Research Study on Contract Law: The equitable doctrine where brought to provide equity in cases which had a defect in consideration, at which it is unconscionable for a party to suffer the determent. The court has the power to practice judicial discretion in these circumstances, where seen there is unjust enrichment or unconscionable. However, it is mandatory for the applicant filing for equity to satisfy the conditions forming the equitable doctrine. The predictability and certainty of these causes have lead to comprise the law, having it called “The dangerous doctrine”, as a person could preplan the events that will lead another person to be victimized by an estoppel. Rather having solid common law that sets the rules, equitable doctrine bend these rules and compromises the law.

1. Agreements Withholding Consideration
Research Study on Contract Law
Author:
Ezat Maiz Mohammad
2015

2. Table Contents
Introduction ............................................................................................................................................3
1.0 Critical Analysis ...........................................................................................................................4
1.1 Contract enforcement in the absence of consideration.........................................................4
1.1.1 The Equitable Estoppel: ..................................................................................................4
1.1.2 Voidable Considerations .................................................................................................5
1.1.3 Bankruptcy......................................................................................................................5
2.2 Judicial Discretion in Equity ..........................................................................................................6
2.3 Certainty & predictability in law .............................................................................................7
Conclusion...............................................................................................................................................8
Bibliography ............................................................................................................................................9
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3. Introduction
A contract is either a simple or formal contract at which it is a legal arrangement between at
least two parties to form an agreement where privileges and responsibilities between the two
parties are enforceable at court.
For a contract to have the formal form or under seal must be all in writing, signed, sealed,
and delivered to be in act. While simple form, the agreement must be made verbally, or
written whether partially or entirely, and most importantly, regardless of the form it must
establish consideration.
In common law, for a contract to be valid at court; there must be an offer and both parties
should have acceptance to engage to create a contract. A contract should have a promise and
a return on that promise in the form of consideration, as described earlier. Both parties must
show legal capacity to engage in a contract and must have a genuine consent. The
performance of the contract should be of legal practice, for example a contract to exchange
drugs for money is not an enforceable contract since the illegality of the practice.
The research study focuses on consideration, a value in return of something, part of an
agreement. In some circumstances agreements can be enforced with the lack or with partial
consideration under the equitable doctrine. Upon selecting five cases to study the conditions
where equity can take effect and whither the court has practiced judicial discretion. Further,
the study will determine if practicing judicial discretion has caused a defect in certainty and
predictability in law.
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4. 1.0Critical Analysis
1.1 Contract enforcement in the absence of consideration
In general, agreements which are not under seal are not enforceable at common law and by
statue, if they lack consideration. However, in equity and in some circumstances these
agreements or promises can be enforceable. The report will focus on three circumstances at
which a simple contract or promise can be enforceable.
1.1.1 The Equitable Estoppel:
The doctrine of equitable estoppel is the most common in legal cases. It was recognized in
the High Case [1947]1
, which discontinues one party engaged in an unenforceable contract
with another party from breaking that engagement and to honour that contract or promise.
Even with the lack of consideration, the contract will be enforceable if it is unfair, unjust, or
have caused one party to suffer some damage or loss.
For an estoppel to be in act the case must establish all the below conditions, (Turner, 2012):
1- A legal engagement must be in existence.
2- A promise has been made by a party.
3- The other party have relayed on that promise.
4- The person relaying on that promise have experience damage, or a detriment.
5- It would be unconscionable for the party who made the promise and broke it, and
which have directly or indirectly cause the damage to the other party.
If the court found at least one of the above conditions not being met the estoppel will not be
acted, for example, in the Smith Crane Construction Limited v Hall2
, Mr. Hall a civil
engineer, the defendant, and Smith construction the plaintiff. Mr. Hall received an offer from
SCC with a trail period clause. He accepted and signed the offer and mail it back, but didn’t
sign the [individual employment agreement]. Later on, he was dismissed from his job. Mr.
Hall claimed that he wasn’t advised about his performance and that he should improve,
instead he was dismissed. Due to the fact that Mr. Hall have traveled from the UK for this
job, he established a remedy for the damages [8] and that a 90 day trail clause is not valid
since he was a pervious employee at SCC. The plaintiff, SCC challenges that there is a
binding 90 day trail on the grounds of an estoppel [9] as he has accepted the offer with the 90
day trail clause, thus he must be estopped of the denial. The cause ended in favor of the
defendant on the grounds established that Mr. Hall did not make believe in such the company
would rely on the contract, also the judge have not concluded that it would be
unconscionable for Mr. Hall to have to deny the 90 days trial just by approving the contract
[65-67].
There are three types of Estoppels, equitable estoppel, promissory estoppel, and the
proprietary estoppel. The equitable estoppel is a representation of a future action in reliance
1
Concise Australian commercial law, Turner, Clive, Second edition, 2012.
2
Smith Crane Construction Limited v Hall [2015] NZEmpC 82 (4 June 2015)
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5. on a promise made. The promissory estoppel is when the promissor had made the other party
to believe that the rights or obligation of a contract won’t be enforced. Whereas, the
proprietary estoppel is related to properties at which a promissor makes believe to the
relaying party that they will have interest in the property. The Smith Crane Construction
Limited v Hall cause the plaintiff has used the equitable estoppel principles to relay on that
Mr. Hall have agreed on the terms of the 90 days trail, however, it wasn’t seen by the judge
that it would be unconscionable for Mr. Hall to deny because he was a previous employee at
the company.
The Character Design Pty Ltd v Kohlen3
case states that there were a partial consideration as
to the work completed, and it applies to a Promissory estoppel as to the section of the cause
[5] “That is to say an oral contract which is diametrically opposed to the terms of a written
contract and cannot be enforced”4 where the defendant made the plaintiff believe the terms of
the oral part of the contract will not be enforced. The Judge has rolled to conclude the claim
of a promissory estoppel [17] as to the five general conditions of an estoppel which the
plaintiff has established to the court.
The proprietary estoppel was brought to provide equity in relation to property conflicts, the
Stephens v Kwai [2014]5
provide a rich example of lack of consideration make on a promise
related to properties and ownership. The plaintiff Mr. Stephen declares the ownership of the
properties of his deceased mother (Sylvia). However, Mr. Stephen’s half sister is entitled to
inherit the properties as to her mother’s last Will. Mr. Stephen has established to the court
that he have entered in to an agreement with the deceased as he would pay off the mortgages
pending on the properties and that the deceased will have him entitled of the properties. Later
on and after her death, he found that her Will have been changed to benefit his half sister
solely. Mr. Hall claims the properties on the bases of promise made and on the bases of
proprietary principles of an estoppel. The court have ruled in favor of the plaintiff to have full
control of the properties, [13] after Mr. Hall have provided material evidence supporting his
claim.
1.1.2 Voidable Considerations
A promise leading for consideration can be voided for different circumstances, such as legal
capacity. For example, minor promises to pay an amount in return for a bike, the minor can
avoid payment and not honor this contract by claiming illegal capacity. The consideration
didn’t take place at this incident as to this scenario, however, the promise becomes binding if
he/she renews the promise as they reach the legal age.
1.1.3 Bankruptcy
Contracts without consideration and by statue in bankruptcy can be enforced under the
following circumstances. After filing for bankruptcy and being exempted from liabilities and
obligations, promise is made to repay the liabilities and obligations, called filing for
reaffirmation. In this cause it is binding as to the change in circumstances at which there was
3
Character Design Pty Ltd v Kohlen [WASC] 112 (9 April 2013)
4
Character Design Pty Ltd v Kohlen [WASC] 112 (9 April 2013) Par[5]
5
Stephens v Kwai [2014] FJHC 94; HBC264.2012 (26 February 2014)
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6. no legal enforcement of consideration, however, when a person files for reaffirmation the
promise is binding. Lee v Mavaddat 6
is a classical scenario at which both the plaintiff and
defendant have entered in to a joint contract (agreement) at which they both were registered
proprietors. The contract is to have 50% shares for each of the parties sharing the same risk as
they have taken a loan from a bank. Later, the defendant files for bankruptcy because of a car
accident which have lead to his bankruptcy along with his weak knowledge of operating a
business. After solvency of the partnership agreement and the assets in relation to that
agreement the defended have taken money out off the partnership in reference of what he
have called and in his defense “The Caco’s Agreement” [487] as to the restaurant where they
used to meet and have discussions which he took notes of the reaffirmation of their solvency
between them which redistributes the benefits or losses between them on the bases of past
consideration. Later on the plaintiff claims an equitable compensation for which the
defendant has received by the liquidator at her expense, which the judge has rolled in favor of
the plaintiff, as to the proceedings and evidence, [Liberty to Apply-25].
2.2 Judicial Discretion in Equity
The court has the discretion to exercise remedies for a party who have suffered damage from
relaying on a promise. However, the court would not necessarily enforce the promise; it may
decide what it can do to relieve the suffered party from its determent.
In the cases searched in this report the court has exercised the discretion over the equitable
doctrine in unfair contracts with the lack of consideration, with past consideration, or partial
consideration. However, the court has dismissed equitable claims when there is a defect in
one of the conditions forming the discretion for equity. For example, in the Smith Crane
Construction Limited v Hall the plaintiff could not establish the unconscionable part of the
estoppel and thus the plaintive claim was dismissed, where the defendant received a remedy
for damages.
As a general rule when it is unconscionable for a party to suffer from a breach in an
agreement that he have relied on, discretion can take please to compensate a remedy. This is
supported in a journal article (Conscience, discretion and the creation of property rights,
2006) “In these limited circumstances, once unconscionability is found; the courts should
have a discretion as to the remedy, modeled on that developed in the context of proprietary
estoppel.”7
.
Furthermore, when unconscionability cannot be foreseen as a justification or off relevance to
the case to determine an intervention for a judicial discretion unjust enrichment can be used
as an equal measure of unconscionability. This was found in the Australia and New Zealand
Banking Group Ltd v Westpac Banking Corporation.8
.
6
Lee v Mavaddat [2005] WASC 68 (29 April 2005)
7
Hopkins, N 2006, Conscience, discretion and the creation of property rights, Legal Studies, [1].
8
Hopkins, N 2006, Conscience, discretion and the creation of property rights, Legal Studies, [3].
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7. The discretion can be a matter of choice to be practiced by the judge during a dispute
between the conflicted parties, or may be of a necessity to build future rules, and as a role
when equity clashes with common law, equity prevails. In the same time we have witnessed a
cause as of bankruptcy which is by statue a promise can be enforced.
2.3 Certainty & predictability in law
“A Dangerous Doctrine” as described in a journal article, (The cause against using concerted-
misconduct estoppel to compel arbitration9
), publish in Alabama/USA in 2009. The journal
discusses that many disputes have overwhelmed the use the equitable doctrine of estoppels to
generate benefits or/and cause damage to the other party. The journal describes the misuse as
preplanning for an estoppel and leading the defendant to a trap by conspiracy.
This might be the case in the Stephens v Kwai as darning the trail the defendant have said
there were legal documents stolen from his office, thus for him to back his claim he doesn’t
hold physical evidence supporting his claim. We can learn that it is merely difficult to predict
justice and equity when there is ambiguity and perhaps week tangible evidence to conclude
judgment.
Moreover, if we take unconscionability as an example, we cannot measure feelings or
whether it is conscionable for a company to pay remedies for a person who have agreed to the
terms of the contract, or not. This may vary from one judge to another depending on what
they perceive whom is the victim. In other cases as we have mentioned, if the conditions and
evidence are clear the rolling is almost predictable, thus people can preplan the events which
leads for an estoppel. The gap between having solid common law that sets the rules, equity
bends these rules and allow for common law to be bent.
9
Driskill, C 2009, A Dangerous Doctrine: The Case Against Using Concerted-Misconduct
Estoppel to Compel Arbitration, Alabama Law Review, [60], p. [443]
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8. Conclusion
The report has discussed two types of contracts, simple and formal. The study concentrated
on simple contracts with the lack consideration, past consideration, or partial consideration.
The most common circumstances at which an agreement without the previous can be
enforced are the doctrine of the equitable estoppel, when a person makes the victim party
depend on a promise at which suffers damage or losses for the breach of the promise. There
are also when someone renews his/her agreement from a previous agreement that
consideration didn’t take place at which after renewal becomes binding. By statue filing for
bankruptcy protects the person from meeting her/her obligations or liabilities and thus having
no consideration. However, just like the previous case and just by renewing the promise or by
reaffirmation the promise becomes binding.
The equitable doctrine where brought to provide equity in cases which had a defect in
consideration, at which it is unconscionable for a party to suffer the determent. The court has
the power to practice judicial discretion in these circumstances, where seen there is unjust
enrichment or unconscionable. However, it is mandatory for the applicant filing for equity to
satisfy the conditions forming the equitable doctrine.
The predictability and certainty of these causes have lead to comprise the law, having it
called “The dangerous doctrine”, as a person could preplan the events that will lead another
person to be victimized by an estoppel. Rather having solid common law that sets the rules,
equitable doctrine bend these rules and compromises the law.
Page 8 of 9

9. Bibliography
Character Design Pty Ltd v Kohlen, WASC 112 (SUPREME COURT OF WESTERN AUSTRALIA APRIL 9 ,
2013). Retrieved from http://www.austlii.edu.au/cgi-
bin/sinodisp/au/cases/wa/WASC/2013/112.html?stem=0&synonyms=0&query=title(Charact
er%20Design%20Pty%20Ltd%20and%20Kohlen%20)
Conscience, discretion and the creation of property rights. (2006, December ). Legal Studies, 26 ,
475–499. Retrieved from
http://eds.a.ebscohost.com.ezproxy.uow.edu.au/eds/detail/detail?sid=ed21fc74-8345-
4432-8a4d-
724a32f4bb17%40sessionmgr4002&crlhashurl=login.aspx%253fdirect%253dtrue%2526db%
253dedb%2526AN%253d22952795%2526site%253deds-
live&hid=4108&vid=0&bdata=JnNpdGU9ZWRzL
Driskill. (2009). A Dangerous Doctrine. The Case Against Using Concerted-Misconduct Estoppel to
Compel Arbitration, 443. Retrieved from
http://ezproxy.uow.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&
db=edslex&AN=edslex4988339C&site=eds-live
Lee v Mavaddat, WASC 68 (Supreme Court of Western Australia April 29, 2005). Retrieved from
http://www.austlii.edu.au/cgi-
bin/sinodisp/au/cases/wa/WASC/2005/68.html?stem=0&synonyms=0&query=title(Lee%20a
nd%20Mavaddat%20)
Smith Crane Construction Limited v Hall, NZEmpC 82, EMPC 263/2014 (IN THE EMPLOYMENT COURT
CHRISTCHURCH JUNE 4, 2015). Retrieved from
http://www.justice.govt.nz/courts/employment-court/documents/2015-judgments/2015-
nzempc-82-smith-crane-construction-v-hall-judgment-of-judge-b-a-corkill-4-june-2015
Stephens v Kwai [2014], HBC264.2012 (FJHC 94 February 26, 2014).
The Law, Sales, and Marketing. (2012). Andy Schmitz. Retrieved from
http://2012books.lardbucket.org/books/the-law-sales-and-marketing/index.html
Turner, C. (2012). Concise Australian commercial law. Oxford University Press Australia.
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