Cobbe v Yeoman’s Row Ltd [2008]

Cobbe v Yeoman’s Row Ltd [2008]

1. Facts

• Agreement: C (Cobbe) and D (Yeoman’s Row Ltd) agreed verbally that C would purchase D’s land, demolish the existing flats, and redevelop the site into individual houses to be sold, with profits shared between them.

• Actions Taken: C relied on this informal agreement by securing planning permission and proceeding with the redevelopment.

• Dispute: D later demanded additional money from C, claiming that the terms had changed. D argued that C should have formalised the agreement in writing before taking any action.

2. Outcome

• Court Decision: The court ruled that promissory estoppel (PE) did not apply in this case.

• Reasoning: The court found that PE could not be used to enforce an agreement that should have been formalised under statute and was not legally binding.

3. Impact and Analysis

◦ Lord Walker: Noted that both parties were experienced in the property world and were aware that there was no legally binding contract. This awareness impacted the court's decision regarding the applicability of PE.

◦ Lord Scott: Emphasised that PE cannot be used to enforce agreements that statutes declare void. Specifically, PE cannot be used to bypass formal requirements necessary for contract formation.

• Formal Requirements:

◦ Statutory Requirements: The case highlighted the importance of adhering to statutory formalities for certain types of agreements, particularly in commercial contexts. PE cannot circumvent these formal requirements.

• Commercial vs. Domestic Contexts:

◦ Distinction: The case drew a distinction between domestic and commercial actors. In Crabb v Arun District Council, a more lenient approach was taken, reflecting the less formal nature of domestic arrangements. In contrast, Cobbe v Yeoman’s Row Ltd involved experienced commercial parties who should have known better and thus were held to a stricter standard.

◦ Expectation of Formality: Commercial parties are expected to formalise agreements properly and are less likely to rely on informal promises. The court’s decision reinforced that experienced commercial actors cannot rely on informal agreements or expectations in the same way domestic parties might.

• Tension in PE Doctrine:

◦ Unconscionability vs. Statutory Form: The case illustrated the tension between using PE to prevent unconscionable conduct and respecting statutory requirements for contract formation. While PE can prevent unjust outcomes, it cannot override the need for formal contractual processes.

Cobbe v Yeoman’s Row Ltd underscores the limits of promissory estoppel in commercial contexts, where formal contractual agreements are required to protect parties from potentially unconscionable conduct. The case reinforces that PE cannot be used to bypass statutory formalities, particularly when dealing with experienced commercial parties.