What Happens If a Party to a Contract Acts In a Way That Expresses An Intent to Waive Legal Rights?

The Doctrine of Promissory Estoppel May Negate the Right to Enforce Legal Rights When a Party to a Contract or Other Legal Relationship Behaved In a Way That Demonstrated An Intent to Waive Such Legal Rights.

Understanding the Promissory Estoppel Principles Involving Waiver of Legal Rights Via Representation and Reliance

Contract Document In a circumstance where a party to a contract expressly or implicitly represents to another party within the contract, whether by statement, silence, or conduct, but unambiguously, that a right provided within the contract will be unenforced, and the representation is relied upon, a promissory estoppel may arise.

The Law

The principle of promissory estoppel, including the required elements to establishing a waiver or a forgoing of contractual rights, were well explained within, among other cases, the cases of Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50Grasshopper Solar Corporation v. Independent Electricity System Operator, 2020 ONCA 499, and 1376273 Ontario Inc. v. Knob Hill Farms Limited, 2003 CanLII 28382, wherein each it was respectively said:


[15]  Promissory estoppel is an equitable defence whose elements were stated by Sopinka J. for this Court in Maracle, at p. 57:

The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the [promisee] must establish that, in reliance on the [promise], he acted on it or in some way changed his position. [Emphasis added.]

The equitable defence therefore requires that (1) the parties be in a legal relationship at the time of the promise or assurance; (2) the promise or assurance be intended to affect that relationship and to be acted on; and (3) the other party in fact relied on the promise or assurance. It is, as we will explain, implicit that such reliance be to the promisee’s detriment.


The principles of promissory estoppel are well settled.  The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on.  Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position.  In John Burrows Ltd. v. Subsurface Surveys Ltd., 1968 CanLII 81 (SCC), [1968] S.C.R. 607, Ritchie J. stated, at p. 615:

It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations.

This passage was cited with approval by McIntyre J. in Engineered Homes Ltd. v. Mason, 1983 CanLII 142 (SCC), [1983] 1 S.C.R. 641, at p. 647.  McIntyre J. stated that the promise must be unambiguous but could be inferred from circumstances.


[67]  Promissory estoppel typically involves a promise by one party not to rely on its strict contractual rights. Where such a promise has been made with an intention that the other party will rely on it, and that party relies on the promise to his or her detriment, the party who made the promise is estopped from acting inconsistently with it. As with a shared assumption, although the promise does not vary the terms of the contract, the party who made the promise may be precluded from resiling from it to the extent necessary to protect the position of the party who has relied on the promise to his or her detriment.


[136]  Equity will intervene in appropriate circumstances where a party expressly or implicitly, by unambiguous representation or by its conduct or silence, waives compliance with a term in a contract or leads another party to suppose that strict rights arising under the contract will not be enforced.  Such conduct invokes the principle of promissory estoppel or detrimental reliance.  See Re Tudale Explorations Ltd. and Bruce et al (1978), 1978 CanLII 1471 (ON SC), 20 O.R. (2d) 593 (Div.Ct.); Owen Sound Public Library v. Mial Developments Ltd. (1979), 1979 CanLII 1624 (ON CA), 26 O.R. (2d) 459 (C.A.).

[137]  Promissory estoppel requires (a) an existing legal relationship when the statement is made; (b) a clear, unambiguous representation by the party against whom the estoppel is raised, establishing his intent to be bound by what he said, (c) reliance on the representation by the party raising the estoppel, a resulting act by the party to his detriment, and (d) a finding that the promisee acted equitably: See G.H.L. Fridman, The Law of Contract in Canada, 4th ed., (Scarborough, Ontario: Carswell, 1999) at pp. 131-147. See also Engineered Homes Ltd. v. Mason, 1983 CanLII 142 (SCC), [1983] 1 S.C.R. 641 respecting the need for a clear unambiguous promise.

As per the Trial LawyersMaracle, Grasshopper, and 1376273 Ontario, cases, the right to enforce contract terms, or other legal rights, may be lost due to the statements or conduct of the party; and accordingly, the party who relied upon the statements or conduct may use the doctrine of promissory estoppel as a defence against an attempt to enforce such terms or rights.  In this respect, the doctrine of promissory estoppel acts as a shield.

Interestingly, the doctrine of promissory estoppel is available only as a shield, meaning available as a defensive legal tool, rather than as an offensive legal tool; and accordingly, the doctrine of promissory estoppel is unavailable for use as a sword.  The principle that promissory estoppel may only be used as a defensive tool rather than as an offensive tool, and therefore unavailable to support a lawsuit was stated in, among other cases, Doef's Iron Works Ltd. v. Mortgage Corp. Canada Inc., 2004 CanLII 34620, wherein the Court of Appeal said:


[2]  It is well established that promissory estoppel can be used only as a shield and not as a sword.  See: Canwest Exploration Co. v. Letair, 1963 CanLII 35 (SCC), [1964] S.C.R. 20, 41 D.L.R (2d) 198; Reclamation Systems Inc. v. The Honourable Bob Rae, 1996 CanLII 7950 (ON SC), [1996] 27 O.R. (3d) 419.  When the respondent commenced proceedings claiming a declaration that the mortgage was null and void based on the representation that the mortgage was “not a real mortgage”, it was using the doctrine as a sword.

Summary Comment

The doctrine of promissory estoppel involves defensive legal principles which negate the right of a party to enforce contract terms, or other legal rights, where such a party previously clearly stated, or clearly represented in other ways such as by silence or conduct, that such legal rights would be waived and another party within the legal relationship relied upon the representation.  Essentially, simply said, the doctrine of promissory estoppel prevents a party from reneging on a waiver or otherwise engaging in some form of take it back type conduct.

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