Hughes v. Metropolitan Railway Co.

"Hughes v. Metropolitan Railway Co." (1877) 2 AC 439 is a House of Lords case considered unremarkable for many years until it was resurrected by Lord Denning in the case of "Central London Property v. High Trees" in his development of the doctrine of promissory estoppel. The case was the first known instance of the concept of promissory estoppel.

Facts

Hughes was the landlord of the building leased to the Railway Company. Under the lease, Hughes was entitled to compel the tenant to repair the building within six months of notice.

Notice was given on October 22, 1874 from which the tenants had until April 22 to finish the repairs. On November 28, the tenant railway company sent a letter proposing to purchase of the building from Hughes. Negotiations began and continued until December 30th, at which point nothing was settled.

Once the six months had elapsed the landlord sued the tenant for breach of contract and tried to evict the company.

Ruling

The court ruled that with the initiation of the negotiations there was an implied promise by the landlord not to enforce their strict legal rights with respect to the time limit on the repairs, and the tenant acted on this promise to their detriment. In Hughes v. Metropolitan Railway Co. (1877) 2 AC 439 (HL) at 448, Lord Cairns stated the principle as:

...it is the first principle upon which all Courts of Equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results — certain penalties or legal forfeiture — afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which are thus taken place between the parties.

In this instance the rights of the landlord were suspended only temporarily, allowing the tenant more time to repair.