PROMISORY ESTOPPEL IN CONTRACT LAW

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CONSIDERATION

The word ‘contract’ is described as an agreement enforceable by law in section 2 of the Indian Contract Act, 1872. (h). Any promise is an agreement under s. 2(e). However, unless the agreement is accompanied by ‘consideration,’ it will be null and void, except in the three cases mentioned in section 25. As a result, unless a pledge is backed up by ‘consideration,’ it will not be legally enforceable. The term ‘consideration’ is described as follows in Section 2(d):

When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do, or abstain from doing, something, such act or abstinence or promise is called a consideration for the promise.

As a result, when someone makes a promise, unless the promisee does, has done, or agrees to do something at the promisor’s request, the promise is worthless and cannot be enforced in a court of law.

DOCTRINE OF PROMISORY ESTOPPEL

The values of right, fairness, and good faith underpin the doctrine of promissory estoppels. It was created by equity in order to avoid injustice. It isn’t covered by any contract or proper estoppels.

The theory is that if one party makes a promise to another with the intent of establishing or influencing a legal relationship, and the other party acts on it, the promise should be binding on the party who made it. It would not be permitted to retract its statements. And going back to the words will be unjust.

In the case of Motilal Padampat Sugar Mills vs. State Of Uttar Pradesh And Ors, the Chief Secretary of the Government promised that in order to develop industries firmly, complete tax exemption will be granted to new industrial units for the next three years. Based on this promise, M.P. Sugar Mills started a hydro generation plant with a large loan. After that, the government made some tax policy changes, stating that industries will be taxed at varying rates.

Using the doctrine of promissory estoppels, the Supreme Court determined that because the appellant took a large loan based on the government’s guarantee, no tax should be levied for a period of three years from the date of production because the promise was made. And there’s no way to make the promise enforceable unless one party suffers injury or damages; in the absence of harm, the promise is still binding.

JURISPRUDENCE BEHIND THE DOCTRINE

Promissory estoppel is a just and equal doctrine. It is discretionary, like all equitable remedies, as opposed to a common law absolute right such as the right to damages for breach of contract. It is a concept developed by equity to prevent discrimination, and although it is often referred to as “promissory estoppel,” it is neither a contract nor an estoppel.

The ingredients of Section 115 of the Indian Evidence Act, 1872, must be satisfied with the implementation of the doctrine in India, as the law of estoppel is a rule of evidence. Section 115 does not apply to the doctrine of promissory estoppel since the section deals with statements made regarding existing facts, while promissory estoppel deals with future promises. The doctrine’s implementation would nullify a constitutional provision, such as Article 299, that exempts the individual who makes the promise or guarantee from personal liability.

APPLICABILITY OF THE DOCTRINE OF PROMISSORY ESTOPPEL

The party asserting the estoppels must have “changed or altered the situation” by relying on that representation in order for the doctrine of promissory estoppel to apply.

In Maxey Charan v. Rohilkhand Uni, Bareilly, the petitioner took a university test and was declared to have passed. Her enrollment was canceled after the error was discovered. The court determined that petitioner made no mistake and hence is not liable for such a mistake. Because of the University’s conduct, the rules of promissory estoppel were appropriate to apply to the respondent University.

Promissory estoppels does not apply in the following situations:

  1. There are no estoppels against a well-established legal principle.
  2. It is not applicable if a commercial contract has been signed.
  3. If a promise is provided but not included in the parties’ agreement, the doctrine of promissory estoppels cannot be used.
  4. The plaintiff’s only condition for applying the rules of promissory estoppels is that he or she change his or her stance.

INGREDIENTS OF THE DOCTRINE OF PROMISSORY ESTOPPEL

In the case of Union of India & Anr vs Wing Commander R.R. Hingorani, a government employee was allowed to keep his apartment two months after the concession period ended. In court, the duty to pay damages equal to market rent for the time of such unauthorized occupation was asserted. Since the Government refused to provide the respondent with a notice that he would be liable to pay market rent for the time of such illegal occupation, the Government was barred from seeking damages equal to the market rent under the doctrine of promissory estoppel. The theory was established that in order to invoke the doctrine of estoppels, three conditions must be met:

  1. A person’s representation of another
  2. The other party should have taken action in response to the said representation, and
  3. The action taken may have been harmful to the individual to whom the representation was made.

In the case of Central London Property Trust v High-trees House, High-trees rented a block of flats from CLP for a fixed amount of rent, but when the war broke out, it had trouble finding tenants for all of the flats. As a result, other flats were left vacant. The CLP decided to lower the rent before the war is over. When the war ended, all of the flats were occupied at the usual rent rate. The defendant demanded the usual rent for the current period as well as the previous period. High-trees went to court, and the court decided that they acted on CLP’s words that rent would be reduced during the war, but that the balance could not be demanded after the war ended, and that they could continue to pay the usual rent. Denning J developed the doctrine of promissory estoppel in this case. All three requirements are met in this case.

In S Ramabhadran v State of Tamil Nadu, the petitioner took a test for a position as a stenographer in the Raj Secretariat Services, but was unable to get hired because there were no vacancies. The petitioners were given the choice of joining the subordinate services with the agreement that if vacancies became available before the selection list expired, they would be integrated into the secretariat services, which they did. Following the expiration of the application list, new vacancies arose, and new job openings were advertised. The government was not required to appoint the petitioners after the time of selection list expired, according to the court; the concept of promissory estoppels did not apply in this case. There is no such thing as a promise, and denying it causes harm.

CONCLUSION

When we live in a group, we cannot live in isolation because we are all interdependent. It resulted in the formation of contractual and commercial relationships. If a commitment made by one individual becomes significant to another and causes benefit or loss, and it is refused, it can cause harm to another, the doctrine of promissory estoppels is available as a shield for their defense. Promissory estoppel is an effective safeguard and a sound concept for preventing oppression. The Indian judiciary has played a critical role in holding the promise responsible and accountable, as well as ensuring that it keeps its word.