The Law To Know

Contract law · United Kingdom · about 4 minutes

Consideration and promissory estoppel

The turnstile at the stadium

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In one breath

A promise made for nothing is not an enforceable contract unless it is made in a deed; the law asks what each side gave, not whether the exchange was fair. Promissory estoppel is a narrow exception that can stop a person going back on a promise to give up part of their rights, but it protects the person relying and does not found a claim of its own.

The picture

The turnstile at the stadium

A stadium turnstile opens only for someone who puts something in: a ticket, a token. It does not weigh whether the ticket was cheap or the match worth seeing. Any ticket will do, so long as it is something of value that the stadium asked for. Now suppose the gatekeeper waves a regular through the staff gate and says, “Come in free all winter.” The regular relies on it. The gatekeeper cannot suddenly demand payment for a match already attended, but nobody can say the wave created a right to attend next season.

Consideration works like the turnstile. A contract needs something given in return for the promise, requested by the promisor: a benefit to them or a detriment to the other side. The courts do not ask whether it was adequate, but it must be sufficient, meaning something the law treats as value. Promissory estoppel is the staff gate: where one party clearly promises not to enforce strict rights and the other relies on that, the promisor may not go back on it while the reliance lasts.

Where the picture stops working

A turnstile is mechanical, whereas the courts add refinements: a promise in a deed needs no consideration, and a practical benefit can count as consideration in business dealings. The staff gate is also limited in ways a gatekeeper’s wave is not. The promisor can usually give reasonable notice to return to strict rights, and the promisee cannot use the estoppel to create a new claim. Scots law does not require consideration for a binding promise.

How it really works

  1. 1Identify the promise being enforced and ask what the other side gave for it: money, goods, a service, a promise or a forbearance, asked for by the promisor.
  2. 2Ask whether it is sufficient. The court does not weigh adequacy, so a nominal item can suffice, but it must be something the law recognises as value (Currie v Misa).
  3. 3Exclude the usual non-starters: something already done before the promise was made, and doing only what one was already bound to do. A practical benefit to the promisor, without duress, can make a promise of extra payment for the same work enforceable (Williams v Roffey Bros).
  4. 4If consideration is missing, ask whether the promise was made in a deed, which needs none.
  5. 5If neither applies, consider promissory estoppel: a clear promise not to enforce existing rights, reliance, and circumstances in which it would be inequitable to go back on it (High Trees). It is usually a defence rather than a cause of action (Combe v Combe).

Why people get it wrong

  • Thinking that consideration means a fair price. It must be sufficient, not adequate.
  • Treating a creditor’s promise to accept less as binding. At common law, paying part of a debt does not discharge the whole of it (Foakes v Beer), unless something extra is given or an estoppel arises.
  • Treating promissory estoppel as a way to create a contract out of reliance. Alone, it does not give a right to sue.
  • Assuming Scots law works the same way. A promise there can bind without consideration.

A worked example

The facts are invented

Mara runs a bakery and rents the shop from Olu at a fixed rent. In a slump Olu writes, “I will take half the rent until trade picks up.” Mara pays half for a year and spends her savings on a new oven, counting on the reduced rent. Olu then sues for the unpaid half.

Mara gave nothing new for Olu’s promise, since she was already bound to pay the rent, so there is no consideration. But Olu made a clear promise, Mara relied on it, and it would be inequitable to let him collect the shortfall for that year, so estoppel is a good defence. It does not stop Olu, once trade has recovered, from giving reasonable notice that full rent is due again.

Try it

A creditor agrees in writing to accept £500 in full settlement of a £1,000 debt. The debtor pays £500 on time and gives nothing else. Can the creditor later sue for the other £500?

Landmark authorities

Read the sources themselves; this list is a starting point.

  • Currie v Misa, (1875) LR 10 Ex 153
  • Foakes v Beer, (1884) 9 App Cas 605
  • Central London Property Trust Ltd v High Trees House Ltd, [1947] KB 130
  • Combe v Combe, [1951] 2 KB 215
  • Williams v Roffey Bros & Nicholls (Contractors) Ltd, [1991] 1 QB 1

Where to go next

More hard concepts in United Kingdom law

This page is an educational overview. It is not legal advice and not a substitute for the sources: the statute, the rule, the case itself. The United Kingdom has three legal systems: England and Wales, Scotland, and Northern Ireland. These pages mostly describe the law of England and Wales and say where Scots law differs when it clearly does; Northern Ireland law is often similar to English law but is not covered separately. Parliament is sovereign, but the devolved legislatures also make law within their powers. Each page states the usual formulation of the rule and names landmark decisions; check the primary sources before relying on any rule.