Equitable estoppel in 'subject to contract' negotiations

Publication Type:
Journal Article
Journal of Equity, 2011, 5 pp. 252 - 287
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Waltons Stores (Interstate) Ltd v Maher was a watershed in the development of promissory estoppel in Australian law, recognising its reach to a representation of future intention from one party to another without the need for a pre-existing legal relationship between them. However, the scope for an equitable estoppel to arise from pre-contractual negotiations which do not result in a formal contract being executed, as in that case, remains unclear in certain respects. In particular, it is not clear whether or not a plaintiff seeking to establish an estoppel needs to have held a belief that the defendant was already bound by, or bound to enter into, the contract. On another view, it may be sufficient for the plaintiff to demonstrate that he or she was induced to assume that the contract would eventuate and then relied to his or her detriment upon that assumption, even if the plaintiff knew that the defendant had a right to withdraw from the negotiations. This article explores this uncertainty in Australian law about the nature of the assumption required to found an estoppel arising from pre-contractual negotiations which are said to be `subject to contract.
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