ExpertACCA · Question 05 · The law of obligations
'EcoVertical Farms Ltd' leases a warehouse from a landlord. During a severe economic downturn, the landlord promises to halve the rent for a year. EcoVertical relies on this and invests its remaining cash into new LED lighting. When the economy improves six months later, the landlord demands the full arrears for the past six months.
Under the equitable doctrine of promissory estoppel, what is the likely outcome?
'EcoVertical Farms Ltd' leases a warehouse from a landlord. During a severe economic downturn, the landlord promises to halve the rent for a year. EcoVertical relies on this and invests its remaining cash into new LED lighting. When the economy improves six months later, the landlord demands the full arrears for the past six months.
Under the equitable doctrine of promissory estoppel, what is the likely outcome?
Answer options:
The landlord can claim the arrears because EcoVertical provided no consideration for the rent reduction.
The landlord is estopped from claiming the arrears because EcoVertical relied on the promise to their detriment.
The landlord can claim the arrears because promissory estoppel can only be used as a 'sword', not a 'shield'.
The landlord is permanently estopped from ever raising the rent back to the original amount.
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