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Equitable estoppel, sometimes referred to as estoppel in pais, is a legal doctrine which protects one party from the voluntary, harmful actions of another party. The concept is based upon assuring fairness to those who have relied upon the actions, either passive or overt, of another person or entity. Such actions include statements of fact, contractual assertions, a refusal to act in a timely manner, acquiescence, concealing facts and silence. Equitable estoppel also prevents a party from denying facts in subsequent legal actions which have already been previously established in a court of law.
The argument for equitable estoppel is generally raised in civil proceedings. One such area is in the issue of paternity, child support and custody suits. For example, Susan and John may have been married for five years, during which time a daughter is born. Susan has been secretly involved with Sam, one of her co-workers, and believes him to be the father of her child. She remains quiet about this possibility, however, and lists John as the father on the child’s birth certificate. John and his daughter develop a close, loving relationship.
Eventually Susan files for divorce so she can marry Sam. The court awards joint custody and requires John to pay child support. Later, Susan files a petition in court to strip John of parental rights, claiming that he is not the father of the child. In this case, the doctrine of equitable estoppel can be used to deny Susan’s petition. John can successfully insist upon his parental rights based upon Susan’s earlier acquiescence regarding his paternity and her overt actions of listing John as the father on the birth certificate and seeking child support at the time of the divorce.
Equitable estoppel is also used to prevent a party from making contradictory claims in a court of law. If a party sues someone for actions which have caused harm, he cannot later file a different claim for the same harm against a totally unrelated party. For example, a teacher who is dismissed wins a wrongful discharge suit against the school principal and a co-worker claiming he was fired as a result of discrimination. Later he may file a suit against a neighbor, claiming that the neighbor harassed the school and defamed his character, causing him to lose his job. He can be prevented from pursuing the second lawsuit since those claims contradict his testimony in the first lawsuit.
Promissory estoppel is a form of equitable estoppel which applies to contract law. This is most frequently used to force an entity to complete a contract when failure to do so can cause significant harm to the other party. For example, a large firm orders a significant quantity of material from a small chemical company. In order to meet the contractual deadline, the chemical company invests in additional equipment and supplies and turns away other customers. If the purchaser refuses to complete the purchase, the supplier can file a petition requesting the court enforce the contract under promissory estoppel.
@Soulfox -- good point, and here's an illustration. Let's say that John agrees to paint Sue's house for $5,000. They don't have a contract -- it's just a handshake agreement. John buys paint, brushes, rollers and everything else necessary to paint the house. He shows up and paints the house while Sue is on vacation and is away from home.
Sue returns home and John hands her a bill. She won't pay it, claiming a written contract never existed.
In that case, should Sue be allowed to not pay John? Courts would likely say Sue owes John $5,000 unless John did a horrible job by using colors not agreed upon, painting over the windows or something else that Sue
will have to pay cash to have fixed.
Promissory estoppel, in that context, is very equitable in that it trumps the statute of fraud defense and makes sure one party deserves to get paid for relying on the promises of another (a very good, working definition of what equity actually is, by the way).
You'll see the estoppel argument raised quite a bit in contract cases. Specifically, it is often used to counter a statute of frauds (amusingly called statute of frogs by law students) defense. The statute of frauds holds that a contract valued at roughly over $500 must be in writing to be valid. The promissory estoppel argument states that a valid, unwritten contract does exist and can be found in the performance of the parties.