Last edited 16 Nov 2020

Estoppel contracts

In very broad terms, 'estoppel' prevents a party from asserting a claim or right that contradicts something they have previously said or done, or something that has been legally established to be true.

The courts have held that in the absence of the essentials of a contract (namely; two or more parties, an intention to create legal relations, an agreement and consideration), a contract could still come into existence between parties if they have so conducted themselves as to a common assumption, in fact or law, that there is a contract and that it would be wrong or unreasonable for the parties thereafter to deny the existence of such a contract.

Estoppel contracts have received a mixed reception from the courts, finding favour in G. Percy Trentham v Architral Luxfer, and in Mitsui Babock Energy Ltd v John Brown Engineering Ltd, but being rejected in J. Murphy & Sons Ltd v ABB Daimler Benz.

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