer of Ownership" (2006-2007) 48 Wm & Mary L Rev 1673 at 1710 [Benson, Transfer].
(183) As contrasted with an onerous contract. See Kant, supra note 153 at 67-8. See also Civil Code of Quebec, SQ 1991, c 64, section 1806.
(184) Dobia, supra note 151 at para 10.
(185) Bruce Ziff, Principles of Property Law, 3d ed (Scarborough: Thomson Canada, 2000) at 141.
(186) Re Ralli's Will Trusts,  Ch 288,  3 All ER 940.
(187) Benson, Transfer, supra note 182 at 1705.
(188) Ziff, supra note 185 at 139. For land, the ceremony involved the physical delivery of a piece of dirt or a twig from the land, on or near the land being transferred, generally in front of a witness.
(189) Benson, Transfer, supra note 182 at 1718. According to Benson, consideration is fit to meet this purpose:
[I]n both [an exchange and a gift] [...] the relation is [...] constituted by two mutually related acts [of] will [...] [I]f the parties are to make reasonably clear to each other in and through their interaction that this is what they are unambiguously doing, their interaction must satisfy the requirements of consideration (or an analogous doctrine). The essential role of consideration is to ensure that each party can objectively manifest to the other an assent to terms that make the latter's co-equal participation necessary for the completion of itself.
My contention is simply that reliance may also, in addition to consideration, make the transfer objectively apparent in some circumstances.
(190) While there is an equitable maxim that equity will not perfect an imperfect gift (Milroy v Lord (1862), 31 LJ Ch 798, [1861-73] All ER Rep 783 (CA)), delivery is a flexible concept. For an account of the flexibility of the concept of delivery in certain areas of the law, see Ziff, supra note 185 at 143-49. It is interesting to note that Ziff includes promissory estoppel as a doctrinal exception to the requirement of delivery.
(191) High Trees, supra note 1 at 136.
(192) It should be noted that a trust could be created unilaterally without actual delivery and without the acceptance of the beneficiary. As opined by Ziff, supra note 185 at 143, the difference between "I am giving you my car" and "I will hold my car (on trust) for you" is not overly clear in the law. However, while the former is not a valid gift without delivery, or something analogous thereto, the latter is a valid gift intermediated through a trust.
(193) This language is drawn from the Restatement (First), supra note 49.
(194) Pratt, supra note 6 at 214.
(195) By labelling this matter one of judicial policy, I mean to say that it is equivalent to, say, the choice of the burden of proof required to prove a fact, or the boundaries of the rule against hearsay. It is a matter that stems from the operation of the courts as an institution, not from the relationship of the parties before it.
(196) Benson, Unity, supra note 58 at 180.
(197) Benson, Transfer, ibid at 1718. See also the text accompanying footnote 189.
(198) See Benson, Transfer, ibid at 1718 ("The essential role of consideration is to ensure that each party can objectively manifest to the other an assent to terms that make the latter's co-equal participation necessary for the completion of itself").
(199) There are conceivably other possibilities further in the direction of the ambiguous end of the spectrum. For example, an expression gratitude in response to a promise intended to be binding may be thought of as a weak manifestation of an intention to take control of the gifted promise. According to Fuller, in continental law, an expression of acceptance "operates to some extent as a kind of surrogate for consideration" (Lon L Fuller, "Consideration and Form" (1941) 41 Colum L Rev at 799, n 31). Placing this in the framework presented in this paper, such an 'acceptance' is a weak manifestation of the will to take intelligible possession of the promise. While a simple "I accept" is, I suggest, a weaker signal than substantial reliance in which the promisee somehow changes her position such that her resources would be lessened if it turned out that she did not, actually, hold the power to direct the promisor's choice, it is, nevertheless, a form of external manifestation, so long as the words were uttered aloud. Therefore, a legal system could--and apparently some do--recognize the sufficiency of this without collapsing the contractual framework.
(200) Tomerlin, supra note 129 at 578.
(201) See the text accompanying footnote 63.
(202) This is not consistent with Yorio and Thel's other argument, supra note 42, that reliance is actually not required as long as there is a substantial prospect of reliance. Eisenberg, supra note 5 at 858 has taken aim at this thesis. I would agree with Eisenberg on this basis of criticism. It is well established that a promisor may resile from the promise before it is relied upon. Moreover, Yorio and Thel's argument requires it to be impossible for a contractual offer to be revoked before it is accepted, which is clearly not the law.
(203) See Part IV(ii).
(204) See the text accompanying note 117.
(205) Pratt, supra note 6 at 210.
(206) Combe, supra note 13.
(207) See Benson, Unity, supra note 5 at 180.
(208) See Roskill LJ's dicta in Brickom, supra note 13, and by the majority of the Court of Appeal in Baird, supra note 13.
(209) This stems from the heart of the Metropolitan Railway, supra note 10 at 448, ratio: the promise "has the effect of leading one of the parties to suppose that the strict rights under the contract will not be enforced."
(210) Wilken, supra note 9 at 8.06. Note that this is why Wilken calls the doctrine discussed in this paper equitable forbearance.
(211) Glenn, supra note 38 at 150.
(212) There is an English case that seems to weaken this requirement. See Pacol Ltd v Trade Lines Ltd (the 'Henrick Sif),  1 Lloyd's Rep 456,  Com LR 92 (QB) [Henrick Sif]. Justice Webster held that the legal relationship requirement is met even when the promisor does not hold a pre-existing in personam right against the promisee, as is the case when the relationship is contractual or analogous thereto. If this interpretation is correct, promissory estoppel in England--as in the US--could have the effect of creating new legal rights independent of existing legal rights. While the result of this case was adopted by the Court of Appeal in Baird, supra note 13 (the same case where the pre-existing legal relationship requirement was confirmed), it has been heavily criticized. See e.g., Spencer Bower, 4th, supra note 9 at XIV.2.28.
(213) See note 109.
(214) While it is technically still an open question whether or not the pre-existing legal relationship in England must be contractual, as this question was left open by Buckley LJ in James v Heim Gallery (London) Ltd (1980), 41 P & CR 269, 256 EG 819 at 821 (CA), there is authority in England for the proposition that it may be statutory. See Durham Fancy Goods Ltd v Michael Jackson (Fancy Goods) Ltd,  2 QB 839,  2 All ER 987, where the relationship was created under the Companies Act. See also Wilken, supra note 9 at 8.108.13, for an account of various legal relationships that have and have not been recognized as being sufficient for the operation of promissory estoppel.
(215) Spencer Bower, 4th, supra note 9 at XIV.2.30.
(216) See the text accompanying note 157.
(217) Fried, supra note 140 at 20, posited that a "choosing self is not an instantaneous self but one extended in time, so that to respect [the] determinations of the self is to respect their persistence through time." While Fried was attempting to capture a different aspect of the idea of choice--namely, that respect for the capacity to choose requires holding the choosing agent to the consequences of her choices--the underlying idea is similar. If it makes sense to hold a choosing agent responsible for her choices, it must be possible to conceive of such choices as persisting through time in an exercised state.
(218) Waiver is a very loosely defined term in the law. See Wilken, supra note 9 at 3.01. See also Verwayen, supra note 16. As a substantive doctrine, waiver can take many forms. According to Wilken's analysis of the jurisprudence, there are four categories of waiver: waiver by election, pure waiver, total waiver, and unilateral waiver (Wilken, supra note 9, ch 4).
(219) Wilken, supra note 9 at 8.06 ("[T]he requirement of knowledge forms the only coherent basis for distinguishing waiver from equitable forbearance [promissory estoppel]"). The relationship between promissory estoppel and waiver is not entirely clear in the jurisprudence. While the characterization of the difference by Wilken is consistent with much of the case law, Lord Denning MR in El Nasr, supra note 9 at 212H, opined that the relationship was other than this. Specifically, he stated that waiver was an example of the principle in Metropolitan Railway and High Trees.
(220) Sea Calm Shipping Co SA v Chantiers Navals De L'Esterel SA ('The Uhenbels'),  2 Lloyd's Rep 294 (QB). However, the relationship between waiver and detrimental reliance may not be as clear-cut as this. While detrimental reliance is not required as an element of the doctrine, it is accepted that a waiving party may resume her rights on reasonable notice (Charles Richards Ltd v Oppenheim,  1 KB 616,  1 All ER 420 (CA)). According to Ship, supra note 4 at para 58, the effect of this is to make waiver dependent on reliance. In his words, "[w]aiver may thus be seen as at least partly concerned with detrimental reliance, since resumption on reasonable notice depends on a certain change of position."
(221) Verwayen, supra note 16 at 427, Brennan J, dissenting on other issues.
(222) Spencer Bower, 4th, supra note 9 at XIV.1.3.
(223) Briscoe, supra note 16.
(224) Kant, supra note 153 at 57.
(225) Re BA Oil Co & Halpert, 21 DLR (2d) 110,  OR 71 (CA).
(226) Supra note 1.
(227) This, I suggest, is why the default rule of contractual breach is damages and not specific performance. Once the choice has been wrongfully made, it has been effectively destroyed.
(228) This is why I believe that anticipatory breach is actionable. By adopting a course that is inconsistent with the counterparty's ability to direct the choice, the part thereby makes the choice, only inconsistently with the counterparty's contractual right.
(229) As set out in Part IV, I interpret Briscoe to stand for the proposition that a promissory estoppel is raised only when the promisee has relied such that she cannot unilaterally return herself to her original position. I suggest that this qualification of the doctrine relates to the concept of what it means to make a choice. It is not sufficient for the promisee to simply 'act' on the promise if this does not change her position in some material way (Thornton, supra note 16). This is so because, to make the licensed choice, the promisee must act inconsistently with the original contractual term in some way. The promisor must move into a universe in which the decision not to comply with the contract has become bound up with the same. However, if the promisee only acts in a manner in which she can resume her original position on reasonable notice without suffering any prejudice, the consequences of her actions must not have become bound up with the universe, at least materially. In other words, she must not have made the choice in the relevant sense.
I suggest that the Briscoe formulation is a device for determining whether or not a choice has been made before the time for performance. If the promisee can return herself to her original position unilaterally, the choice could not have been made, and the promisor may resile. On the other hand, if the promisee cannot resume her original position unilaterally, she has done something in reliance on the promise that has moved her into a universe inconsistent with the original contractual term--i.e., she has exercised the choice to act inconsistently with it. At this point, the promisor cannot resile for the simple reason that if he did, he would not regain any power of choice, being as the choice has been extinguished.
(230) Foakes v Beer (1884), 9 App Cas 605, 54 LJQB 130 (HL) [Foakes] would say that the acceptance of a lesser amount in satisfaction of a debt is not good consideration. However, Denning J, in High Trees, supra note 1, was clear that this may fall within the scope of promissory estoppel.
(231) This is subject to any exceptions to the past consideration rule.
(232) Briscoe, supra note 16.
(233) See e.g., High Trees, supra note 1.
(234) Briscoe, supra note 16.
(235) See Part IV, above.
(236) Stephen A Smith, Contract Theory (Oxford: Oxford University Press, 2004) at 243.
(238) See also footnote 5 and the accompanying text.
(239) Ship, supra note 4.
(240) See e.g., Tomerlin, supra note 129.
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|Author:||Rankin, W. David|
|Publication:||University of Toronto Faculty of Law Review|
|Date:||Mar 22, 2011|
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