Doctrine of Promissory Estoppel - Simple Explanation #lawstudents #lawschool #laws #legalterms

What is the Doctrine of Promissory Estoppel?

Think of the word ‘stop’ when you hear ‘Estoppel’.

Estoppel is when a person is stopped from asserting or denying something that contradicts the persons own previous words or actions.

While promissory estoppel in contract law is usually used to enforce oral contracts; it is applicable in written contracts also.

A promissory estoppel prevents a promisor from denying the existence of a promise when the promisee reasonably relies on the previous words or actions of the promisor and an injustice can avoided only by the enforcement of the promise.

For example, in the Motilal Padampat Sugar Mills case, the UP government had announced a 3-year sales tax exemption to promote new industries. (Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P)

The company started a new vanaspati plant to take advantage of the tax exemption. Subsequently, the government decided to significantly reduce the benefits.

Following the doctrine of Promissory Estoppel, the supreme court enforced the promise of a tax holiday.