Estoppel by representation and estoppel by convention
Produced in partnership with Nicholas Macklam of Radcliffe Chambers
Estoppel by representation and estoppel by convention

The following Dispute Resolution practice note Produced in partnership with Nicholas Macklam of Radcliffe Chambers provides comprehensive and up to date legal information covering:

  • Estoppel by representation and estoppel by convention
  • Estoppel by representation—what is it?
  • By representation—what do you need to establish it?
  • By representation—what amounts to a representation?
  • By representation—what amounts to reliance?
  • By representation—what amounts to detriment?
  • Estoppel by convention—what is it?
  • By convention—what do you need to establish it?
  • By convention—identifying the 'convention'
  • By convention—communication of the assumption
  • More...

This Practice Note considers estoppel by representation and estoppel by convention.

For general guidance on what an estoppel is and when it may be pleaded, see Practice Note: Estoppel—what, when and how to plead.

For guidance on other forms of estoppel see Practice Notes:

  1. Contractual estoppel

  2. Promissory estoppel

  3. Proprietary estoppel

Estoppel by representation—what is it?

An estoppel by representation arises where one person (A) makes, by words or conduct, a unilateral representation of fact or law to another (B),which was made by A with the intention of inducing B to rely upon it (or was made in circumstances where A’s conduct is such that a reasonable person would understand that it was intended to be acted upon), and B does in fact rely upon it to their detriment. In those circumstances A will be estopped from subsequently resiling from their original representation. The representation of fact may be made by positive action (eg, by words or conduct) or, in some circumstances (where A is under a duty to speak out but fails to do so), by inaction or acquiescence.

By representation—what do you need to establish it?

The essential requirements for establishing a plea of estoppel by representation are:

  1. a representation of fact or law by the representor (A) made to the representee (B) on which B was intended by A to rely (or was made in circumstances

  • where A's conduct is such that a reasonable person would understand that it was intended to be acted upon)

  • reliance on the representation by the representee (B)

    1. detriment to the representee (B) as a result of their reliance on the representation

  • It has been said because common law estoppel by representation is not an equitable doctrine (unlike proprietary estoppel and promissory estoppel) then there is no need to demonstrate unconscionability, ie provided the requirements of representation and detrimental reliance are established, there is no need to prove that it would be unconscionable for the representor to go back on the representation. However, given that Lord Goff said in Johnson v Gore Wood (page 508):

    'In the end, I am inclined to think that the many circumstances capable of giving rise to an estoppel cannot be accommodated within a single formula, and that it is unconscionability which provides the link between them...'

    and, given the fluidity between the various categories of estoppel (see Taylors Fashions v Liverpool Victoria

    , page 915), it would be unwise to assume that unconscionability is always an unnecessary element to establishing an estoppel by representation.

    By representation—what amounts to a representation?

    A representation may be made either by:

    1. statement, or

    2. conduct, which can include:

      1. negligence (Freeman v Cooke)

      2. silence (Covell v Sweetland and The Henrik Sif [1982] 1 Lloyd's Rep 456 (not reported by LexisNexis®)) (or inaction), but only if the party alleged to be estopped was under a duty to speak or act at the time

    However, regardless of the form of the representation, it must:

    1. have been made voluntarily (Debs v Sibec [1990] RTR 91 (not reported by LexisNexis®))

    2. if made on another's behalf, it must have been made by a person having the authority to do so (as to authority to make representations on behalf of another see, eg, Credit Suisse v Allerdale, Re Selectmove, South Buckinghamshire v Flanagan)

    3. be communicated to the person to whom it was addressed (Lokumal & Sons (London) Ltd v Lotte Shipping Co Pte Ltd, The August Leonhardt [1985] 2 Lloyd's Rep 28 (not reported by LexisNexis®), cf The Vistafjord [1988] 2 Lloyd's Rep 343 (not reported by LexisNexis®) per Bingham LJ)

    4. be material—eg, it is of such a nature that it would naturally lead to reliance

    5. be clear and unambiguous

    6. only the person to whom it was addressed may use it to support a plea of estoppel (Hillingdon v ARC, CIN v Rawlins)

    By representation—what amounts to reliance?

    The representation has to have influenced the mind of the representee, ie as a result of the representor's words or conduct (or absence of them) the representee believes or expects a certain state of affairs. The representation need not, however, have been the only influencing factor on the mind of the representee (Amalgamated Investment v Texas Commerce).

    However, this does not mean that the representor has to know that their statement is false, provided that:

    1. the representor intended their representation to be acted on in the manner in which it was acted upon, or

    2. the representor has conducted themselves in such a way that a reasonable person would take the representation to be true, and believe that it was meant that they should act upon it in that manner (Freeman v Cooke)

    A party seeking to rely on an estoppel by representation will be unable to do so if that party's own actions have contributed to the making of the representation in a legally significant way (eg by breach of duty or as a result of the concealment of a material fact) (Customs & Excise v Hebson).

    It can be sufficient if the representation confirms or strengthens a belief or expectation already held by the representee from another source. See per Goff J in the first instance decision in Amalgamated Investment (at page 936):

    'There may be cases where the representee has proceeded initially on the basis of a belief derived from some other source independent of the representor, but his belief has subsequently been confirmed by the encouragement or representation of the representor.'

    By representation—what amounts to detriment?

    The representation must have been acted upon by the representee. The need for detrimental reliance requires that the representee changes their position, to their detriment, as a result of the representation (Freeman).

    If the representee changes their position before the representation is made there can be no estoppel even if, had the representee changed their position in the same way in reliance upon the representation, an estoppel could have arisen (Horsfall v Halifax (1883) 52 LJ Ch 599 (not reported by LexisNexis®) M'Kenzie v British Linen).

    Detriment can include that the representee, as a result of the representation, failed to take steps to protect themselves or to retrieve their position until it was too late (Knights v Wiffen, Dixon v Kennaway, Durham v Michael Jackson).

    It has been said that the representation must be material (Ellis v Lambeth) and, if the change in position would have occurred in any event, then there is no detrimental reliance and accordingly no estoppel will arise (Costagliola v English).

    While it is for the representee to establish detrimental reliance, once they have done so causation is usually presumed unless the representor can establish that the representee's change of position was not as a result of reliance on the representation (Greasley v Cooke, Habib v Habis, Gillett v Holt).

    Estoppel by convention—what is it?

    Estoppel by convention is usually seen as a sub-species of estoppel by representation. The difference between the two is that, in estoppel by convention cases, the facts or state of affairs that A is estopped from denying arises, not from a representation of the type discussed above, but by mutual assent (eg, a common assumption or agreement) between the relevant parties. In such cases, it is the parties’ mutual assent (ie, the 'convention') that constitutes the representation giving rise to the estoppel. The doctrine was pithily summarised by the Court of Appeal (Hildyard J) in Dixon v Blindley Heath paras [72]–[73]:

    '72.     Estoppel by convention is a form of estoppel that was originally developed by the common law courts (see Legione v Hately (1983) 152 CLR 406 at 430) largely in the context of binding parties to agreed recitals in deeds (a paradigm example of “estoppel in pais”). Traditionally it was conceived as a rule of evidence that precluded the party estopped from leading evidence to rebut the recital or assumption. However, and especially since the decision of this court in Amalgamated Investment & Property Co Ltd (in Liquidation) v Texas Commerce International Bank Ltd [1982] 1 QB 84, its principles have largely been explained in equitable terms and expanded as another variant of equitable estoppel.

    73.     Estoppel by convention is not founded on a unilateral representation, but rather on mutually manifest conduct by the parties based on a common, but mistaken, assumption of law or fact: its basis is consensual. Its effect is to bind the parties to their shared, even though mistaken, understanding or assumption of the law or facts on which their rights are to be determined (as in the case of estoppel by representation) rather than to provide a cause of action (as in the case of promissory estoppel and proprietary estoppel) .... If and when the common assumption is revealed to be mistaken the parties may nevertheless be estopped from departing from it for the purposes of regulating their rights inter se for so long as it would be unconscionable for the party seeking to repudiate the assumption to be permitted to do so (and see, for example, The “Vistafjord” [1988] 2 Lloyds Rep 343 at 353 in the judgment of Bingham LJ, as he then was).'

    The judgment of Lord Denning MR in the Court of Appeal in Amalgamated Investment (at page 584) is often seen as the starting point for the modern analysis of the doctrine:

    '…If parties to a contract, by their course of dealing, put a particular interpretation on the terms of it - on the faith of which each of them - to the knowledge of the other - acts and conducts their mutual affairs - they are bound by that interpretation just as much as if they had written it down as being a variation of the contract. There is no need to inquire whether their particular interpretation is correct or not - or whether they were mistaken or not - or whether they had in mind the original terms or not. Suffice it that they have, by the course of dealing, put their own interpretation on their contract, and cannot be allowed to go back on it.

    …the parties by their course of dealing adopted a "conventional basis" for the governance of the relations between them, and are bound by it. I care not whether this is put as an agreed variation of the contract or as a species of estoppel. They are bound by the "conventional basis" on which they conducted their affairs. The reason is because it would be altogether unjust to allow either party to insist on the strict interpretation of the original terms of the contract - when it would be inequitable to do so, having regard to dealings which have taken place between the parties. […]

    …When the parties to a contract are both under a common mistake as to the meaning or effect of it - and thereafter embark on a course of dealing on the footing of that mistake - thereby replacing the original terms of the contract by a conventional basis on which they both conduct their affairs, then the original contract is replaced by the conventional basis. The parties are bound by the conventional basis. Either party can sue or be sued upon it just as if it had been expressly agreed between them.'

    Lord Steyn summarised estoppel by convention in the following way in the House of Lords’ decision in Republic of India v India Steamship (page 391):

    'It is settled that an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared by them both or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption […]. It is not enough that each of the two parties acts on an assumption not communicated to the other. But it was rightly accepted by counsel for both parties that a concluded agreement is not a requirement for an estoppel by convention.'

    At first instance in Blindley Heath, the judge said that (at para [133]) '…the circumstances in which an estoppel by convention is likely to operate are likely to be rare and the facts unusual'. Nonetheless, an estoppel by convention was found to exist in that case (upheld on appeal).

    In ING Bank v Ros Roca, Lord Justice Carnwath (as he then was) helpfully reviewed and summarised the authorities on estoppel by convention in the context of a claim by a bank against a company for fees for acting as a financial adviser.

    By convention—what do you need to establish it?

    In order to establish an estoppel by convention, you need to demonstrate:

    1. the 'convention'—ie the shared assumption or agreement about a particular state of facts or law

    2. that the relevant shared assumption or agreement was communicated by one party to the other; it must be shown that it was expressly shared between them

    3. that the parties acted on the basis of the convention in connection with some subsequent mutual dealing between them; the party alleging the estoppel must have relied upon it to a sufficient extent, rather than merely their own independent view of the matter

    4. that it would then be unconscionable or unjust for the court not to hold the parties to the convention. This will require the party who is alleged to be estopped to properly be said to have assumed some element of responsibility for the common assumption, in the sense of conveying to the other party an understanding that they were expected to rely upon it. It will also require detriment to have been suffered by the party alleging the estoppel, or some benefit to have been conferred upon the person alleged to be estopped

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