Legislating Promissory Estoppel IN Malaysia

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  • 1. i LEGISLATING PROMISSORY ESTOPPEL IN MALAYSIA By Nur Hafiza Binti Jemi (2010360057) Nursakina Binti Azman (2010992285) Khairunnadiah Binti Rosli (2010134045) Ahmad Farouq Bin Amir (2010313869) Submitted in Partial Fulfillment of the Requirements For the Degree of Bachelor of Legal Studies (Hons) Universiti Teknologi Mara Faculty of law July 2013 The students/authors confirm that the work submitted is their own and that appropriate credit has been given where reference has been made to work of others.
  • 2. ii ACKNOWLEDGEMENTS In the name of Allah, the Most Beneficent, the Most Merciful. First and foremost, our deepest gratitude we bid to our ever so helpful supervisor, Madam Rahimah Bee Binti Mohd Yusof for all her efforts and guidance which leads us to the completion of this project paper. Without her guidance, we might not be able to complete this project paper successfully. We are also thankful to Dr. Hartini Binti Saripan for her hard work in teaching us the first stage of this project paper in the Legal Research and Methodology for without her assistance and teaching, we might not be able to come out with an idea to do a project paper on this important area of law. Special thanks we bid to our beloved friends who had helped and supported us throughout the creation and completion of this project paper. All the teamwork and efforts that has been shown had greatly assisted in making this project paper to come into existence. Last but not least, thank you to our most treasured family members for their continuous supports, encouragements, and thoughtful advices during the completion of this project paper. Without them, it will be harder for us to complete our very first project paper. In a nutshell, we hope that this project paper can help other researchers in fulfilling their own research paper as well as to give ideas and guidelines for Malaysia to implement the doctrine of promissory estoppel into the Malaysian law.
  • 3. iii ABSTRACT This research has been conducted to analyse the existing legal framework in Malaysia governing the doctrine of promissory estoppel, where, special references have been made to the legal position in Australia and United States of America. This research aims to examine the adequacy in Malaysian law regarding the existing law which is still in need to be revised in order to handle cases such as detrimental reliance upon the promise. This study also reveals how the United States of America are craving for the existence of a specific statutory provision for the land in order to uphold and serve the justice fairly. The continuing evolution of promissory estoppel starts with the first phase, which dated back to as early as the 16th century under the notion of reliance as an acceptable element of contract law. The reliance notion is shown to be a thriving alternative to the contractual element of consideration throughout the study. It has also been revealed that the evolution of promissory estoppel in Malaysia did not end with its formal promulgation but continues to be developed by the common law courts. Thus, a collective study between Australia, Malaysia and United States of America has been carried out in this study to determine the present parameters of promissory estoppel where it is found may develop this doctrine to further levels.
  • 4. iv TABLE OF CONTENTS Acknowledgement ii Abstract iii Contents iv List of Cases vi CHAPTER ONE: INTRODUCTION 1.0 Introduction 1.1 Background of Study 1.2 Problem Statement 1.3 Research Objective 1.4 Research Methodology 1.5 Limitation of Study 1.6 Significance of Study 1.7 Literature Review 1.7.1 Conceptual Framework 1.7.2 Legal Framework 1.8 Conclusion CHAPTER TWO: HISTORY AND THE NEEDS OF PROMISSORY ESTOPPEL IN MALAYSIA 2.1 Introduction 2.2 Development of Promissory Estoppel 2.2.1 United States of America 2.2.2 England 2.2.3 Australia 2.3 Limitation to the Doctrine of Promissory Estoppel 2.4 The Development and the Drawback of Promissory Estoppel in Malaysia 2.5 The Next Step towards Certainty in Legal Process 2.6 Conclusion
  • 5. v CHAPTER THREE: THE APPLICATION OF PROMISSORY ESTOPPEL IN AUSTRALIA AND UNITED STATES OF AMERICA 3.0 Introduction 3.1 The Application of Promissory in Australia 3.2 The Birth of Promissory Estoppel 3.3 The Problem as to the Application of Promissory Estoppel 3.4 Conclusion 3.5 The application of Promissory Estoppel in United States of America 3.5.1 The History 3.5.2 The Birth and The Need of Enforcement 3.5.3 The Application, Cases and Statistics 3.6 Conclusion CHAPTER FOUR: RECOMMENDATION 4.1 Introduction 4.2 Recommendation 4.3 Conclusion Bibliography
  • 6. vi List of Cases 1. Bencon Development SdnBhd v Yeoh Cheng Heng [1996] 4 CLJ 25 2. Birmingham & District Land Co. v. London & North Western Railway Co., 40 Ch. D. 268 (C.A. 1888). 3. Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Bhd 4. Central London Property Trust Ltd v High Trees House Ltd [1947] KB 5. Chin v Miller (1981) 37 ALR 171 6. Combe v. Combe [1951] 2 K.B. 215, 219 7. Commonwealth of Australia v Verwayen(1990) 170 CLR 394 8. Currie v. Misa10 L.R. Exch. 153 (1875) 9. Dillwyn v. Llewelyn45 Eng. Rep. 1285 (Ch. 1862) 10. EA Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1326 PC 11. Foakes v Beer (1884) 9 App Cas 605, HL 12. Greiner v. Greiner 293 P. 759 (Kan. 1930) 13. Grundt v Great Boulder Pty Gold Mines Ltd 59 CLR 641 (1937) 14. Hammersley v. De Biel (1845) 12 Cl& F 45 15. Hamer v. Sidway10 L.R. Exch. 16. Hayes v. Plantations Steel Co., 438 A.2d 1091, (1982) 17. Hoffman v. Red Owl Stores, Inc.26 Wis.2d 683 18. Hughes v Metropolitan Railway Co. (1877) 2 AC 439 19. Jackson v Corby (1979) 21 SASR 280 20. Jorden v. Money (1854) 5 HLC 185 21. Kinta Medical Centre v Foo Yet Kai Foundation &Anor [1997] MLJU 258 22. Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd. [1991] 23 NSWLR 571
  • 7. vii 23. Legione v Hateley[1983] 57 ALJR 152 CLR 406 24. Low v. Bouverie[1891] 3 Ch. 82 (C.A.) 25. O‟ Donoghue v Minister for immigration and citizenship and Another, (No 3)- 121 ALD 575 (2011) 26. Perpetual Trustee Co Ltd v Pacific Coal Co pty Ltd 55 SR (NSW) 495 (1953) 27. Salehs v Romanous (2010) 79 NSWLR 453N 28. Salsbury v. Northwestern Bell Telephone Co., 221 N.W. 2d 609 29. Sim Siok Eng v Government of Malaysia [1978] 1 MLJ 15 30. SocieteItalo-Belge Pour le Commerce etI‟Industries SA v Palm & Vegetable Oils (Malaysia) Sdn Bhd, (The Post Chaser) [1982] 1 All E.R. 19. 31. Tang Heng Hua v. Tanah Manis Realty Sdn. Bhd (No. Syarikat : 15107-V) [2010] MLJU 1346 32. Teh Poh Wah v Seremban Securities Sdn Bhd [1996] MLJ 701 33. Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 34. Wong Juat Eng v Then Thaw Eu & Anor [1965] MLJ 133
  • 8. 1 CHAPTER ONE INTRODUCTION 1.0 THE MISSION This research paper aims to analyse the application of the doctrine of promissory estoppel in Malaysia. This paper also aims to propose the implementation of the said doctrine into the Malaysian legislation. The structure of this research paper will begin with the background study of the research area that will clarify the development and the problems faced by the Malaysia legal system regarding the application of the doctrine of promissory estoppel. Next, the problem statement and the objectives of this research are further construed. Following the previous, the significance of the research will enlighten the reader about the importance of promissory estoppel to be legislated into the Malaysia law. The limitation and the research of the study are explained as well. Lastly, the conclusion is written to conclude the chapter. 1.1 BACKGROUND OF STUDY Promissory estoppel is an equitable doctrine applicable in contract law, which applies when one party to a contract promises the other, by words or conduct, that he will not enforce his right under the contract. Estoppel is a rule of evidence or rule of law, which prevents a person from denying the truth of a statement he made or from denying facts he alleged to exist.1 Promissory estoppel fall under the category of estoppel by representation and is applicable when one party to a contract promises the other, either by words or conduct, that he will not enforce his right under the contract wholly or partially.2 If the other party has acted in reliance of that promise, the person making the 1 Martin (1986) 2 Wan IzatulAsma.“Enacting Promissory Estoppel into the Malaysian Law: Towards More Certainty in Litigation”.Journal of Politics and Law, (2012): 5.
  • 9. 2 promise will be bound by it and pursuant to that, he will not be allowed to sue on the contract.3 This doctrine was first introduced in the case of Hughes v Metropolitan Railway Co.4 In Malaysia, the landmark case of Boustead Trading (1985) SdnBhd v Arab-Malaysian Merchant Bank Bhd5 , where Gopal Sri Ram JCA stated that “The time has come for this court to recognize that the doctrine of estoppel is a flexible principle by which justice is done according to the circumstances of the case. It is a doctrine of wide utility and has been resorted in varying fact patterns to achieve justice. Indeed, the circumstances in which the doctrine may operate are endless”. This can be taken as a positive and clear indication that the doctrine is used in Malaysia, and the courts are in favour of the usage of the doctrine. This paper provides analytical studies on the application of the doctrine of Promissory Estoppel in Malaysia, and comparatively will complement the study by looking at the application of the doctrine in Australia and United States of America.6 Promissory estoppel, which is an English doctrine of equity, has been widely accepted in common law through the colonization by the British Empire. United States have enacted this doctrine in Article 90 of the Second Restatement of Contract.7 Thus, by enacting promissory estoppel into Malaysian law, it is beneficial because the enactment can be considered as a constructive and advantages for the development in Malaysian legal system.8 3 Supra Note 2 4 (1877) 2 AC 439, p.498, where the meaning of promissory estoppel, had been judicially explained by Lord Cairns as follows, “…It’s the first principle upon which all courts of equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results – certain penalties or legal forfeiture – afterwards by their consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealing which has thus taken place between the parties.” 5 [1995] 3 MLJ 331, p.344 6 Note 2 7 Ibid 8 Ibid
  • 10. 3 1.2 PROBLEM STATEMENT The usage of promissory estoppel in Malaysia is allowed by the virtue of Section 3(1) of the Civil Law Act 1956. Since promissory estoppel is an equitable doctrine and was first promulgated in 1947 through High Trees Case, superficially it is right to say that the Malaysian courts are indeed free to adopt the doctrine.9 Referring to the application of the said doctrine into the Australia and England legal system, the main problems that can be identified that limits the application of promissory estoppels are: 1) The parameters was not clearly defined for the easier application by the courts because now that unconscionability is being the main focus in granting promissory estoppel, in lieu of detrimental reliance, the thin line surrounding its parameters are becoming more vague.10 2) The limited interpretation and application which may potentially obstruct the development of equity and the administration of justice.11 3) The statutory restriction imposed by Section 3(1) of the Civil Law Act 1956 which necessitates the reception of this equitable doctrine to be subject to the exclusionary phrase stated in the beginning of Section 3 denoting that its application of promissory estoppel in Malaysia can only be carried out only when there is a lacunae in such area of law.12 9 Supra note 2 10 Ibid 11 Ibid 12 Ibid
  • 11. 4 1.3 RESEARCH OBJECTIVE 1) To analyse the application of the doctrine of Promissory Estoppel in Malaysia. 2) To compare the application of the doctrine of Promissory Estoppel in Malaysia to Australia, and the United States of America. 3) To propose the legislation of the doctrine of Promissory Estoppel in Malaysia. 1.4 RESEARCH METHODOLOGY This research will adopt the qualitative research approach where the said method will be further divided into two categories mainly, Doctrinal Research and Empirical Research. In our research, we will use only doctrinal research method in order to collect all of our research data. In Doctrinal research, our primary sources will be the statutes and case laws that we had successfully collected during our research. Such statutes include the Malaysian Contracts Act 1950, and the Civil Law Act 1956. Aside from the Malaysian statutes, we also referred to The Second Restatement of Contract of the United States of America, and the English Contract Law and the Sale of Goods Act 1979 from the United Kingdom. Some relatively important cases to assist us in our research includes,Hughes v Metropolitan Railway Co.13 , the case was the first known instance of the concept of promissory estoppel applied by the House of Lords in the United Kingdom. There is also the case of Central London Property Trust Ltd v High Trees House Ltd14 to where this is the leading case that helps to justified the application of the doctrine of promissory estoppel in the United Kingdom after being resurrected by Lord Denning 13 Note 4 14 [1947] KB 130
  • 12. 5 upon his obiter dictum in the said case, a century after the judgment in the Hughes‟s case. For local jurisdiction, we found the case of Boustead Trading (1985) SdnBhd v Arab-Malaysian Merchant Bank Bhd15 Our secondary sources in the Doctrinal Research will include journal articles, books, and written commentaries on the case law and legislation. Several techniques of Doctrinal analysis include Content analysis, Historical analysis, and also Comparative analysis. 1.5 LIMITATION OF STUDY Some limitations that we had encounter while during this research was the lacked of suitable resources and authorities to support our claims. Although this study is to provide an insight on the quality and the effectiveness of the promissory estoppel in Malaysia, there were limited cases from the common law countries for us to refer to. For the purpose of this research, we need a lot of cases and journals domestically as well as internationally in order to make the data analysis, however we are lacking of the said sources. 1.6 SIGNIFICANCE OF STUDY The research of past cases have illustrated that promissory estoppel has now been treated more flexibly than before where the requirement of reliance, many of the cases was treated it as no longer needed and been replaced by the newer notion of unconscionability which is based on good faith and laced with equality in bargaining power.16 15 [1995] 3 MLJ 331 16 Wan Izatul Asma Wan Talaat, The Continuing Evolution of Promissory Estoppel: From Rigidity to Flexibility, 2011.
  • 13. 6 However, now the position has undergone a change. The present parameters in comparing with those three countries are slowly recognizing the use of promissory estoppel as a sword although not as independent cause of action but rather as “supporting” means to assist an existing cause of action as can be seen in the Australia case, Jackson v Corby.17 The doctrine now has been available to plaintiffs not only as a defence but also as an independent and the sole cause of action.18 By applying this doctrine into Malaysia, our country can be in the same level with Australia counterparts.19 By forseeing this development, the promissory estoppel can obtain the objective of providing justice to all the contracting parties involved.20 A promisee, who has suffered from acting upon a promise, can now seek redress from the court rather than wait until a claim is filed against him.21 The quest for the statutory enactment of promissory estoppel into the Malaysian statutory regime in this research may be considered as a constructive and beneficial contribution to the development of Malaysian Law by following the footstep of the American in enacting promissory estoppel into their Article 90 of Second Restatement of Contract, it will gives two positive effects.22 This would help in clarifying the parameters of this doctrine, which would lead to more certainty in litigation.23 The statutory enactment of the doctrine of promissory estoppel would certainly facilitate its application by the Malaysian courts, which will no longer be bound by the restrictions imposed by Section 3 (1) of the Civil Law Act 1956.24 Thus, by incorporating this doctrine into the Malaysian statutory regime, its parameter will be clearly defined and no longer be restricted by the principle conferred in Section 3 (1) of the Civil Law Act 1956. 17 Ibid., See also case of Jackson v Corby (1979) 21 SASR 280 18 Ibid 19 Ibid., See also statement by Sri Ram JCA in Boustead case that the doctrine of promissory estoppel is no longer restricted to the defendant but also to the plaintiff to recourse it by having the right to initiate a claim. 20 Ibid 21 Ibid 22 Ibid 23 Ibid 24 Ibid
  • 14. 7 1.7 LITERATURE REVIEW 1.7.1 Conceptual Framework It is common knowledge and mutual understanding for legal practitioners to conceive that some arrangementsbetween two partieswill brought upon some sort of legal consequences onlyifthere is a contractual agreement between them, and concretely supported by consideration from the promisor.25 Furthermore, promissory estoppel is regularly claimed as some sort of defense mechanism in relation to contractual situation.26 The doctrine was designed in order to estop a person from changing or altering his earlier promises.27 Estoppel is a rule of evidence or rule of law, which prevents a person from denying the truth of a statement he made from denying facts he alleged to exist.28 However, without the element of consideration, the doctrine of promissory estoppel cannot be raised as a cause of action to enforce a gratuitous representation.29 This doctrine was first promulgated to prevent any occurrence of inequity or injustice caused by the action of the promisor in backing out from his promise, which had initially led the promise to act to his detriment.30 Many years have passed and this doctrine has experienced evolution and being applied flexibly than the time promulgated.31 The main focus now is the unconscionability in granting promissory estoppel, and the three common law countries mainly Australia, United Kingdom, and Malaysia are more than willing to do as equity demands.32 25 Margaret Halliwell, "Estoppel: unconscionability as a cause of action " Legal Stud. 15, no. 14 (1994). ; See also the Law Reform (Miscellaneous Provisions) Act 1989. 26 Ibid 27 Supra Note 2.; See the definition from, Martin (1986), 28 Ibid 29 Supra Note 16 30 Wan Izatul Asma Wan Talaat, "The Threats to the Limitations Outlining the Present Parameters of Promissory Estoppel: A Comparative Study," International Journal of Business and Social Science 3, no. 6 (2012). 31 Ibid 32 Ibid
  • 15. 8 The definition33 of promissory estoppel is then used in many later cases. It can be said that promissory estoppel, which falls under the category of estoppel by representation, is applicable when one party to a contract promises the other, either by words or conduct, that he will not enforce his right under the contract wholly or partially.34 If the other party relies on that promise, the person making the promise will be bound by it and he will not be allowed to sue under contract. Traditionally, there are five limitations35 to this doctrine, derived from the High Trees and Hughes case, (i) Promissory estoppel only operates as a shield and not as a sword, (ii) Pre-existing contractual relationship, (iii) Clear and unequivocal undertaking, (iv) Proof of detrimental reliance on the representation, (v) There shall only be a temporary suspension of contractual obligations and rights.These limitations36 previously helped to outline the parameters in applying this doctrine.37 In the present days, this doctrine is applied more flexibly than the time it was first promulgated in 1887 through the case of Hughes v Metropolitan Railway Co.38 and complemented through the Central London Property Trust Ltd v High Trees House Ltd.39 Even the casual observer of trends in estoppel jurisprudence may have noted that discussions of promissory estoppel have recently become less ubiquitous in reported decisions.40 This phenomenon has occurred against the backdrop of a proliferation of 33 Supra Note 2., See also Hughes v Metropolitan Railway Co. (1877) 2 AC 439 at page 498, “…It’s the first principle upon which all courts of equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results – certain penalties or legal forfeiture – afterwards by their consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealing which has thus taken place between the parties.” 34 Ibid 35 Supra Note 30 36 Ibid 37 Ibid 38 (1877) 2 AC 439 39 [1947] KB; Ibid Note 30 40 Dawson, T. Brettel. "Estoppel and Obligation: The Modern Role of Estoppel by Convention." (1989).
  • 16. 9 so-called 'equitable' and proprietary estoppels, and judicial and scholarly exasperation at the disorder into which estoppel issues generally appeared to have fallen.41 Putting the common law countries aside, by mid-nineteenth century, when the American law systems were having problems with civil cases involving reliance and unbargained-for promises, they started studying the concept of estoppel from the English law and imported the idea into their jurisdictions which enabled them to create a remedy that crystallized into the new doctrine of promissory estoppel.42 This is because the doctrine of promissory estoppel is essentially a flexible, equitable doctrine which lays out a general structure capable of being filled with its local content.43 The author of this article44 discusses on the 3 main problems in relation to the application of promissory estoppel. He had identified the three main problems as: (1) Promissory Estoppel cannot be used as the ground to create a cause of action (2) The statutory requirements where the agreement must be in writing, (3) where the problem lies on the jurisdictions itself.45 But, on the issue of the first limb, the author criticizes the approach made by the common law courts for one are denied from taking legal action on the ground of promissory estoppel. He is against the said approach and asked the courts to adopt the application of the doctrine of estoppel as in the United States of America. The English Law had developed beyond time, though since the doctrine of promissory estoppel are still under development and a flexible doctrine, that is why it is difficult to ascertain the requirements needed to exercise this doctrine in a more precise way.46 41 Ibid ; See eg P. S. Atiyah, 'Contract and Fair Exchange' (1985) 35 U Tor LJ 1; P. Finn, 'Equitable Estoppel' in Essays in Equity, P. Finn (ed) (1985) 42 Ngugi, Joel M. "Promissory Estoppel: The Life History of an Ideal Legal Transplant." University of Richmond Law Review 41, no. 2 (2007). 43 Supra Note 30 44 Hickling, Dr. M. A. "Labouring with Promissory Estoppel: A Well-Worked Doctrine Working Well?"17 (1983). 45 Ibid 46 Supra Note 42
  • 17. 10 In 1946, Lord Denning at that time had resurrected the doctrine of promissory estoppel into the common law.47 He uses language that if taken literally and out of context, it may be reviewed as supporting the view that the doctrine of estoppel could be used to create a legal relationship which was non-existent before.48 Thus, he spoke of a promise which was intended to create legal relations and to be binding, and insisted that it had to be honoured when the promisor knew that the promise was going to be acted upon by the person to whom it was made and it was in fact acted upon.49 The more accurate manner in formulating the effect of the doctrine of promissory estoppel is that one cannot take action for breach of promise even if the promise was without consideration, but he may be able to take legal action by using the promise as part of a cause of action.50 The doctrine has the effect of adding on the rights to one party and obligations to the other. So, to deny that estoppel can be used as a cause of action is no more than a matter of semantics.51 Based on the article,52 in the process of working on his hypothesis, the author discusses several landmark cases which entangle with the doctrine of promissory estoppel. The author successfully described the dictum of the Lords and the Judges in all the possible cases where in the end, the article able to raise the contrast and vanish of the doctrine‟s effect as a defence.The author had pinpointed the mistakes made by the judges regarding their discretionary power which failed to give a good dictum in cases such as the Pinnel's Case. The principle of promissory estoppel is described as, when one party to the contract agreed upon an agreement, without fresh consideration, and later refused to not invoke his part of the agreement, the principle of equity will be raised to in favour of the other 47 Supra Note 2 48 Ibid 49 Ibid, see also the case of Central London Property Trust Ltd. v. High Trees House Ltd. [1947] K.B. 13o, pp. 134, 136. 50 Supra Note 2 51 Ibid 52 Capper, David. "The Extinctive Effect of Promissory Estoppel."Common Law World Review(2008).
  • 18. 11 party.53 Nevertheless, the equitable rights are limited to certain conditions, mainly, (1) that the other party has altered his position, (2) that the promisor can recede from his promise by giving reasonable notice, which not necessarily a formal notice, giving the promisee a reasonable opportunity of resuming his previous position before the agreement occur, (3) the promise only becomes final and irrevocable if the promisee cannot resume his position…54 The author‟s formal conclusion agrees that per Denning J's judgment in High Trees is better understood as meaning that the original debt is discharged provided the conditions for promissory estoppel are satisfied.55 But the most important elements that need to be revived are reliance. Reliance is the basis for promissory estoppel. It is the debtor's reliance which creates the unfairness of the creditor going back on the promise to accept part payment.56 But there must be a real reliance and this cannot be where the debtor merely makes the part payment requested and does nothing more.57 Reliance also suggests another way of dealing with cases on the pre-existing duty rule and allows for this rule and the part payment rule to be dealt with in a similar way.58 The doctrine of promissory estoppel is treated as the cause of action.59 However, the main root problem of promissory estoppel is that the requirement of the element of consideration which means the requirement of a request by the promisor.60 The issue that arise is whether thedetriment which the promisee has suffered, but not at the request of the promisor, should be actionable, despite the doctrine of consideration and if so under what conditions.61 53 Ibid 54 Supra Note 44., See also the dictum by Lord Hodgson in the case of EA Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1326 PC 55 Ibid 56 Ibid 57 Ibid 58 Supra Note 44 59 E.K. Teh, "Promissory As a Sword," Anglo-American Law Review 13(1984). 60 Ibid 61 Ibid
  • 19. 12 Then the author62 stated three solutions to deal with the issue that arises from the doctrine of promissory estoppel. First, common law may be reformed from within, whereby, in developing this doctrine in United States for instances, they appear to escape from rigidity in application.63 Secondly, the doctrine of promissory estoppel may be turned as a sword.64 Thirdly, the suggested solution is that the doctrine of acquiescence may be extended.65 This doctrine will not only prevent him from going back on his promise but also permitting the promise to be enforced.66 The author in his article highlighted the possibility to use promissory estoppel as a sword. He stated that if the doctrine of promissory estoppel wants to be used as a sword, the requirement of existing contractual relationship should be abandoned. He is of the opinion that rather than the needs to fulfil the condition of an actual contractual relationship, it is more convenient to detach the doctrine from that condition in order to turn the doctrine from a defence, into a cause of action.67 1.7.2 Legal Framework England The Court in England follows the traditional requirement of having a pre-existing contractual relationship before a contract can be deemed legal.68 However, in 1968, the English courts broke the chain in the Fancy Goods case.69 The English court also departed from the third limitation which is the requirements of detrimental reliance, where the current inclination is holding towards unconscionability.70 For instance, in 62 Supra Note 42 63 Ibid 64 Ibid., Read also, in Hughes v Metropolitan Railway Co. (1877) 2 AC 439, though this doctrine of promissory estoppel applied in this case only acted as defensive, however it does not means that an action cannot be brought on a claim and that promised may be enforced. 65 Ibid., The promise given gratuitously but intended to be binding and intended to be acted upon by the promise with the acquiescence of promisor is binding on promisor. 66 Ibid 67 Ibid 68 Supra Note 30 69 Ibid 70 Ibid
  • 20. 13 the case of Instance SocieteItalo-BelgePour le Commerce etI‟Industries SA v Palm & Vegetable Oils (Malaysia) SdnBhd, (The Post Chaser).71 Australia Promissory Estoppel was accepted in Australia through Legione v Hateley.72 However only in Waltons Stores (Interstate) Ltd v Maher 73 that the Australian High Court made a major breakthrough and decided that promissory estoppel alone could be used as a cause of action against defendant even in the absence of any contractual relationship .74 Malaysia Malaysia also attempts to shrink the limitation of this doctrine in the case of Boustead Trading (1985) SdnBhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 where estoppel was considered as a doctrine of wide utility that must be resorted to in varying fact patterns to achieve justice.75 Gopal Sri Ram in this case stated that this doctrine should be flexibly applied and the judgment mustbased on the circumstances of each case.76 In comparing the position of promissory estoppels in England, Australia and Malaysia, it can be viewed that the application of this doctrine is more complicated in England because of the requirement of consideration and the judges in England also seen to be more concerned with certainty and security rather that good faith and fairness.77 The author also stated that, from the threat shown by the common law courts as discussed above, the traditional parameters of this doctrine is compromised and 71 Supra Note 30., [1982] 1 All E.R. 19. 72 Ibid.,[1983] 57 ALJR 152 CLR 406 73 Ibid.,(1988) 164 CLR 387 74 Ibid 75 Ibid 76 Ibid., Supra Note 2.; Also read, “The time has come for this court to recognize that the doctrine of estoppel is a flexible principle by which justice is done according to the circumstances of the case. It is a doctrine of wide utility and has been resort in varying fact patterns to achieve justice. Indeed, the circumstances in which the doctrine may operate are endless”- Per Gopal Sri Ram in Boustead Trading (1985) SdnBhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331. 77 Supra Note 30
  • 21. 14 departed from the traditional parameters through:78 (i) the use of promissory estoppels as a cause of action, (ii) The denying of the requirement for pre-existing contractual relationship, (iii) The dichotomy between detrimental reliance and unconscionability, (iv) Promissory estoppels can now be a permanent and extinctive doctrine.79 It was concluded that, the threats to the limitations of promissory estoppels may pose turbulence in contract law and open the flood gates in litigation. The attempts to depart from the five traditional limitationsset by the Hughes and the High Trees cases have caused the parameters of promissory estoppels to be no longer an establishment and well-settled area leaving behind the following questions80 : 1. Whether in the interest of equity and justice, promissory estoppel can also be used independently by a plaintiff as a cause of action? 2. Whether promissory estoppel can be granted to a plaintiff who has no pre- existing contractual relationship with the defendant? 3. Whether the proof of unconscionable conduct supersedes the proof for detriment suffered by the promisee as a result of reliance made on the promisor‟s representation? 4. Whether promissory estoppel can permanently extinguish the promisor‟s contractual rights? The continuous development of the doctrine of promissoryestoppel has affected the parameters and dimming the thin line surrounding its limitations.81 Since the requirements of a pre-existing contractual relationship has been denied, the application of this doctrine can be extended to gratuitous promise and go beyond the scope of contract law which is the original domain of this doctrine.82 This phenomenon 78 Ibid 79 Ibid 80 Ibid 81 Ibid 82 Ibid
  • 22. 15 consequentially affects the significance of the doctrine of accord and satisfaction and certainty that stand amongst the elements of a valid contract.83 This doctrine operates to permanently estop a representee from exercising his contractual rights and thus creates a redundancy to section 64 of Malaysian Contract Law 1950 where waiver, which has permanent effect, has been provided under this act.84 The author proposed for a statutory incorporation of the doctrine of Promissory Estoppel into Malaysian law due to the continuing evolution of this doctrine which seems to affect the present parameters.85 Once Promissory Estoppel has been enacted to Malaysian law, its parameters will be clearly defined.86 There are no specific provisions in England which resemble specific application of Promissory Estoppel except Section 21(1) of the Sale of Goods Act 1979.87 The statutory regimes in Australia clearly prohibit any conduct that is unconscionable, misleading and deceptive by giving remedial provision especially to the contracting parties such as in the Australia trade practices Act 1974.88 This equitable doctrine however, has been enacted as a statutory provision under Article 90 of the Second Restatement of Contract which facilitate its easier application by the courts.89 Incorporation of this doctrine in Malaysian legislation may be considered as constructive and is a beneficial contribution to the development of Malaysian law and provides more certainty in the litigation.90 83 Supra Note 30 84 Ibid 85 Supra Note 2 86 Ibid 87 Ibid Note 30 88 Ibid 89 Ibid 90 Ibid
  • 23. 16 There are also some courts that affirm the use of the doctrine of promissory estoppel in circumstances where the promisee rely on the promise made, and it is the promisor‟s duty to not cause any injurious reliance when it is reasonably foreseeable by the promisor that the promisee does rely on the promise.91 The courts do not offer a rigid and mechanical relief to the innocent parties regarding promissory estoppel.92 The remedies given are usually based on previous precedent and the courts uses a case-to- case basis in determining the appropriate relief for the innocent, taking into account the elements of good faith, conscience, and justice.93 Promissory Estoppel is a defense for debtors because of the acts of reliance that are only explicable in terms of the creditor's promise that part payment will do.94 The mere payment of part of a debt indisputably due to the creditor cannot possibly be an act of reliance by itself, promissory estoppel cannot extinguish a debt through mere part payment.95 The doctrine of promissory estoppel continue to develop and some of the courts expanded the use of the doctrine by enforcing the promises given, which otherwise defective contracts and promises made during the course of preliminary negotiations.96 By doing this, the courts use promissory estoppel to provide a remedy for reliance upon offers before acceptance.97 In Illinois, it is sufficient to deem the promise enforceable as long as the promisee proved that he did relied on the promise made by the promisor even though there is no consideration present at the time the promise was made.98 In other words, the 91 Richmond, Collin F. “Promissory Estoppel- Only a Shield, Not a Sword?: Analysis of Dewitt V. Fleming, 828 N.E.2d 756 (III. App. 5th 2005).” (2005). 92 Supra Note 91 93 Ibid 94 Capper, David. "The Extinctive Effect of Promissory Estoppel."Common Law World Review (2008); per Lord Denning in Foakes v Beer (1884) 9 App Cas 605, HL. 95 Ibid 96 Supra Note 44 97 Ibid 98 Supra note 91
  • 24. 17 promisee‟s foreseeable reliance is an effective substitute for consideration.99 However, the doctrine of promissory estoppel will not prevail the statute of Frauds under Illinois jurisdiction.100 In Texas, the doctrine of promissory estoppel has been used diversely as the substitute for the consideration, where, the doctrine can be used as a defensive plea to prevent the promisor from escaping liability for not enforcing the promise that is absence from the element of consideration.101 Promissory Estoppel emerged originally as an extension of the equitable concept of estoppel.102 The first thing that the courts will consider in applying the doctrine is the conventional theories of consideration in enforcing the promise as a contract.103 If there is no quid pro quo evidence, the courts will, in certain circumstances enforced the promise by taking into consideration the theory that there had been detrimental reliance and, if the enforcement is denied, that will lead to injustice.104 Besides as the substitute in the absence of consideration, the courts of Texas also used the doctrine of Promissory Estoppel as the defensive plea, a defence that can be raised by the promisee.105 Thus, if A promises B that he will perform a certain act and B changes his position in reliance on this promise, A will not be allowed to raise certain defences that otherwise might have been available to him.106 B, will be allowed to claim promissory estoppel as a rebuttal to A‟s defensive pleas.107 The author in this article108 have concluded that the doctrine of promissory estoppel in Texas has at least been applied in 3 major circumstances mainly: (1) as a substitute to 99 Ibid 100 Ibid 101 Wright, Robert Lee. "Promissory Estoppel Marches on- Mooreburger." (1976). 102 Ibid 103 Ibid 104 Supra Note 101 105 Supra note 44 106 Ibid 107 Ibid 108 Ibid
  • 25. 18 consideration, (2) it may also be used where there is consideration present, but the contract terms are vague and indefinite to be enforced, and (3) as a means in satisfying the Statute of Frauds.109 There is still no confirmation on to what extent the doctrine of promissory estoppel can be manipulated and applied within the judgments by the future courts since the end is still open.110 From what can be seen, the trend is indicating that the doctrine is widening for the better and for substantial justice.111 1.8 CONCLUSION Throughout the discussion above, we can clearly see that the doctrine of promissory estoppel does not have a concrete foundation in terms of its application. The judgment of a judge with regards to promissory estoppel differs between each other. Even the requirements for a valid ground of promissory estoppel also vary in each case. As such in Malaysia, the judges are still having problems with regards to making decision for promissory estoppel. There is no solid guidance that can be used as the guidelines to help the judges in their decision-making. Thus, Malaysia is in need of having the doctrine of promissory estoppel legislated as one of the provision in the statute. By having the doctrine legislated, it can help the judges in coming to their decision clearly and unequivocally. 109 Ibid 110 Ibid 111 Ibid
  • 26. 19 CHAPTER TWO THE NEED OF PROMISSORY ESTOPPEL IN MALAYSIA 2.1 Introduction In common law countries, the doctrine of promissory estoppel can only be used as a defence mechanism to shield the innocent parties to a contract from an act of injustice. However, when it comes to initiating a legal action, any contracting parties are seemingly unable to raise the grounds of promissory estoppel as the cause of action. The question that lingers in the minds of the injured parties will be how can we start an action and fight for justice if the ground is not acceptable? 2.2 Development of Promissory Estoppel Promissory estoppels is an equitable principle meant to prevent any occurrence of inequity or injustice caused by the action of the promisor in backing out from his promise, which had initially led the promise to act to his detriment.112 This doctrine was created to meet a perceived problem in the extant legal doctrines.113 2.2.1 United State of America In having the promissory to be applied in the early stage, the most related principle is the doctrine of consideration which means, all promises in which the promisor did not specifically bargain for a return promise or performance that it left unenforced even if the promisee had suffered substantial detriment as a result of the promisee reliance on the promise made by promisor earlier.114 112 Supra Note 16 113 Professor Alan Watson argues that transplants are the main source of legal change. See Alan Watson, Legal Transplants: An Approach To Comparative Law, 95 (1974). Lawyers prefer to imitate laws and principles from other jurisdictions rather than react directly to solve societal problems with an “original” rule or principle.See id. at 99. 114 See Charles L. Knapp, Rescuing Reliance: The Perils of Promissory Estoppel, 49 Hastings L.J. 1191, 1196 (1998).
  • 27. 20 From this, it had extracted out the unfairness on promises made by the promisor which resulted will made any person who relied on that promise to suffer loss and grief.115 The evolution to the bargain theory before this stated that, consideration was mainly defined only in terms of benefit to the promisor or detriment to the promisee.116 It is enough that something is promised, done, forborne, or suffered by the party to whom the promise is made as consideration for the promise made to him.”117 The definition of consideration supplied by the English Exchequer Chamber in Currie v. Misa118 in 1875: “consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other.‟”119 By this definition, it means that a plaintiff needs to prove only one element in order to succeed on a contract theory whether a benefit to the defendant or a detriment to the plaintiff. Furthermore, the benefit or the detriment must have been conferred, or suffered as the case may be, as an inducement for the promise.120 The promise must as well be made and accepted as the conventional motive or inducement for furnishing the consideration.121 It was then sparked a clear principle of estoppels which means a bar that prevents one from asserting 115 Ibid 116 Hamer, 27 N.E. at 257 (quoting William R. Anson, Principles of the English Law of Contract and of Agency in its Relation to Contract 63 (Jerome C. Knowlton ed., 2d American ed. Chicago, Callaghan and Co. 1887)). 117 Ibid 118 10 L.R. Exch. 153 (1875). 119 Hamer, 27 N.E. at 257 (quoting Currie, 10 L.R. Exch. at 162). 120 In 1896, Professor Reuben Benjamin defined consideration in the following words: “When, at the desire of the promisor, the promisee, or any other person on his behalf, confers or promises to confer any benefit upon the promisor, or incurs or promises to incur any detriment, and such benefit, detriment, or promise is the inducement of the promisor‟s promise, it is a sufficient consideration for the promise.” Reuben M. Benjamin, The General Principles of the American Law of Contract 21 (Indianapolis and Kansas City, Bowen-Merrill Co. 1889) (citations omitted). 121 Oliver Wendell Holmes, The Common Law, 289–94 (48th prtg.Boston, Little, Brown and Co. 1923) (1881).
  • 28. 21 a claim or right that contradicts what one has said or done before, or what has been legally established as true. Williston therefore suggested section 90 of the First Restatement but he was fastidiously refusing calling it an “estoppel.”122 However, as he had admitted, “there was a binding thread in all the classes of cases namely, the justifiable reliance of the promisee.”123 Why he formally avoided using the terminology “estoppel” is because he perceived it to be too elastic.124 He also found the thread that linked the variety of non-bargain cases was the justifiable reliance of the promise and he also brought those cases within the jurisprudence of the dominant type of estoppels which is estoppels in pais.125 The basis of estoppel in pais was that the person who received a representation reasonably and justifiably “acted on the representation” to her detriment.126 This essential requirement of the estoppel in the language that the person who receives the representation “must be prejudicially affected by the action he has taken.”127 In the case of Greiner v. Greiner,128 a mother promised to convey a tract of land to her son if the son moved from one county, where he was then residing, to another, where the rest of the family lived.129 Following the promise, the son gave up his homestead in the one county and moved to the other county, relying 122 For the controversy of whether Williston had initially decided to completely exclude unbargained-for but relied on promises from inclusion in the First Restatement, but acquiesced when he was confronted by Arthur Corbin with a pile of cases demonstrating the point. 123 A.L.I. Commentaries 124 William Shakespeare, Romeo and Juliet act 2, sc. 2. 125 An estoppel in pais refers to an estoppel which does not spring from a record, or a deed. It is made to appear to the jury by competent evidence. By an estoppel in pais a party is prevented by his/or her own conduct from obtaining the enforcement of a right which would operate to the detriment of another who justifiably relied on such conduct. Courts adopt estoppel in pais when a contradictory stance stands unfair to another person who relied on the original position. 126 See Bigelow, The Principles of Estoppel: An Essay 78,82 (London, W. Maxwell & Son 1888). 127 Ibid 128 293 P. 759 (Kan. 1930). 129 Ibid
  • 29. 22 on his mother‟s promise to convey the land to him.130 The son set up his new homestead in the eighty-acre tract of land identified by the mother, made valuable improvements thereon, and lived there for nearly one year.131 When his mother sought to evict him from the land and recover possession of the eighty-acre tract of land, the Supreme Court of Kansas held that the son was entitled to continued possession and deed.132 The Supreme Court of Kansas decided the case on a theory of promissory estoppel, and explicitly relied on section 90 of the draft of the First Restatement for support.133 Then, Williston‟s formulation of section 90 of the First Restatement ended up unintentionally lead towards the fusing of estoppel into one area of law in the United States. 134 This fusion was brought about since under the new promissory estoppel doctrine, all representations which were justifiably relied upon could be used as the basis of a cause of action.135 Williston invented section 90 precisely because he wanted to limit the spread of such cases that were decided on non-bargain basis. Thus, the principle estoppels meant by “equitable estoppel” was “estoppel in pais,” and the two terms were used interchangeably.136 It was also known as “estoppel by conduct” or, at times, as “estoppel by representation.”137 Even though Williston was mistaken that justifiable reliance had been used as a basis for contractual relief, he was not entirely mistaken. He derived this belief from the then existing conceptualization of estoppel by misrepresentation.138 130 Ibid 131 Ibid 132 Ibid 133 Ibid 134 This fusion has, in part, provided inspiration for English law to achieve the same fusion. Australia followed the U.S. lead in this regard. See Waltons Stores (Interstate) Ltd. v. Maher, 1988, 164 C.L.R. 387 [38]. 135 See Restatement (First) of Contracts S. 90 (1932) 136 See, e.g., Lloyd Pospishil, Equitable Estoppel, 19 Neb. L. Bull. 222, 22728 (1940); Teeven, 137 See, e.g., Cooke, Charles L.O. Edwards, Note, Equitable Estoppel Estoppel by Representation, 12 Or. L. Rev. 316, 317 (1933). 138 Ibid
  • 30. 23 By the existing jurisprudence of reliance-based estoppel, Williston was right in concluding that the doctrine could not be used to protect a party which could otherwise have protected itself by contract.139 The creation of estoppel was never meant to protect the indolent or the incompetent.140 Thus, if a party could have protected itself by a contract, estoppel would not be used to protect her. 141 2.2.2 England Since the mid-nineteenth century, English law had been categorical that the “doctrine of estoppel does not apply to a case where the representation is not a representation of a fact, but a statement of something which the party intends or does not intend to do.”142 This was emphatically stated by the House of Lords in Jorden v. Money.143 As the professor Elizabeth Cooke noted, the effect of the decision in Jorden ensured that the doctrine of estoppel could not form a general principle of reliance-based promise enforcement.144 Thus the reliance- based estoppel began with roots in the rather formal estoppel in pais. This is stated in the case of Hammersley v. De Biel.145 In this case, the plaintiff sought to enforce a promise by his father-in-law to make a marriage settlement in reliance on which the plaintiff married.146 No cause of action could lie in contract since, clearly, there was no consideration for the promise.147 Nonetheless, the House of Lords held the father-in-law‟s estate liable to pay the amount promised by the father-in-law.148 Lord Campbell cited with approval Lord Cottenham, who heard the case at first instance, in laying out what is, perhaps, the broadest statement of promissory estoppel in England 139 Bigelow, LancelotFeilding Everest, The Law of Estoppel 279 (3d ed. 1923). 140 Ibid 141 See Metzger & Phillips, (“[P]romisees who relied without the protection of an enforceable bargain might have been deemed morally unworthy of recompense due to their foolishness.”). 142 Jorden, 5 H.L.C. at 214 15, 10 Eng. Rep. at 882. 143 (1854) 5 HLC 185 144 Supra Note 137 145 (1845) 12 Cl& F 45 146 See 12 Cl& Fin. 45, 45 , 47, 8 Eng. Rep. 1312, 1313 (H.L. 1845). 147 See ibid. at 65, 66, 8 Eng. Rep. at 1322 (Brougham, L., concurring). 148 Ibid. at 61, 8 Eng. Rep. at 1320.
  • 31. 24 to date: “A representation made by one party for the purpose of influencing the conduct of another, and acted on by him, will in general be sufficient to entitle him to the assistance of a Court of Equity, for the purpose of realising such representation.”149 Hammersley, then, stood for the then remarkable proposition that equity would enforce all representations, including representations of intention, if such representations were made for the purpose of influencing the conduct of another person, who then acted in reliance on such representations.150 Thus the House of Lords further limited the utility of reliance-based estoppel in England in 1891 in the case of Low v. Bouverie.151 In this case, the House of Lords categorically ruled that estoppel is only a rule of evidence and cannot found an action. The decision in Low that estoppel was not a cause of action but could only prevent rights from being enforced when it was inequitable to do so have ensured that estoppel emerged from the nineteenth century as a rather mild doctrine. It was now only a defence mechanism: a shield, never a sword.152 With the reliance-based estoppel so consigned as a rule of evidence and a point of pleading, the doctrine of consideration emerged as the sole test of contractual obligations under English law.153 One form of reliance-based estoppel, however, continued to thrive in England throughout this period of decline which is named as proprietary estoppel. The well-known proprietary case in England is Dillwyn v. Llewelyn.154 In this case, a father “gave” land to his son, the plaintiff.155 No formal conveyance was 149 Ibid. at 88, 8 Eng. Rep. at 1331. 150 For other cases in this line of reasoning see Loffus v. Maw, 3 Giff. 592, 66 Eng. Rep. 59 (V.C. 1862),Piggot v. Stratton, 1 De G.F. & J. 33, 45 Eng. Rep. 271 (Ch. 1859), and Prole v. Soady, 2 Giff. 1, 66 Eng. Rep. 1 (V.C. 1859). 151 [1891] 3 Ch. 82 (C.A.). 152 See, e.g., Combe v. Combe, [1951] 2 K.B. 215, 219 153 Supra Note 139 154 De G.F. & J. 517, 45 Eng. Rep. 1285 (Ch. 1862) 155 See id. at 520, 45 Eng. Rep. at 1286
  • 32. 25 ever made, however, so the gift was not perfected.156 Nonetheless, with the assent of the father, the son proceeded to build a home on the land.157 On the death of the father, the son sought a declaration that he was entitled to the land in the face of a will granting the land to other members of the family.158 The court gave the son the right to call for a proper conveyance159 Lord Chancellor Westbury held that while a voluntary agreement to make a gift was not enforceable in equity for lack of consideration, where the donee had, with the knowledge of the promisor, expended money on the land, the donee acquired an interest in the land because the donee had acquired a reasonable expectation in the land.160 Hence, in England, the doctrine of proprietary estoppel survived the period in the 19th century when consideration was expanded and other reliance-based estoppels were limited. Aside from this doctrine of proprietary estoppel, in the late nineteenth century, the growth of commerce and the need for more certainty and flexibility in business necessitated a judicial revision of the restriction of the reliance-based estoppel.161 This relaxation came slowly and haltingly in the two cases of Hughes v. Metropolitan Railway Co.162 and Birmingham & District Land Co. v. London & North Western Railway Co.,163 decided in 1877 and 1888 respectively. Eleven years later, in Birmingham and District Land Co., the Court of Appeal endorsed and extended the doctrine of “equitable estoppel” enunciated in Hughes.164 156 Ibid 157 Ibid 158 Ibid 159 Ibid 160 Supra Note 16 161 Supra Note 113 162 Ibid.,[1877] 2 A.C. 439 (H.L.). 163 Ibid.,40 Ch. D. 268 (C.A. 1888). 164 Ibid
  • 33. 26 It should be clear that what is in operation here is a form of the doctrine that the American lawyer would easily identify as “promissory estoppel.”165 It should again be clear that this doctrine closely resembles the reliance-based estoppel enunciated by Lord Cotenham in Hammersley.166 It should be noted, however, that as the doctrine re-emerges in England in the second half of the nineteenth century in Hughes and Birmingham & District Land Co,167 it has been significantly emasculated.168 Two important conclusions can be drawn from this short history of reliance- based estoppel in England. The first point to note is that though reliance-based estoppel first emerged as a generalized estoppel with offensive capacity, it was soon blunted by the emerging force of contract law‟s doctrine of consideration. One, Jorden held that for an estoppel to arise there had to be a representation of fact, as opposed to a representation of future intention. Two, Low held that an estoppel does not create a cause of action but is merely a rule of evidence. Nonetheless, the “new” doctrine in Hughes somewhat revitalized this reliance- based estoppel. Under Hughes, parties who were already in a contractual relationship could, at least, set up an estoppel to prevent the other party from going back on their word, and thereby succeed in a cause of action based on the existing contract. The effect of these developments was that during the period when the legislator was writing the First Restatement in the United States, English law had already found two related, but distinct, doctrines alleviate the problems caused by the rigidity of the doctrine of consideration. These are the Hughes doctrine and the doctrine of proprietary estoppel. The basic principle espoused in these two doctrines is the same one adopted in the doctrine of promissory estoppel as it developed in the United States. 165 Supra Note 113 166 Ibid., [1947] K.B. 130 (1946). 167 Ibid., (1889) LR 40 Ch D 268 168 Ibid
  • 34. 27 Since Justice Denning gave his judgment in the High Trees169 Case in 1947, at least fifteen years after the First Restatement was adopted, we can only assume that he knew about the American development. It has been suggested by some commentators that this was Denning‟s ultimate goal or wish but that he felt hamstrung by the authorities. If one begins with the categorical statement of the law enunciated by the Privy Council in Ajayi v. R.T. Briscoe (Nigeria) Ltd,170 one might conclude that the American developments of the doctrine of promissory estoppel have had little effect in influencing English law. This doctrinal position, however, masks some nuanced changes to the English doctrine of promissory estoppel as it developed, or at least the legal discourse about it. 2.2.3 Australia Paul Key, one of the Australia solicitors has drawn attention to two decisions of the High Court of Australia (Waltons Stores (Interstate) Ltd v Maher171 and Commonwealth of Australia v Verwayen172 which he describes as a fundamental attack on the traditional perception of estoppel as a complete defence.173 These Australian cases have been cited in a number of other English cases.174 English legal commentators have also drawn inspiration from the 169 [1947] K.B. 130 (1946) 170 [1964] 3 All ER 556 171 (1988) 164 CLR 387 172 (1990) 170 CLR 394) 173 Gordon Derby, [2001] EWCA (Civ) 369, (citations omitted); see also Nat‟l Westminster Bank PLC v. Somer Int‟l (UK) Ltd., [2001] EWCA (Civ) 970, [2002] 3 W.L.R. 64 (Potter, L.J.). 174 See, e.g., Petromec Inc. v. PetroleoBrasileiro S.A. Petrobras, [2004] EWHC (Comm) 127; Brennan v. Bolt Burdon [2003] EWHC (QB) 2493; Actionstrength Ltd. v. Int‟l Glass Eng‟g, [2003] UKHL 17, [2003] 2 W.L.R. 1060; In re Goldcorp Exch. Ltd. [1994] 3 W.L.R. 199.
  • 35. 28 Australian developments to urge English courts to “unify” estoppel into a single doctrine with offensive.175 He interprets the Waltons Stores doctrine as “perhaps more likely than the American doctrine to be influential in England since the Australian and English judicial styles of argument and analysis are closer to each other than either is to the American.” 176 2.3 Limitations to the doctrine of Promissory Estoppel As if it is a tradition, an equitable doctrine of promissory estoppel had its limitation in many areas. This however, helps in determining to what extent is the problem at hand. Accordingly, there are five common limitations of promissory estoppel,177 which are: 1. The doctrine of promissory estoppel is limitedly used only as a defense for the innocent party, and they are unable to create legal action against another on the ground of the doctrine since the court does not recognize promissory estoppels as a cause of action.178 2. There is a need for a contractual agreement between both parties before either of them can invoke the doctrine of promissory estoppels which means that the doctrine is limited only for cases where the contractual relationship exist beforehand.179 175 Supra Note 174 176 Ibid 177 Supra Note 2 178 Ibid 179 Ibid
  • 36. 29 3. The court is strict in determining whether the promise was made in a precise and unambiguous manner, regardless of whether the promise is expressly made or not.180 4. The requirement for the innocent party to prove that by relying on the promise, the said party incurred losses due to the fact that the breaching party had turned back on their promise. The court will scrutinize the “injury” incurred by the innocent party until proven that there is a possible detriment due to the reliance made.181 5. Adopting the principle of executory promise, the doctrine limits the representation and promises to only relate towards past or present events whereby any future events, those promises are excluded in accordance to the doctrine. This brings us to the temporary suspension of contractual obligations and rights.182 2.4 The Development and the Drawback of Promissory Estoppel in Malaysia In Malaysia, the doctrine of promissory estoppel is developing regularly. Since the doctrine is deemed as flexible in a way, the judgment also varies in accordance with the conscience of the judge. Taking into example the judgment by the Federal Court of Malaysia upon the landmark case of Boustead Trading SdnBhd v Arab-Malaysia Merchant Bank Ltd183 , as per Gopal Sri Ram JCA in his judgment: “The time has come for this court to recognize that the doctrine of estoppel is a flexible principle by which justice is done according to the circumstances of the case. It is a doctrine of wide utility and has been 180 Ibid 181 Ibid 182 Ibid 183 [1995] 3 MLJ 331
  • 37. 30 resorted to in varying fact patterns to achieve justice. Indeed, the circumstances in which the doctrine may operate are endless.”184 In the said case, the judges saw no point of denying the equitable right of the plaintiff who raised the defence of promissory estoppel as a cause of action to which the right may be lost to him if ever the defendant plea in court.185 They are of the opinion that the doctrine itself is flexible in a way that it creates the opportunity for an open ending, meaning that, the judges themselves may decide their judgments according to the circumstances of each cases, which may vary from one case to another.186 Another case is Tang Heng Hua v. Tanah Manis Realty Sdn. Bhd (No. Syarikat : 15107-V)187 ,where in this case,the Respondent is the registered proprietor of a piece of land where a bungalow was erected thereon bearing postal address No. 99, Jalan Tanjung Tokong, Penang. The Appellant has been in occupation of the said land as a tenant since 1987. The last tenancy agreement entered into between the parties was the Tenancy Agreement dated 11.1.1999 which was for a fixed period of two years commencing on 1.7.1998 and expiring on 30.6.2000. The monthly rental was RM 1,800.00. The Appellant apparently had used the part of the land to carry out business as used car dealer and car bodywork and repair workshop as well as dealing in auto accessories. The Appellant had carried out structural renovation works on the Property. The Respondent later in time had served Notice to Quit to the Appellant and asked to deliver vacant possession of the land, to which the latter had failed to comply with the instruction and refused to deliver vacant possession of the said land. So, one of the issues in dispute was whether the Appellant has acquired an equity to estop the Respondent from gaining vacant possession. The High Court of Penang decided in favour of the Respondent and upheld the judgment of the trial court. The judges 184 Supra Note 181.,pg 344 185 Matta, Ali Mohammad. "Promissory Estoppel: Does Malaysia Need This Doctrine?".Malayan Law Journal Articles 6 (2006). 186 Ibid 187 [2010] MLJU 1346
  • 38. 31 proceed with the judgment and applying the principle of equity where “those who comes to equity must come with clean hands”, to where the appellant was proven to come to court with tainted hands where he had acted in an illegal and contumelious manner. The appellant failed to estop the respondent from gaining his vacant possession of the said premises. It can be seen based on the case above where the court adopted the maxim of equity, “those who comes to equity must come with clean hands”, meaning, the party who seeks for justice from the court must come in good faith and with no ill-mannered intention. We can see that the appellant‟s defence of equitable estoppel backfired when the judges in this case adopted the maxim, in favour of the respondent. This justifies the earlier statement where the doctrine of promissory estoppel can be exercised widely where the judgments may vary from one judge to another, in accordance with the circumstances of the case. Hence, the findings from this research would justify that Malaysia needs the doctrine of promissory estoppel to be legislated into the Malaysian Law in order to create certainties in litigation with regards to the application of promissory estoppel. It is because, despite all the positive growth in the application of the doctrine by the judiciary branch, there is still a lot of reluctance experienced by some of the Malaysian judges to give judgment in favour of promissory estoppel. They need to determine that all the elements of promissory estoppel have been fulfilled completely before they can give judgments. This is where the problem arises. Without legislating promissory estoppel as one of the provision imprinted inside the Malaysian Law, the judges will be hindered from identifying the true elements of the promissory estoppel. Does the element of consideration essential in the matter of promissory estoppel? Shall there be some form of reliance that the innocent parties need to prove in order to succeed in their claim? All sorts of questions will arise in court and since the doctrine of promissory estoppel is merely an ideology that had been accepted and applied in most of the Common Law countries, there are many versions of interpretations of the doctrine of promissory estoppel. Judges in some countries which adopted promissory
  • 39. 32 estoppel sees no great importancein the element of detrimental reliance whereas some other countries considered detrimental reliance or other form of reliance as the most essential element in raising the defence of promissory estoppel. Thus, we can see that it is hard for the courts in Malaysia to apply specifically to thedefence of Promissory Estoppel itself as the shield to injustice act. The reluctance of the judges to exercise the doctrine of Promissory Estoppel as the specific defence contributes to the lack of relevant cases reported and brought upon the court. In the case of Kinta Medical Centre v Foo Yet Kai Foundation &Anor188 , it was held that the plaintiff‟s claim upon the first defendant had been dismissed by the court since they considers that there was no actual assurance made by the first defendant to the plaintiff to rely upon. In this case, we can see that in Malaysia, the courts still require the presence of consideration or assurance for the defence of promissory estoppel to succeed. They analysed critically to what extent the form of consideration or assurance had been given to the innocent parties that leads them to put their reliance to the promise made by the promisor. This had become problems to the innocent parties since there is no yardstick to determine which word is considered as the most probable to show the assurance or consideration of the promise. If the judges are still strict on evaluating the level of assurance, then it will be difficult for the innocent parties, and their rights may not be upheld. This case had supported the statement above where it had been previously stated that one of the common limitation of the doctrine of promissory estoppel is that the court is strict in determining whether the promise was made in a precise and unambiguous manner, regardless of whether the promise is expressly made or not. There is also limitation regarding the persistent of the court in scrutinizing whether the innocent party had incurred detrimental reliance which reduced the party into pecuniary losses. 188 [1997] MLJU 258
  • 40. 33 2.5 The Next Step towards Certainty in Legal Process What Malaysian Law need right now is an implimentation of a clause or a section regarding the doctrine of promissory estoppel in the Malaysia Contracts Act 1960. By legislating the doctrine of promissory estoppel into the Contracts Act 1960, the doctrine will no longer only be an ideology, but it can proudly stand on its own and made itself as a composed and useful doctrine. For example, the United States of America has adopted the doctrine of promissory estoppel and legislated the certain doctrine into their legislation, specifically, under Article 90 of the Second Restatement of Contract.189 Three reasons can be deduced on why Malaysia needs to legislate promissory estoppel 190 which are, (1) the continuous development and evolution of the promissory estoppels in Common Law such as in England, Australia, India, or even Malaysia has led to the vagueness of the parameters of the application of the doctrine.191 Whose judgments shall be followed? Which court has more logical decision regarding promissory estoppels? Those are some questions commonly asked in determining the decision of promissory estoppels in court since there is an absence of clear and unequivocal parameters that can set up the actual area of promissory estoppels in the countries. By having the promissory estoppels legislated, this act can lead to a more certainty in litigation and facilitate the Malaysian Court in their judgments. (2) Since long ago, the doctrine of promissory estoppels are deemed as an equitable doctrine which follows the rules of equity as the source of reference.192 As an equitable doctrine, promissory estoppels cannot be interpreted freely by the Malaysian courts. This rendered difficulty to the Malaysian judges since the rules of equity make the doctrine becomes more rigid and create a certain restrictive barrier during the judgments to where the case can only be solved with the adoption of the maxims of 189 Supra Note 2 190 Ibid 191 Ibid 192 Ibid
  • 41. 34 equity.(3) Another reason for the legislation of promissory estoppel into the Malaysian Law is in connection with the implimentation of Section 3(1) of the Civil Law Act which provides that the principles of equity can only be applied when there is a lacunae in the Malaysian Law and it is suitable with the local circumstances.193 Regarding this matter, the application of promissory estoppel is being limited to only if there is a loophole or a need of equity in the Malaysian Law. The question that arises is on whether there is a lacunae in the Malaysian Law regarding the defence of promissory estoppel? Accordingly, in the Malaysia Contracts Act 1960, a certain section, specifically section 64194 provides the almost similar principle in nature as promissory estoppel. The only difference is that section 64 which statutorily provides for the wavering of contract, involves an actual contractual agreement, and not only by the promise. Therefore, both the general provision of Section 3(1) of the Civil Law Act 1956 and Section 64 of the Contracts Act 1950 had led to the creation of restrictions towards the reception of Promissory Estoppels in Malaysia. The provisions had restricted the doctrine of Promissory Estoppel in the manners that the doctrine can only be applied when there is no written law in Malaysia, which unfortunately to us, there is written law of the same effect (S.64), when the circumstances of the States of Malaysia and their respective inhabitants permits, and only when the local circumstances rendered the doctrine to be necessary. The bright side of having a statutory provision with regards to promissory estoppel is that, it would assist in determining the actual parameters of the doctrine, which would eventually lead to the certainty in the Malaysian litigation. Another positive effect of the legislation of promissory estoppels is that it would help in the exercised of the 193 Note 2 194 Section 64 of Contracts Act 1950. “Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.”
  • 42. 35 doctrine by the Malaysian courts which will no longer be restricted by the rigidity of the rules of equity or to be limited by Section 3(1) of the Civil Law Act 1956.195 2.6 Conclusion The doctrine of promissory estoppel has been confronted with a lot of issues that until this moment of time, there is still no certainty of the application of the doctrine in the Malaysian Law. The country is in need of further implementation of the promissory estoppel into a more composed and concrete form which can give the guidance to the judges in their judgment. We should observe the determination of the Australia‟s Court in exercising and applying the doctrine of promissory estoppel into the domestic laws which evolves rapidly day by day. Bearing in mind that, the doctrine is speedily developing in the said country, and the judges are more than willing to analyse the promissory estoppel and applied the doctrine not only as the defence for the innocent parties, but also as a cause of action. Taking into the example also, the brilliant act done by the United States of America in legislating the promissory estoppel into their domestic law which helps a lot by providing certainties in their litigation process as well as eliminating all the vagueness in the application of the doctrine itself. Thus, in order for the law in Malaysia to evolve into a more efficient legislation and in order to overcome the problems regarding promissory estoppel, the above needs have to be fulfilled. 195 Supra note 2
  • 43. 36 CHAPTER THREE THE APPLICATION OF PROMISSORY ESTOPPEL IN AUSTRALIA AND UNITED STATES OF AMERICA 3.0 Introduction This chapter will examine the law of promissory estoppel as applied in Australia and United States of America. Both countries conclusively applied this doctrine since ages. And we will expose certain aspects such as elements, cases, problems which become the fundamental issue in the process of creating, constructing and amending the law. 3.1 The application of Promissory Estoppel in Australia According to Australian perspective, Promissory Estoppel should not be used as a sword but also shield. The Australian court adopted this principle and escaped from the restricted traditional view which limiting the application of Promissory Estoppel only as a defence.The traditional view of the application of promissory estoppel is reflected in Hughes v Metropolitan Railway Co196 whereby the court is reluctant to allow Promissory Estoppel as cause of action. This traditional view is also followed in the decision in the case of Perpetual Trustee Co Ltd v Pacific Coal Co pty Ltd197 , which stated that estoppels could only be relied defensively as a shield and not as a sword. Thus, it can be seen that Australian court has made a big change in the law in respect of promissory estoppel by using it not only as a shield or defence, but also as a sword or cause of action in court. The application of promissory estoppels as both shield and 196 Hughes v Metropolitan Railway LR 2 App Cas 439 (1876-77) 197 55 SR (NSW) 495 (1953)
  • 44. 37 sword can be seen in the case of Waltons Stores v Maher198 whereby the court in this case establishes the application of promissory estoppels as both shield and sword. The court in this case stated that promissory estoppels can be used as a cause of action in four situations.199 1. Promisor makes a promise 2. When a promisor creates or encourages an assumption that a contract will come into existence or a promise will be performed 3. When the promisee relies on the representation to his detriment 4. It is an unconscionable conduct of the promisor to ignore the promise he has made.200 If the plaintiff able to fulfill all this elements, he should succeed to raise his action in court by using promissory estoppel as his cause of action.Thus, it can be conclude that promissory estoppel will only come to the relief of a plaintiff who has acted to his detriment by assuming there is a contract between both parties and it is unconscionable for the other party to ignore the assumption. According to Brennan J in the same case201 , in order to establish equitable estoppels, there are six elements which must be met202 . 1. Plaintiff has assumed an expected that a legal relationship exists between both parties 2. It is the defendant whom induced plaintiff to assume there is a legal relationship between them 3. The plaintiff act as what he relies on the assumption 4. The defendant knew or intended him to do so 5. The plaintiff‟s act or omission will cause him to his detriment if the assumption is not fulfilled 198 (1988) 164 CLR 387 199 See in Waltons Stores v Maher (1988) 164 CLR 387 200 Ibid 201 Ibid 202 Ibid
  • 45. 38 6. The defendant has failed to fulfill the plaintiff‟s assumption and caused the plaintiff to act to his detriment.203 Deanne J, giving his judgement in this case by saying that, the principle of estoppels works by preventing a person from departing from his promise of an existing future fact and knowingly that his act will cause the other party whom relies to his promise to act to his detriment.204 So far, the doctrine prevents a departure from representation of a person in a pre-existing contractual relationship, and he will have to perform as what he had promised. This principle is also illustrated in a recent case of Saleh v Romanous205 which concerned about the sale of 163 Kissing Point Road206 . The appellants, Michael and Rose Saleh owned 163 Kissing Point Road. Meanwhile, Michael‟s brother, Edmund owned 165 Kissing Point Road, Dundas. The Salehs were then obtained consent for the development of eight strata titled two storey townhouses on the two properties. A contract was entered between the Salehs and the Romanous for the selling of 163 Kissing Point Road for an agreed sum with the assumption that the property will be developed into two storey townhouse along with the neighbouring property. Before any exchange of contract happens between the parties, a contractual promise had been made by Salehs stating that if no development made by Edmond, the Romanous would not have to purchase the property and their money will be return. After an exchange of contract occurred, Edmond did not wish to proceed with the development, so the Romanous want to rescind the contract. Court of appeal held that the promise made by Salehs has a legal binding effect on the basis of promissory estoppel even though it is a pre-contractual promise. The court also held that “promissory estoppel is a restraint on an enforcement of rights, and thus unlike proprietary estoppels, it must be negative in substance”207 203 Ibid 204 Supra Note 197 205 79 NSWLR 453N (2010) 206 NSWLR 274 (2010) 207 Supra note 203
  • 46. 39 In order to invoke the doctrine of promissory estoppel, the promise itself must be clear and unambiguous. The application of it can be seen in a latest case of O’ Donoghue v Minister for immigration and citizenship and Another,208 Mister Donoghue, an Irish citizen applied for a visa on the basis of that he would be employed as a legal consultant by a legal firm, Hope Lawyers. Mr Donoghue was granted the visa and allowing him to stay in Australia for 28 days starting from the date of the decision. However at the end of 2004, Mr O‟ Donoghue was arrested pursuant to Extradition Act 1988 for offences he has been committed in Republic of Ireland. While the extradition proceedings were ongoing, he was informed that his application for a visa was „ongoing‟ and there were few things required to be completed. Later, after the completion of the extradition challenges in August 2009, Mr O‟ Donoghue‟s application for visa was rejected due to the absence of written confirmation from the Hope Lawyers that the employment position is still available. The department has before this requested for the particular information from him or his application for a visa will be decided without the information requested. Mr O‟ Donoghue fails to provide the information requested by the department. He then challenges the decision and claimed that the minister was stopped from determining the application adversely prior to the final determination in the extradition proceedings. The court held thatthe promise made was not sufficiently clear and unambiguous, so the defence of promissory estoppels would not be relied on. The court in this case also rejected any claim of reliance or detriment on the part of the party whom relied on the promise. Australian court stressed on the application of promissory estoppel to prevent unconscionability of conduct as stated in the case of Commonwealth of Australia v Verwayen209 whereby in this case, two warships were collided and the plaintiff wished to take action for the injuries sustained even though the cause of action happened 20 years ago. The commonwealth did not plead the limitation defence nor deny it owed no 208 (No 3)- 121 ALD 575 (2011) 209 170 CLR 394 (1990)
  • 47. 40 duty of care to verwayen on the reason that their policy was not to contest liability and not to plead the limitation defence210 . As a result, Verwayen continued to take action, however Commonwealth later wished to change their policy to raise defence that the claim was time-barred and they owe no duty of care to Verwayen. The court in this case held that, the commonwealth was not free to dispute its liability to Verwayen by reason of estoppel and waiver211 3.2 The birth of promissory estoppels This doctrine was first recognized in the case of Grundt v Great Boulder Pty Gold Mines Ltd212 where the case was concerned about a tribute agreement which allows the plaintiff to mine ore belongs to the defendant. On 8 may 1935, the mine owner told plaintiff that he is mining the ore beyond the agreed area which is not covered in the agreement. Later, the plaintiff offered to stop the mining until the dispute as to the extent of the mining area is settled by arbitration. However, the owner urged him to continue the mining and the mining owner continue to process the ore and account for half share from it. Later, the owner wished to rescind the agreement. The High Court of Australia delivers their judgment by saying that plaintiff has committed a trespass for mining the ore beyond the area specified in the agreement and would have to account for all the extra profit he gained up to May 1935213 . However, he will not be accountable for the profit he gained from May 1935 up until the attempted cancellation.214 The majority opinion of the court in this case did not think there were any equitable estoppels but they were of the opinion that it is inequitable to allow the mine owner to recover the extra profit gained since it had continued to receive the extra ore, process it 210 Talaat, Wan IzatulAsma Wan. The Continuing Evolution of Promissory Estoppel : From Rigidity to Flexibility. Universiti Malaysia Terengganu, : Terengganu, 2011. 211 Ibid, at p. 44 212 59 CLR 641 (1937) 213 ibid 214 ibid
  • 48. 41 and account for the profit215 . The court also held that “payments made in respect of a disputed liability are voluntary and cannot be recovered either directly or as damages representing part of a loss”216 Later, this equitable doctrine attained its legitimacy and recognition in the case of Legione v Hateley 217 whereby in this case, the appellant is the vendor and the purchaser is the respondent. Both parties entered into a sale and purchase agreement on a piece of land. The respondent paid the deposit but the balance was due one year later. The respondent then occupied the land and builds a dwelling house on it without the knowledge of the appellant. They also intended to finance the purchase money by the sale of another property but the sale fell through. The payment of the balance must be completed on 1st July 1935, however, the respondent in their letter on 29th July ask for an extension for the payment. The appellant‟s solicitor refuses to extend the due date and told them to apply for a bridging loan. In the meantime, the completion date has already expired and the appellant‟s solicitor sent a notice to the respondent on 26th July. On 9th August, the respondent‟s solicitor telephoned the secretary of the appellant‟s solicitor and asked for an extension of the date of completion on 17th August. The secretary said “I think that‟ll be alright but I‟ll have to get instructions”. The respondent relied on the statement. On 14th August, the appellant‟s solicitor sent a notice by hand to the respondent‟s solicitor stating that the contract had rescinded on 11th August and they demanded the immediate possession of the land. The High Court held that the conduct of the solicitor‟s clerk made it inequitable for the appellant to rescind the contract without first giving them a reasonable notice to inform the respondent that they must complete the payment and giving them a reasonable opportunity to do so. 215 ibid 216 ibid 217 (1983) 152 CLR 406
  • 49. 42 In the case of Legione v Hateley,218 the plea of promissory estoppel was disallowed, it marked a new wave of transformation in Australian contract law.219 Promissory estoppels continue to be recognized and applied in the case of Walton Store v Maher220 whereas in this case, court decided to widen the application of promissory estoppel both as a shield and sword. Through this case, Australian had made a major breakthrough in the development of this equitable doctrine of promissory estoppel221 . This decision has made a major big turn from the traditional approach222 adopted by other common law courts by deciding that promissory estoppels could be a cause of action.223 Australian court has declared that the application of promissory estoppel is to prevent any unconscionable conduct.224 The case which upholds this notion is the Commonwealth of Australia v Verwayen.225 3.3 The problem as to the application of promissory estoppel Australian law have not legislated the doctrine of promissory estoppels into their law. Because of that, there is no justification or denying for the application of this doctrine in the absence a pre-existing relationship. However, judge in Walton v Maher 226 gave his judgment by saying that; when a promise has been made and some alteration made to the earlier promise by non-contractual promise, the creation of new promise will be recognized instead of the earlier promise. The judge in the case of O’ Donoghue v Minister for immigration and citizenship and Anotherr 227 also mentions about the difficulties of applying the doctrine of promissory estoppels in administrative decisions and concluded that the doctrine must not apply to fetter the exercise of the statutory duty under s 65 of Migration Act 1958. 218 (1983) 152 CLR 406., Supra Note 16 219 Ibid 220 (1998) 164 CLR 387 221 Supra Note 16, at p. 43 222 Ibid., Refer to the case of Hughes v Metropolitan Railway Co (1877) 2 App.cas.439, House of Lords 223 Ibid 224 Ibid 225 (1990) 170 CLR 394 226 164 CLR 387 (1998) 227 (No 3)- 121 ALD 575 (2011)
  • 50. 43 According to the judgment, can be implied that since there is no specific law in statute which provide for the application of promissory estoppel in Australian law, this doctrine can be applied as long as it does not interfere with application of other statute. This also gives options for the judge to choose whether to invoke or not promissory estoppels into their decision. This could deny the fundamental right of the defendant to have a fair hearing which is provided under article 10 of Universal Declaration of Human Right which says “Everyone is entitled in full equality to a fair and public hearing by an independent and impartial tribunal, in the determination of his rights and obligations and of any criminal charge against him.” 228 3.4 Conclusion To conclude, the application of promissory estoppel was first recognised in the case of Grundtv Great Boulder Pty Gold Mines Ltd 229 but the application of this doctrine was only attained its legitimacy in the case of Legione v Hateley230 . Australian court had escaped from the traditional doctrine that promissory estoppel can only be used as a shield, by adopting a wider view. It is in the case of Legione v Hateley that the Australian court recognises the application of promissory estoppel as both shield and sword, or in other words, promissory estoppel could be used as a cause of action. 3.5 The application of Promissory Estoppel in United States of America 3.5.1 The History What is certain is that no interpretation can explain all the cases, and that the various requirements of promissory estoppel are hard to state and harder to apply231 . Nevertheless, it is suggested that the basic ideas presented here, coupled with an understanding of the contractual variation context of promissory estoppel and the 228 Article 10, Universal Declaration of Human Right (UDHR) 229 59 CLR 641 (1937) 230 152 CLR 406 (1983) 231 Kramer, A. (2002). "The many doctrines of promissory estoppel."Student Law ReviewVolume 37 18.
  • 51. 44 formality rules of contract law that provide the context for the doctrine of promissory estoppel, should go some way to demystifying a challenging topic, in Malaysia. In the United States, although it has been known that the application of law in the country is vary from Malaysia which applied the Common Law. The origins of the doctrine of promissory estoppel in the American law of contracts vested in the Restatement (First) of Contracts 1932. Generally by facts and evidences, there are so many trial and cases in the scope of Promissory Estoppel. Like all legal inventions or transplants, the American doctrine of promissory estoppel was developed to address a perceived problem in the extant legal doctrines. The problem which the doctrine of promissory estoppel was meant to address has been described in dozens of articles and commentaries. Only a brief rehash is necessary here. By the beginning of the twentieth century, due to the influences of Classical Legal Thought (CLT) on the evolution of the doctrines of contract law, the doctrine of consideration had been defined in singularly narrow terms to exclude all non-bargain promissory transactions. 3.5.2 The Birth and the Need of Enforcement This emergence of the bargain theory of contracts meant that all promises in which the promisor did not specifically bargain for a return promise or performance went un- enforced even if the promisee had suffered substantial detriment as a result of her reliance on the promise. A promise would not be enforced even if the promisee had relied on it to incur substantial detriment as long as the promisee‟s acts of reliance were not bargained for or requested by the promisor in making her promise. Such reliance was termed “unbargained-for reliance” and did not meet the requirements of consideration. Hence, the definition of consideration sometimes worked harsh results. The possibility of working unfairness on promisees became greater in American contract law when the definition of consideration explicitly embraced the bargain element toward the end of the nineteenth century. Before this evolution to the bargain theory, consideration was mainly defined only in terms of benefit to the promisor or detriment to the promisee. A good American example is the definition of consideration
  • 52. 45 given in the venerable case of Hamer v. Sidway232 , a leading case in almost all first- year contracts case books. In this case, Judge Parker endorsed the definition of consideration given by treatise writer Anson: “The Courts will not ask whether the thing which forms the consideration does in fact benefit the promisee or a third party, or is of any substantial value to anyone. It is enough that something is promised, done, forborne, or suffered by the party to whom the promise is made as consideration for the promise made to him.”233 Both these English and American definitions of consideration required that a plaintiff prove only one element in order to succeed on a contract theory: a benefit to the defendant or a detriment to the plaintiff. To this pre-classical element of consideration” namely benefit to the promisor or detriment to the promisee CLT sought to add a second element. This was the element of bargain. According to CLT, it was not merely sufficient that the promisor had benefited or that the promisee had suffered some detriment: CLT insisted that the benefit or the detriment must have been conferred, or suffered as the case may be, as an inducement for the promise, as example the action conferring benefit or inflicting detriment must have been bargained for in exchange for the promise. This changing definition of consideration heralded the rise of the bargain theory of consideration. Among the greatest supporters for the bargain-based definition of consideration in the United States was Justice Oliver Wendell Holmes 234 which was explicitly attacking the detriment-benefit definition when he put the landmark famous definition of consideration in terms of bargain. However, in Williston‟s235 view, 232 Hamer, 27 N.E. at 257 (quoting Currie, 10 L.R. Exch. at 162). 233 Ibid 234 Oliver Wendell Holmes, Jr., has been famously described as “the great oracle of American legal thought.” Thomas C. Grey, Holmes and Legal Pragmatism, 41 Stan. L. Rev. 787, 787 (1989). Holmes‟s writings at the time were interpreted as an attack on Langdellian formalism, and he was therefore considered as the first legal realist. See, e.g., Steven J. Burton, Introduction to The Path of the Law and Its Influence: The Legacy of Oliver Wendell Holmes, Jr. 2 (Steven J. Burton ed., 2000). 235 Samuel Williston was a professor at Harvard Law School. He was one of the founding members of the American Law Institute (ALI) as a “movement . . . which should have the broad object of improving the law.” Samuel
  • 53. 46 consideration was not a major element or conditions need to be study thoroughly, it‟s the matter of justifiable reliance of the promise which later created the terminology of „estoppel‟. In the end, therefore, Williston‟s formulation of section 90 of the First Restatement ended up unwittingly contributing toward the fusing of estoppel into one area of law in the United States. This fusion236 was brought about because under the new promissory estoppel doctrine, all representations which were justifiably relied upon could be used as the basis of a cause of action.237 From here, the restatement evolves and known as The Restatement (Second) of the Law of Contracts which is one of the best-recognized and frequently-cited legal treatisesin all of American jurisprudence. Every first year law student in the United States is exposed to it, and it is probably the most-cited non-binding authority in all of U.S. The second edition was begun in 1962 and completed by the American Law Institute in 1979. By the virtue of Section 90 of Restatement (Second) of the Law of Contracts stated that, promise reasonably inducing action or forbearance: “A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.” 238 3.5.3 The Application, Cases and Statistics Estoppel was never meant to protect the indolent or the incompetent. Thus, if a party could have protected itself with a contract, estoppel would not be used to protect her. The application had been widely enforce and can be seen through many cases which Williston, Life and Law: an Autobiography 310 (1940). It was Williston, together with Professor Joseph Beale of Harvard Law School, and Mr. William Draper Lewis (who later become the Director of ALI) who proposed that ALI undertake the “project of a Restatement of the common law in as brief, exact, and simple form as was possible. 236 This fusion has, in part, provided inspiration for English law to achieve the same fusion. Australia followed the U.S. lead in this regard. See Waltons Stores (Interstate) Ltd. v. Maher, 1988, 164 C.L.R. 387 [38]. 237 Ibid 238 Section 90 of Restatement (Second) of the Law of Contracts
  • 54. 47 the cases can be divided into so many league such as charitable subscriptions239 , employment240 , franchises241 . These are the example of division and type of cases identified in the American legal system that is being applied presently. There are a lot more types of cases which emphasize on the element of promise such as gratuitous promises242 , option contracts243 and subcontractor bid or construction projects244 In general, by the virtue of Section 90 Restatement (Second) of Contracts the elements of promissory estoppel are: first, a promise reasonably expected by the promissor to induce action or forbearance, second, action or forbearance by the promisee in justifiable reliance on the promise (i.e. “detrimental reliance”), and third, injustice can be avoided only through enforcement of the promise. By insisting that the “detriment” (or benefit must have been) given in exchange for the promise,[this definition of consideration] effectively ignored the possibility of the promisee‟s substantial change of position in reliance on the promise, not bargained for as the price of the promise, but substantial and detrimental nevertheless. Other elements and grounds that can be consider for a good grounds of claim shown as graft in Table 1 below. 239 Salsbury v. Northwestern Bell Telephone Co., 221 N.W. 2d 609 (Iowa 1974), where defendant promised to give $15,000 to the college. The college was later closed and the trustees sought to recover the pledge. The court held that the promise was binding. Pledges to charity are enforceable via promissory estoppel without a showing of detrimental reliance. 240 Hayes v. Plantations Steel Co., 438 A.2d 1091, (1982), in this case an employee discussed a pension with his employer after announcing his retirement. The employer stopped paying the pension after three years. The court held that the promise was not enforceable because the plaintiff did not retire in reliance on the contract. 241 Hoffman v. Red Owl Stores, Inc.26 Wis.2d 683, 133 N.W.2d 267 (Wis. 1965) where the plaintiff sold his bakery and invested significant time and expense in reliance upon Red Owl‟s assurances that he would be granted a franchise. He never received the franchise and sued to recover for his expenses. The court ruled for plaintiff on the basis of promissory estoppel. Damages were only as necessary to avoid injustice and could not exceed actual loss. 242 Ricketts v. Scothorn 57 Neb. 51, 77 N.W. 365 (Neb. 1898) where a grandfather‟s promise to give his granddaughter $2,000 to enable her to stop working was held enforceable. A promise can be enforced without consideration if there has been detrimental reliance on the part of the promisee. 243 Berryman v. Kmoch, 221 Kan. 304, 559 P.2d 790 (1977), in this case Berryman gave Kmoch an option contract for real estate in exchange for ten dollars which was never paid. Berryman sold the property before the option expired. The court held that the contract was valid. Option contracts must be supported by consideration, but promissory estoppel applies to such contracts. 244 James Baird Co. v. Gimbel Bros.64 F.2d 344 (2nd Cir. 1933), in this case efendant submitted a subcontractor bid which the plaintiff relied upon in calculating the general contract bid. Defendant realized that it had miscalculated the bid and attempted to withdraw it. Plaintiff was awarded the general contract and sued for damages when defendant refused to perform. The court found for the subcontractor. Promissory estoppel does not render a subcontractor‟s bid irrevocable even where the contractor has relied upon it in submitting a bid for a general contract.
  • 55. 48 Table 1. Reasons and grounds for promissory estoppel (all courts)245 Promissory estoppel was originally conceptualized as a relatively insignificant form of promissory recovery—an “unwanted stepchild” of the Restatement intended to supplement, rather than compete with, the traditional bargain-based theory of contracts in mostly non-commercial situations. For Promissory Estoppel Success Rates (Overall), indicated in Tables 2 below that promissory estoppel claims tended to succeed much more often than has been previously reported. In fact, the data reveal that promissory estoppel cases decided under the Restatement (Second) of Contracts are successful about 53 percent of the time. This, coupled with the extraordinary growth of promissory estoppel cases over the past decades, including the particularly impressive explosion of promissory estoppel cases since the Restatement (Second) was published in 1981, supports the conclusion that promissory estoppel is a growing and increasingly significant form of promissory recovery and the progressive process can be seen in Table 3. 245 Marco J. Jimenez, "The Many Faces Of Promissory Estoppel : An Empirical Analysis Under The Restatement (Second) of Contracts," UCLA Law Review 57, no. 669 (2010).
  • 56. 49 Table 2. Promissory Estoppel Success Rates (overall) 246 246 Supra Note 242 Year Success Failure Percentage of Success (%) 1981 3 2 60 1982 6 5 55 1983 4 3 57 1984 6 4 60 1985 8 4 67 1986 3 5 38 1987 6 7 46 1988 5 6 45 1989 4 5 44 1990 6 7 46 1991 8 8 50 1992 5 6 45 1993 9 6 60 1994 8 5 62 1995 6 3 67 1996 9 3 75 1997 8 6 57 1998 6 3 67 1999 5 8 63 2000 7 2 78 2001 3 1 75 2002 4 7 57 2003 10 8 56 2004 8 5 62 2005 12 16 43
  • 57. 50 Table 3. Promissory Estoppel Cases Decided by Decade247 247 Ibid. 2006 7 11 64 2007 7 9 44 Totals 173 155 53 Decade No. of Cases 1900 - 1909 0 1910 - 1919 0 1920 - 1929 8 1930 - 1939 41 1940 - 1949 64 1950 - 1959 87 1960 - 1969 189 1970 - 1979 415 1980 - 1989 1688 1990 - 1999 4883 2000 - present 6100 Totals 13,475
  • 58. 51 Table 4. Success Rate of Promissory Estoppel Claims Decided by Trial Courts248 Although Table 4 249 reveals that promissory estoppel claimants survived an opposing motion to dismiss or motion for summary judgment about 50 percent of the time, which one might expect given the figures presented in Table 2, the number of cases in which plaintiffs were successful on the merits of their promissory estoppel claims is more surprising. 3.6 Conclusion From the data collected by the analysis, cases and the history in United States of America, the doctrine of promissory estoppel which engrave in the contract the act and endeavour the journey since 1920, published in 1932 as First Restatement of Contract and going through refurbishment by Second Restatement of Contract until 1979, it is safe to say that United State had practice a stable legal provision for managing and uphold the justice in cases and matters involving detrimental reliance of promise or promissory estoppel. Although it is basically a persuasive foundation type of law in Malaysia to apply, it seems reasonable because the discussion above narrow down the need of the promissory estoppel in United State which may be possibly be transplanted 248 Ibid. 249 Supra Note 243
  • 59. 52 in Malaysia because it does not involve any judicial precedent nor judgment, it‟s the theory which Malaysia may adopt as a master copy to be inserted in the Malaysian Contract Act 1950.
  • 60. 53 CHAPTER FOUR THE RECOMMENDATION 4.1 Introduction The previous chapter has provided the comparative research on how the doctrine of Promissory Estoppel being developed from the traditional notion up until in the recent times which more spaces had been given for this doctrine to breathe throughout the local cases. 4.2 Recommendation To have the recommendation, the problem statements that have been stated in the earlier part of this research paper shall be ascertained. The problems are 1) the parameter of the application was not clearly defined, 2) There are very limited in the application of this doctrine in order to facilitate our court in Malaysia since it is in the form of equitable doctrine. 3) There are statutory limitations which stated in section 3(1) of Civil Law Act 1956 since according to this section, the way to apply the doctrine of Promissory Estoppel is when there is a lacuna in the local statute. It is to see the possibility of the implementation of Promissory Estoppel in Malaysian statute. 4.2.1 The parameter of the application was not clearly defined. In order to know, to what extent this doctrine can be applied, several traditional limitations must prove to be solved. (a) Promissory Estoppel as a sword In Australia, the application of promissory estoppels can be made as a cause of action.250 We can see in the case of Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd.251 In this case It was suggest that the Australian courts have been more valiant in their efforts to treat the use of promissory estoppels as a sword where the courts 250 Supra Note 16 251 [1991] 23 NSWLR 571
  • 61. 54 confidence in trying to make this doctrine also available to plaintiff as a cause of action.252 This might be due to the influence of the prevailing notion of unconscionability, which has a firmer footing in the United States.253 Whereby in Malaysia, it is found in the most outstanding Malaysian case on promissory estoppels which is Boustead Trading (1985) SdnBhd v Arab – Malaysian Merchant Bank Bhd.254 Sri Ram‟s attempts in comparing the position of this equitable doctrine in Malaysia and the US can be seen as a strong indication to loosen the strict rules limiting the application of this doctrine in Malaysia, which was due to the colonial influence by liberal approach adopted by US.255 Thus the attempt was taken by the Malaysian Federal Court to adopt the American liberal approach and to follow the footstep of its Australian counterpart is perhaps a much awaited call to the Malaysian law to move forward256 . (b) The absence of pre-existing contractual relationship The most illustrious Australian case to this effect is Walton Store case257 . Though both parties admitted that no contract has been duly executed since the appellants did not execute the exchange of the lease, which inevitably shows that no pre- existing contractual relationship nor any contractual relationship had ever existed between the parties, promissory estoppels was still granted based on the representation by the appellant during the course of the negotiations that the store “should be erected by mid-January 1984”.258 The performance of a contractual right is strictly governed by the terms of the agreement while satisfying an equity based on estoppels may be carried out according to what is necessary to prevent harm or detriment resulting from an 252 Supra Note 16 253 Ibid 254 Ibid., See also Boustead Trading (1985) SdnBhd v Arab – Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 255 Ibid 256 Ibid 257 Ibid., See also Walton Store v Maher (1988) 164 CLR 387 258 Ibid
  • 62. 55 unconscionable conduct.259 By making the above distinction, Brennan J can be safely said as explicating the views of the other Australian judges, who had previously initiated the move to apply this doctrine beyond contractual relationship.260 In Malaysia In affirming the trial judge‟s decision in the local case Teh Poh Wah v Seremban Securities Sdn Bhd 261 , Sri Ram JCA held to the effect that, “In our judgement, this appeal may quite satisfactorily be resolved by reference to the doctrine of estoppels.262 It is a flexible doctrine by which the courts seed to do essential justice between the litigating parties…The doctrine may be applied to enlarge or reduce the rights or obligations of a party under a contract..It has been applied to prevent a litigant from asserting that there was no valid and binding contract between him and his opponent”.263 (c) Detrimental reliance versus unconscionability Deane J explained that the “Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under special disability in circumstances where it is not consistent with equity or good conscience that he should do so.”264 The notion of unconscionability in Australia has been relatively considered as the underlying basis in equitable estoppels.265 The Australian court had given their tendency on the requirement of detriment in the case of Chin v Miller266 where 259 Ibid 260 Ibid 261 Supra Note 16., See also The PohWah v Seremban Securities SdnBhd [1996] MLJ 701 262 Ibid 263 Ibid 264 Ibid 265 Ibid 266 Ibid., See also Chin v Miller (1981) 37 ALR 171.
  • 63. 56 Parkinson supports the reliance-based approach in estoppels by saying that estoppels must be seen as operating to protect against detrimental reliance.267 Unconscionability is accepted in Malaysia through the case of Wong JuatEng v Then Thaw Eu & Anor268 , where the requirement of detrimental reliance was recapped by the federal court as one of the limitations to promissory estoppels.269 Several more cases such as Bencon Development Sdn Bhd v Yeoh Cheng Heng270 has proven the readiness of the Malaysian Courts to explore the newer notion of unconscionability in the equity realm.271 (d) Temporary suspensions vs permanent extinction An interesting account between the two effects of this doctrine in Australia can be seen in Silovi Pte Ltd V Barbaro and others.272 In Malaysia, the question of the effect of promissory estoppels is permanent or extinctive depends on the nature of representation made between the parties.273 . This can be seen in the case of Sim Siok Eng v Government of Malaysia 274 where Raja Azlan Shah drew a demarcation which shows the effect of promissory estoppels are based on the intention of the promisor who made the representation.275 267 Ibid 268 Ibid, See also Wong JuatEng v Then Thaw Eu&Anor [1965] MLJ 133 269 Ibid 270 Ibid., BenconDevelopment SdnBhd v Yeoh Cheng Heng [1996] 4 CLJ 25 271 Supra Note 16 272 Ibid.,In this case, although the estoppels in this case only operated until the specified date stated, it cannot be simply assumed that the effect of this doctrine was merely suspensory. The rights sought to be protected by the respondents were the 10-year lease, which was by no means perpetual, and the action of the court to exclude the contract of sale to be concluded until after the expiry of the lease period may strongly be taken that the right of the owner to sell the land during such period was completely extinguished. Thus, the effect of the promissory estoppels in this case is permanent, though seen as suspensory. 273 See Matta, Ali Muhammad. “ The Development of Promissory Estoppel”, 1999, International Workshop on Estoppel (Kuala Lumpur), at p. 8. 274 Ibid., See also SimSiokEng v Government of Malaysia [1978] 1 MLJ 15 275 Ibid
  • 64. 57 4.2.2 There are very limited in the application of this doctrine in order to facilitate our court in Malaysia since it is in the form of equitable doctrine. Promissory estoppel is an English doctrine of equity which is accepted in the common law countries.276 Whereby in United States, this doctrine has been adopted into a statutory provision under article 90 of the Second Restatement of Contract thereby make it easier to assist in the judgement of the court.277 In Malaysia, the application is restricted by equitable principle which been applied by common law countries.278 Thereby, to break such boundaries, Malaysia shall follow the footsteps of United States in enacting promissory estoppels into their Article 90 of the Second Restatement of Contract where it could help Malaysia in the application of this doctrine without being bound by the section 3(1) of Civil Law Act 1956 anymore.279 4.2.3 There are statutory limitations which stated in section 3(1) of Civil Law Act 1956 since according to this section, the way to apply the doctrine of Promissory Estoppel is when there is a lacunae in the local statute. According to the judgment many of the cases, it can be implied that since there is no specific law in statute which provide for the application of promissory estoppel in Australian law, this doctrine can be applied as long as it does not interfere with application of other statute.280 This also gives options for the judge to choose whether to invoke or not promissory estoppels into their decision.281 This is quite similar to Malaysia282 where, although we always give a warm welcome to the coming of this doctrine throughout the local cases, however we are 276 Supra Note 273 277 Ibid 278 Ibid 279 Ibid 280 Supra Note 16 281 Ibid 282 Ibid
  • 65. 58 still restricted by section 3(1) of Civil Law Act 1956 since we do not have our own statutory provision regarding Promissory Estoppels.283 In US, although it has been known that the application of law in the country is vary from Malaysia which applied the Common Law.284 The origins of the doctrine of promissory estoppel in the American law of contracts vested in the Restatement (First) of Contracts 1932 and it has going through reconstruction by Second Restatement of Contract until 1979, thus it is safe to say that United State had practice a stable legal provision for managing and uphold the justice in cases and matters involving detrimental reliance of promise or promissory estoppels.285 4.3 Conclusion The idea of welcoming the doctrine of Promissory Estoppel, as applied by the courts under the Restatement (Second) of Contracts, is a significant form of promissory recovery.286 Indeed, it is worth to say that the doctrine of promissory estoppels, plaintiffs litigating the merits of their dispute do not worse and may even fare better than the plaintiffs litigating the merits of traditional breach of contract claim, regardless of the court hearing the claim. Therefore, with the explosion of promissory estoppels cases since the publication of the Restatement(Second) of Contract in 1981287 , it indicates that promissory estoppels is a healthy, vibrant and significant cause of action that seems to be showing no signs of disappearing in the near future. However, despite of agreeing that the application of promissory estoppels will bring a better development and growth in today‟s local law, however, it is not easy to make 283 Supra Note 16 284 Ibid 285 Ibid 286 Daniel A. Farber & John H Matheson, Beyond Promissory Estoppel: Contract Law and the “Invisible Handshake”, 52 U.CHI.L.REV.903,904 (1985) 287 To put matters into perspective, at the time Professor Gillmore published his book in 1974, only about eight hundred cases mentioning the term “promissory estoppels” had been decided. Yet, of the more than 13,000 cases on the books today mentioning the term “promissory estoppels,” over 12,671 of these cases have been decided since 1980, indicating that over 94 percent of all cases using the term “promissory estoppels” have been decided since the Restatement (Second) of Contracts was promulgated in 1981.
  • 66. 59 this doctrine to be implemented as a new statutory provision. As we can see in United State itself, the doctrine of Promissory Estoppels is not in a single statutory being, it has also been inserted as Second Restatement of Contract which is derived from the First Restatement of contract 1981 after being reviewed and improved, the promissory estoppels has then being renewed as the new principle called Second Restatement of Contract 1981. Likewise in Malaysia, where we have the Contract Act 1950, we can adopt the same way as the United State did. This is because the process of insertion or adding of the provision under the existing act is easier rather than to create a new statutory provision which will take a longer time. Though the application of Promissory Estoppels in United States is only a persuasive means to the Malaysian law, where we cannot really adopt and take the judicial precedent as a reference into the local cases, however, the extent that Malaysia can take is that, we can just adopt the pattern of how the US implements the doctrine into their statute. This is same like how the Second Restatement has been made where the case of High Tree from England has been referred. Hence, we can say that the United States also took the pattern of the law involving the application of Promissory Estoppels in England and turn it into a new form of provision. This is how we recommend Malaysia should follow the US footstep. Thus, from the analytical and comparative study above, we recommend that a provision regarding promissory estoppels be inserted into the existing Contract Act 1950.
  • 67. 60 Bibliography Statutes Malaysia a. Civil Law Act 1956 b. Contracts Act 1950 England a. English Contract Law b. Sale of Goods Act 1979 Australia a. Australia Trade Practices Act 1974. United States of America a. Restatement (First) of Contract b. Restatement (Second) of Contract Treaty Universal Declaration of Human Right (UDHR)
  • 68. 61 Journal Articles 1. Alan Watson, Legal Transplants: An Approach To Comparative Law, 95 (1974). 2. A.L.I. Commentaries 3. Bigelow, The Principles of Estoppel: An Essay 78,82 (London, W. Maxwell & Son 1888). 4. Bigelow, Lancelot Feilding Everest, The Law of Estoppel 279 (3d ed. 1923). 5. Capper, David. "The Extinctive Effect of Promissory Estoppel."Common Law World Review (2008). 6. Charles L. Knapp, Rescuing Reliance: The Perils of Promissory Estoppel, 49 Hastings L.J. 1191, 1196 (1998). 7. Cooke, Charles L.O. Edwards, Note, Equitable Estoppel Estoppel by Representation, 12 8. Daniel A. Farber & John H Matheson, Beyond Promissory Estoppel: Contract Law and the “Invisible Handshake”, 52 U.CHI.L.REV.903,904 (1985) 9. Dawson, T. Brettel. "Estoppel and Obligation: The Modern Role of Estoppel by Convention." (1989). 10. E.K. Teh, "Promissory As a Sword," Anglo-American Law Review 13(1984).
  • 69. 62 11. Hickling, Dr. M. A. "Labouring with Promissory Estoppel: A Well-Worked Doctrine Working Well?"17 (1983). 12. Kramer, A. (2002). "The many doctrines of promissory estoppel." Student Law Review, 37. 18. 13. Lloyd Pospishil, Equitable Estoppel, 19 Neb. L. Bull. 222, 22728 (1940) 14. Marco J. Jimenez, "The Many Faces Of Promissory Estoppel : An Empirical Analysis Under The Restatement (Second) of Contracts," UCLA Law Review 57, no. 669 (2010). 15. Margaret Halliwell, "Estoppel: unconscionability as a cause of action " Legal Stud. 15, no. 14 (1994). 16. Matta, Ali Mohammad. "Promissory Estoppel: Does Malaysia Need This Doctrine?".Malayan Law Journal Articles 6 (2006). 17. Ngugi, Joel M. "Promissory Estoppel: The Life History of an Ideal Legal Transplant." University of Richmond Law Review 41, no. 2 (2007). 18. Oliver Wendell Holmes, The Common Law, 289–94 (48th prtg. Boston, Little, Brown and Co. 1923) (1881). 19. P. S. Atiyah, 'Contract and Fair Exchange' (1985) 35 U Tor LJ 1; P. Finn, 'Equitable Estoppel' in Essays in Equity, P. Finn (ed) (1985) 20. Reuben M. Benjamin, The General Principles of the American Law of Contract 21 (Indianapolis and Kansas City, Bowen-Merrill Co. 1889)
  • 70. 63 21. Richmond, Collin F. “Promissory Estoppel- Only a Shield, Not a Sword?: Analysis of Dewitt V. Fleming, 828 N.E.2d 756 (III. App. 5th 2005).” (2005). 22. Steven J. Burton, Introduction to The Path of the Law and Its Influence: The Legacy of Oliver Wendell Holmes, Jr. 2 (Steven J. Burton ed., 2000). 23. Samuel Williston, Life and Law: an Autobiography 310 (1940) 24. Thomas C. Grey, Holmes and Legal Pragmatism, 41 Stan. L. Rev. 787, 787 (1989) 25. Wan Izatul Asma Wan Talaat, The Continuing Evolution of Promissory Estoppel: From Rigidity to Flexibility, 2011. 26. Wan Izatul Asma.“Enacting Promissory Estoppel into the Malaysian Law: Towards More Certainty in Litigation”.Journal of Politics and Law, (2012): 5. 27. Wan Izatul Asma Wan Talaat, "The Threats to the Limitations Outlining the Present Parameters of Promissory Estoppel: A Comparative Study," International Journal of Business and Social Science 3, no. 6 (2012). 28. William R. Anson, Principles of the English Law of Contract and of Agency in its Relation to Contract 63 (Jerome C. Knowlton ed., 2d American ed. Chicago, Callaghan and Co. 1887)). 29. William Shakespeare, Romeo and Juliet act 2, sc. 2. 30. Wright, Robert Lee. "Promissory Estoppel Marches on- Mooreburger." (1976).