What is the doctrine of equitable estoppel in contract law?
The doctrine of equitable estoppel in contract law is a legal principle that comes from the state of Rhode Island. It holds that one party in a contract cannot later deny the truth of some fact that they previously accepted as true. Under Rhode Island law, a party may be stopped or legally prevented from denying a fact or a set of facts that they had previously accepted or agreed to. For example, let’s say you and your neighbor enter into a contract that states your neighbor will pay you $1000 for a lawn mower in one month’s time. Your neighbor then pays you $500 that month and then they refuse to pay the remaining $500 when the month is up. You may invoke the doctrine of equitable estoppel, which means your neighbor can no longer deny that they had agreed to pay you the full amount of $1000. Another example is if a manufacturer promises to make a part for a customer and the customer relies on that promise to their detriment. The manufacturer cannot later deny that they made that promise and they must fulfill their part of the agreement. The doctrine of equitable estoppel is a way of preventing one party from taking unfair advantage of the other. This is important for creating trust between two parties in a business transaction and preventing one party from changing the terms or refusing to fulfill their part of the agreement.
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