VARIATION, WAIVER AND ESTOPPEL—A RE‐APPRAISAL
| DOI | http://doi.org/10.1111/j.1468-2230.1976.tb01479.x |
| Published date | 01 November 1976 |
| Date | 01 November 1976 |
VARIATION, WAIVER AND ESTOPPEL-A
RE-APPR AISAL
INTRODUCTION
THE
aim of this article is to examine the recent case law on the
subject
of
post-contractual representations and to suggest a more
rational basis for their analysis than has hitherto been adopted. A
post-contractual representation, in this context. means a representa-
tion made, either by words or conduct, by one
party
to the other,
after the contract has been made. This may
take
place whilst the
contract is
still
executory or after
a
breach has occurred, but the
legal effect of the representation will be different depending upon
which of these two categories it
falls
into. There has been consider-
able confusion
as
to the possible legal effects
of
post-contractual
representations and
as
to
the requirements necessary before such
effects
are
0perative.l This confusion has been highlighted by the
three decisions which
are
discussed later in this article.a We propose
to consider the legal effect of representations made by one party to
a contract to the other that
certain
rights or remedies arising under
the contract will not be enforced against the party to whom the
representation is made.
At common law, such a reprasentation may have effect
as
a
simple
variation or a rescission of the old contract followed by the making
of a new The fine distinction between these two concepts is
material where written evidence
is
required for the formal validity
of the contract." but
is
immaterial in
so
far
as
both require considera-
ti~n.~ In the absence
of
consideration, such a representation may
still
have effect at common law
as
a waiver, although there
is
confusion
as to whether it then binds both parties or just the representor and
as
to whether it
is
absolute or temporary in effect.O Equity's attempt
1
e.g.
is the effect
of
the representation such
as
to create
a
waiver,
a
forebcarance
or
a
variation?
See
Treitel,
The Law
o/
Contract
(3rd ed.), pp. 86
et seq..
and
see
Hickman
v.
Haynes
(1875)
L,R.
10 C.P. 598;
Hartley
v.
Hymans
[1920] 3
K.B.
475;
Levey
&
Co.
V.
Coldberg
it9221
1
K.B.
688;
Besseler Waechter Glove
&
Co. Ltd.
v.
S.
Dement Coal Co. Ltd.
[1938]
1
K.B.
408;
Panoutsos
V.
Raymond Hadley Corp.
o/
New York
[1917] 2
K.B.
473,
infra.
This confused situation should be contrastcd to
the comparatively
clear
position that ariscs
in
the
casc
of pre-contractual represcnta-
tion.
If
these are not given contractual effect by the parties or are not shown to fall
within the Misrepresentation Act 1967
or
to give
a
ground for rescission in equity,
they have no other legal
effect
in contract; see
Revenue Commissioners
v.
Moroney
[1972] I.R. 372. Assurances given
before
contractual obligations are entered into
cannot
affect,
by way
of
estoppel, liabilities subsequently incurred:
McCuthie
v.
McCuthie
11971)
N.Z.L.R.
58.
2
Panchaud Fr8res
S.A.
V.
Etablissements General Grain Co.
[1970] 1 Lloyds Rep.
53;
Woodhouse A.C. Israel Cocoa Ltd. S.A.
v.
Nigerian Produce Marketing Co. Ltd.
[1972] A.C. 741;
W.
I.
Alan
&
Co.
v.
El
Nasr Export
&
Import Co.
[1972] 2
Q.B.
189.
3
Stead
v.
Dawber
(1839) 10 A.
8
E.
57;
c/.
United Dominions Corp. (Jamaica)
Ltd:
v.
Shoucair
[1969] 1 A.C. 340.
4
See
Treitel,
op. cit.
p.
90.
J
Fenner
v.
Blake
[1900]
1
Q.B.
427.
6
See
Treitel,
op. cit.
p. 92.
680
Nov.
19761
VARIATION,
WAIVER
AND
ESTOPPEL-A
RE-APPRAISAL
68
1
to deal with the problem of absence of consideration
in
such situations
has been to develop the doctrine
of
equitable or promissory estoppel.‘
Neither the precise requirements nor the effect of the doctrine appear
to be settled. The overall picture
is
thus confusing and confused.
There are two main reasons for this confusion. First, no clear
distinction
seems
to have been drawn
in
the
cases
betwecn repre-
sentations made whilst the contract
is
still executory (termed
in
this
article
“
pre-breach representations
”)
and representation made after
a breach has occurred (termed in
this
article “post-breach repre-
sentations”). This distinction
is
vital
because
the
&ects
of the
representation in the two situations are entirely different. In the case
of pre-breach representations, their purported effect is to alter the
obligations arising under the contract, whilst the effect of a post-
breach representation
is
to alter the already established remedial
consequences of the breach.
As
the
effects
of the represemtations are
thus
different,
so
too shdd the requirements necessary before the
representations
can
be said to have any
effect
be different. The
second source of confusion
seems
to
be
a
terminological one, in that
both pre- and. post-breach representations
seem
to go under the
generic name
of
“
waiver.”
The term
“
waiver
”
is a troublesome term
in
the law
of
contract.
It is
used
with different meanings and there are, therefore, necessarily
conflicting judicial statements
as
to
its requisites.8 When members of
the Bench take issue with each other on the correct meaning of the
term’ it is, perhaps, because the different legal
effects
of a waiver
have not been kept clear. It
is
possible to isolate the following
meanings for the term
lo
:
1.
An
agreement for sufficient consideration, made
as
part
of
or
in
substitution for an obligation previously made and still unper-
formed, which provides for a performance different from or substituted
for that to which the parties were bound and entitled by their original
obligation. This is sometimes called an accord and
has
the effect
of a variation
of
the original contract.
Hughes
v.
Metropolitan Railway
Co.
(1877) 2 App.Cas. 439;
Central London
Property Trust Ltd.
v.
High Trees House Ltd.
[I9471
K.B.
130;
Tool Metal Manu-
facturing
Co.
Ltd.
v.
Tungsten Electric
Co.
Ltd.
119551 2
All
E.R. 657; and see
Cheshire and Fifoot (1947) 63 L.Q.R. 283; Wilson (1951) 67 L.Q.R. 330; Denning
(1953) 15 M.L.R. 1; Sheridan (1953) 15 M.L.R. 325; Bennion (1954) 16 M.L.R. 441;
Gordon 119631 C.L.J. 222; Wilson 119651 C.L.J. 93; Jackson (1965) 81 L.Q.R. 84,
223. We are here concerned with cstoppcl in the
contractual
context. Outside that
context,
for
example in relation to the establishment
of
property rights, there may
well be
a
need for an
independent
discretionary reliance remedy,
as
suggested by
Duncanson in (1976) 39 M.L.R. 268. However, it is difRcult
to
see how this principle
could operatc except where the estoppel has
a
non-contractual function, see
post,
note 37.
fl
Patichaud Fr?res S.A.
v.
Etablissements General Grain
Co.
[1970]
1
Lloyd’s Rep.
53.
0
SCC the discussion by Woottcn J. in
Wilson
v.
Kingsgate Mining Industries
11973)
2 N.S.W.L.R. 713, 728-733, and by the members
of
the House
of
Lords in
Banning
v.
Wright
119721
1
W.L.R. 972.
10
See
also
Ewart,
Waiver Distributed;
J. W. Brunyate,
Limitation of Actions in
Equity,
Chap. VII; Cheshire and Fifoot (1947) 63 L.Q.R. 283;
Stoljar
(1957) 35 Can.
Bar Rev. 485.
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