Estoppel: Overview, definition, and example
What is estoppel?
Estoppel is a legal doctrine that prevents a party from asserting or denying a fact or claim that contradicts previous statements, actions, or behavior. The purpose of estoppel is to maintain fairness and consistency in legal matters by ensuring that a party cannot change their position or backtrack on their previous representations if doing so would unjustly harm another party who has relied on those representations. Estoppel is commonly applied in contract disputes, property law, and situations involving promises or representations.
For example, if a landlord tells a tenant that they are allowed to keep a pet and the tenant then spends money on pet-related items, the landlord may be estopped from later claiming that the tenant cannot have the pet, as the tenant relied on the landlord's representation.
Why is estoppel important?
Estoppel is important because it promotes fairness and prevents parties from acting in bad faith or taking advantage of situations where they have previously made representations or promises that others have relied upon. It ensures that people cannot change their positions to the detriment of others, protecting individuals or businesses who have acted in reliance on what they were led to believe. This doctrine helps uphold trust in legal and business relationships and provides a remedy for parties that have been harmed by changes in position.
For businesses and individuals, estoppel is crucial for maintaining consistency in dealings and avoiding situations where one party is unfairly disadvantaged by a change in the other party's stance or actions.
Understanding estoppel through an example
Imagine a company that has repeatedly accepted late payments from a supplier without any objection. If the company then suddenly demands payment on time for a future invoice, the supplier could claim estoppel, arguing that the company had previously accepted late payments without issue. The supplier can argue that they relied on the company's previous behavior, and the company should be estopped from enforcing a strict payment deadline.
In another example, a homeowner allows a neighbor to build a fence on their property for several years without objection. Later, the homeowner cannot claim that the fence is encroaching on their property, as they allowed it to remain for a significant period. The neighbor can argue that the homeowner is estopped from challenging the fence's location due to their prior acceptance of it.
An example of an estoppel clause
Here’s how an estoppel clause might appear in a contract:
“The Parties agree that any previous representations, conduct, or statements made by either Party that have been relied upon by the other Party shall preclude the Party from later asserting any position that contradicts such representations or conduct. The Parties agree to abide by the established understanding and behavior regarding [specific matter].”
Conclusion
Estoppel is a legal principle designed to prevent unfairness by prohibiting a party from contradicting previous statements or actions that have been relied upon by others. It ensures consistency in legal relationships and protects parties from being harmed by someone changing their position after another has relied on their conduct. By understanding estoppel, businesses and individuals can navigate legal agreements with greater clarity, knowing that their actions and representations carry weight and cannot be easily undone without consequence.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.