Legislating Promissory Estoppel IN Malaysia

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.

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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.

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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.

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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

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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

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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

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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

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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.

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

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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

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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

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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.

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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

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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

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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).

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

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).

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

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

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

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

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

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

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

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

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).

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, 289â€“94 (48th prtg.Boston, Little, Brown and Co. 1923) (1881).

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

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

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.

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

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

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

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.

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

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

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

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

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

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

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.”

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

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)

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

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

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)

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

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

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)

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.

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

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

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

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