ESTOPPEL BY WAIVER

• Date: 06 February 2019

(1) "Indeed, consideration is scarcely relevant, since the agreement to accept a lesser sum, in full and final settlement, concerns the modification or discharge of the contract, not its formation. In effect, this defence of estoppel by waiver (if it may be so conveniently described) is always pleaded by way of defence. It is set up, not as the foundation of an action for breach of contract, but as an answer to the contention of a creditor that the letter of the original contract must be observed. The principle, as we understand it, is that where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relations as if no such promise or assurance had been made by him. He must accept their legal relations as modified by himself, even though it is not supported in point of law by any consideration, but only by his word. (See Combe v. Combe (1951) 1 All E.R. 767 as per Denning, L.J. (as he then was) at p. 770). The only qualification to the above principle is that it can only be invoked by a defendant. It can never stand alone as giving a cause or action in itself and cannot, therefore, do away with the necessity of consideration when that is an essential part of a plaintiff’s cause of action. Again, the observation of Lord Denning, M.R., in D & C Builders Ltd. v. Rees (1965) 3 All E.R. 837 at 840 (a judgment in which most of the authorities on the point were considered), and to which learned counsel to the defendants/respondents has referred us, appears to accord with our stand in this Appeal. It reads: - "In point of law, payment of a lesser sum, whether by cash or cheque, is no discharge of a greater sum. This doctrine of the common law has come under heavy fire. It was ridiculed by Sir George Jessel, M.R. in Couldery v. Bartrum (1881) 19 Ch. D. 394 at p 399. It was held to be mistaken by Lord Blackburn in Foakes v. Beer (1884) 9 App. Cas at p. 622. It was condemned by the Law Revision Committee in their Sixth Interim Report (Cmnd 5449) paragraphs 20 and 22. But a remedy has been found. Equity has stretched out a merciful hand to help the debtor. The Courts have invoked the broad principle stated by Lord Cairns L.C., in Hughes v. Metropolitan Railway Co...