Promissory estoppel

                         

Central London Property Trust Ltd v High Trees Ltd (1947)

Fact

Central London Property Trust (CLPT) owned a block of flats which it leased for £2250 to High Trees Ltd (HT), and which became known as `High Trees House'. HT's plan was to let the flats individually to tenants. However, the war meant that demand was slack and HT negotiated a reduction in the cost of the lease to £1250 for the period 1940-1945. After the war the demand increased and the flats were all let. CLPT attempted to recover the full cost of the lease, as per the original agreement, claiming that there was no Consideration from HT to support the agreement for the reduced rates. The absence of consideration was not in dispute, and under a strict interpretation of the common law on contracts CLPT would have been able to enforce their rights to full lease value. However, Lord Justice Denning ruled that the agreement to reduce the rent was a promise, and HT had acted on that promise. If CLPT were allowed to enforce their rights then the fact that HT had acted on the promise would be to its detriment (because they would have to pay full price when most of the flats were unlet), and CLPT could be made subject to a promissory estoppel.

Decision:

This case (Central London Property Trust Ltd v High Trees Ltd [1947] KB 130) formed the basis of the modern interpretation of the doctrine of Promissory Estoppel, as applied to a Contract. The judgement has attracted a fair amount of criticism and a number of attempts at exploitation; nevertheless, it attempts to right an obvious injustice, using a principle of equity that has been around for centuries.

Resource:

Law Student Forum