Waltons Stores (Interstate) Ltd v Maher (LAWS1071)

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Citation: (1988) 164 CLR 387

This information can be found in the Textbook: Paterson, Robertson & Duke, Principles of Contract Law (Lawbook Co, 3rd ed, 2009), pp. 145-6 [9.35], 149 [9.55].

Contents

Background facts

  • Walton Stores negotiated to lease land from the Mahers.
  • There was a condition that the Mahers demolish the existing building and build a new one as per Walton’s specifications.
  • Maher’s solicitors prepared an agreement which included some modifications, sent it to Waltons solicitors which said they would let them know by tomorrow if they disagreed with the modifications.
  • No further communication was made.
  • Maher signed the contract, gave it to Walton, who delayed signing the contract even though he knew Maher began demolishing the building and building the new one.
  • Finally, when the building is already 40%, Walton backrf up and refuses to sign.

Legal issues

Judgement

  • Justices were divided whether this is a representation of fact (common law estoppel) or a representation of future conduct (equitable estoppel).

Common-Law Estoppel

  • Deane & Gaudron JJ: Mahers acted on the assumption that exchange has taken place (binding agreement has been made).
  • Therefore, this is Common-Law Estoppel ,
  • Walton now cannot deny that they signed the lease – there is a binding agreement just as if Walton signed the lease.

Equitable Estoppel

  • Mason CJ, Wilson & Brennan JJ: Mahers acted on assumption that Walton will sign the lease in the future
  • Therefore, Equitable Estoppel – Promissory Estoppel.
    • Promissory Estoppel can occur in pre-contractual negotiations.
    • Promissory Estoppel could be used to support a case of action in contract.
  • Walton’s silence consciously put Maher under the assumption that the completion of the transaction was a formality and therefore he should begin preparations (which are to his detriment if Walton acts inconsistently with his representation)
  • Landmark case, departure from the idea that consideration is needed and reliance does not matter.

Inducement element

  • Express inducement is not required. Implied promises to complete a contract will constitute inducement .
  • Inducement element satisfied.

Detrimental Reliance element

  • Reliance loss – wasted expenditure incurred demolishing house (diminishing value of the property) and partially constructing the new building
  • Element satisfied

Cause of action

  • Remedial flexibility argument: remedy generated according to estoppel rather than breach of contract, thus Estoppel is a cause of action.
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