DOCTRINE OF PROMISSORY ESTOPPEL

 

DOCTRINE OF PROMISSORY ESTOPPEL

 

Generally, a promise is legally enforceable when such promise/promises are made for consideration. If, any promise/promises are made without underlying consideration, such promises are void-ab-initio and cannot be legally enforceable in the court of law. But, in some instances courts may entertain promises without valid consideration also and the same is known as the “Doctrine of Promissory Estoppel”.

The Doctrine of Promissory Estoppel is a legal principle, wherein a promise made without underlying consideration is also legally enforceable when such promise/promises are made by the promisor to promisee and on the basis of such promise/promises, promisee has acted upon and that results to his detrimental.

So, following aspects must present in a case to fit into the ‘Doctrine of Promissory Estoppel’ so that Court can consider such cases for hearing even though promises are made without underlying consideration.

1)    There is a Promise

2)    The Promisor has made promise to promise

3)    Promise doesn’t have any underlying consideration

4)    Promisee has acted upon (entered into the contract) on the basis of such promise by the promisor.

5)    Promisee has suffered/may suffer any economic loss if such promises are not met.

The main objective of this legal principal is to protect the interest of the innocent promisee who has entered into the contract solely on the basis of promises made by the promisor. This principal also abstains the promisor from arguing that an underlying promise shouldn’t be entertained as no consideration is involved. It helps the injured person (promisee) to recover the losses on a promise.

Also, cases are entertained by the Court only if it determines that honouring of the promise is the only means by which loss(e) suffered by the promisee can be rectified.

Example:

Vendor, sells a shirt to customer by promising that the shirt can be replaced if it doesn’t fit to customer’s size.

Here,

1)    There is a promise

2)    A Promise is made without consideration (No Consideration is demanded for replacing the shirt)

3)    Customer has acted upon i.e., purchased the shirt on belief that shirt can be replaced if it doesn’t fit to his size.

4)    If the promise is not honoured the customer will suffer loss

5)    Honouring the promise is the only way by which loss of the customer can be rectified.

 

So, in such instances the Court will accept the cases even though they are made without underlying consideration.

 

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CA Sanjay R Shetty