30 Mar Promises vs. Contracts – Understanding the Law
In law, there is a principle about contracts versus promises, which is that the law does not regard bare promises, only bargains, as contracts.
What this means is that you cannot go to the Court and expect them to order your friend to let you borrow her new Ferrari for the weekend, even though she promised she would.
The same applies to gifts. That your mother promised to give you some money at some point usually does not mean much of anything to the Court.
Now, if that same friend promised to trade her Ferrari for your 2016 Chevrolet Cobalt, and failed to follow through for some odd reason, this may be a “bargain” the Court is willing to enforce.
However, there are exceptions to the above. For example, a promise might act as a defence, or shield, from a breach of contract claim. This is called promissory estoppel (and the criteria for it may be the subject of a future post). Unfortunately though and under this doctrine, you still cannot get your friend to give you the Ferrari for the weekend.
There is at least one type of promise, or representation, the Court may enforce for you, and those are promises made regarding real property. Called “proprietary estoppel”, the Court can create or effect property rights despite it not being a bargain. It can arise when someone promises someone else that they will enjoy a right or benefit over a property.
In particular, the criteria for proving to the Court that proprietary estoppel applies is the following:
- A representation or assurance is made to the claimant (a promise), on the basis of which the claimant expects that she will enjoy some right or benefit over a property. For example, it could be that the owner of the land (let’s call him “Landowner”) promises to give you the property on his death through his will.
- You then reasonably rely on the above representation by doing something or refraining from doing something. So, for example, you could start investing in the property, renovating the house or other such tasks. The word “reasonable” here means it is not enough you, personally, believed the house was coming to you. The Court assesses the circumstances under which the promise was made to see if it was reasonable for you to form that belief to begin with. In other words, the Court may not be impressed with you if the promise came from Landowner while he was talking in his sleep.
- You then suffer a detriment as a result. In the above example, it turns out Landowner never changed his will to ensure you get the house, and it ended up going to someone else. It deprived you of the money you put in.
The reason the above can be such a powerful tool is that, assuming you successfully prove it, the entire house can be transferred to you if you made a claim against the Landowner’s Estate. This is compared to other causes of action, such as unjust enrichment, where you might only get the money you put into the house back.
Please note the above is provided for informational purposes, is not legal advice, and no solicitor-client relationship is created between our firm and the readers of this post. If you believe you may have a claim based on a contract or a claim to property, or you are defending such claims, please contact us for a consultation.