Estoppel by conduct in contract law

This article provides a short discussion of the concept of estoppel by conduct in contract law.

The law of the Republic of Cyprus grants citizens the right to freely enter into contracts, subject to the terms, limitations, or obligations of contract law (Article 26 of the Constitution of the Republic of Cyprus).

According to the case of Charalambous v. Achilleos et al. (2001) 1 (B) A.A.D. 1058, the basic interpretative rule for contracts by the Court links the intention of the contracting parties with the meaning of the terms used in common language, as understood by the average prudent person, within the context of the agreement, excluding, however, the negotiations.

As explained in the case of Frederikou Schools Co. Ltd. v. Acuac Inc (2002) 1 (C) A.A.D. 1527, the common intention of the parties to an agreement can be revealed through the method of viewing it as a whole. In this way, the relevance, sequence, and unity of the terms and words used become apparent.

However, within the framework of a contract, the so-called rule of estoppel by representation applies, which includes behavior that, in turn, encompasses silence and promise (see Application No.: E74/2013, decision dated 28/03/2019). This rule prevents a person who led another to believe in a particular state of affairs from going back on the words or behavior that led to that belief when it would be unjust or inequitable (unconscionable) to do so (Halsbury’s Laws of England, 4th Edition, Volume 16(2), paragraph 951).

As a result, a contract can, for example, be considered renewed even if the written agreement states that it has expired, if the behavior of the parties is such that it would be unjust or inequitable (unconscionable) not to consider it so.

However, there are exceptions to this rule, such as in matters of intellectual property (see O Phileleftheros Public Company Ltd. v. Innews Cyprus Ltd., Case No. 112/2022, dated 29/06/2022).

If in doubt whether a behaviour or silence consitutes estoppel by conduct, consider seeking legal advice.

This article has been written by Chara Palekythriti, Lawyer - Legal Consultant ©

Disclaimer: This article is for informative purposes only and does not constitute legal advice, opinion or otherwise.