## Facts

- Tool Metal Manufacturing Co Ltd allowed Tungsten Electric Co Ltd to use patented alloys under an agreement specifying standard and extra payments if production exceeded limits.
- During World War II, facing Tungsten Electric’s financial difficulties, Tool Metal Manufacturing agreed not to seek the extra payments.
- After the war, Tool Metal Manufacturing sought to reinstate the original payment terms and claim the previously suspended extra payments.

## Issues

1. Whether Tool Metal Manufacturing’s promise not to claim extra payments operated to permanently forfeit its rights, or merely suspended them under promissory estoppel.
2. Whether the company could resume its rights to claim extra payments after giving clear notice to Tungsten Electric.
3. Whether promissory estoppel permitted Tungsten Electric to claim new rights or merely to defend against payment demands.

## Decision

- The House of Lords held that the promise to suspend extra payments created a promissory estoppel, temporarily preventing enforcement of those rights during the wartime period.
- The estoppel did not permanently extinguish Tool Metal Manufacturing’s rights; the rights could be resumed provided clear notice was given to Tungsten Electric.
- Tungsten Electric could use estoppel as a defence to avoid paying for the suspended period, but could not base new claims on the promise itself.
- Sufficient clear notice—allowing reasonable time for adjustment—was deemed necessary before Tool Metal Manufacturing could enforce its original rights.

## Legal Principles

- Promissory estoppel prevents a party from acting inconsistently with a clear promise relied on to the detriment of the promisee, even absent formal consideration.
- Estoppel operates as a shield, not a sword; it protects against the enforcement of existing rights, but does not create new causes of action.
- Suspension of rights via promissory estoppel is temporary and those rights may be resumed with proper notice.
- Clear notice is a prerequisite for resuming rights previously suspended under promissory estoppel.
- Promissory estoppel is distinct from waiver (which requires abandonment of rights) and from contract modifications (which require consideration).

## Conclusion

Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd established that promissory estoppel suspends, but does not terminate, legal rights and clarified the requirement of clear notice before resuming such rights. This case remains foundational in guiding the application of promissory estoppel and the necessity of fairness and precise communication in contract law.


Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 2 All ER 657