First Principles of Business Law

8.4. Creating obligations by estoppel  

Case-study. A applies for and is granted a licence to import fruit into Australia from New Zealand. A can make a profit by importing apples and sell them at $2 per kilo. A offers 2000 kilos of apples to B, a fruit seller. B says that he is interested and will send a fax to A to confirm the order. A week later, A has heard nothing. He telephones B and says that he needs to know whether to import the apples or not. B says that he has prepared the order and will fax it the next day. Relying on this, A contracts to import 2000 kilos of apples. However the order from B is never received and B says that the contract with A was never completed. A says that, although this is technically true, B should not be allowed to deny the existence of an order for 2000 kilos of apples. Is A correct?

(a) No. B did not wrongly represent an existing fact to A: he only represented what he intended to do in the future. The doctrine of estoppel does not operate in relation to representations about the future. B is will not be prevented from denying that a contract was made.

 (b) Yes. B represented what he intended to do in the future, and A relied on this representation, acting to his detriment by importing the fruit. In these circumstances, good conscience requires that B should not be allowed to deny that a contract with A was made.