Peyman v Lanjani: CA 1985

Application was made for consent to assign a lease. The court was asked whether or not the purchaser of a leasehold interest in a property, who had elected to affirm the contract despite a repudiatory breach by the vendor, could be held to his election if, when he made it, he was aware of facts which entitled him to rescind the contract, but had no knowledge that those facts gave him the right in law to rescind.
Held: For the purposes of the common law doctrine of election, where a person has an unrestricted choice between two mutually inconsistent courses of action which affect his rights, knowledge of the right to elect is a pre-condition of making an effective election, and there can be no effective election unless the person making it knows his legal rights as well as the facts giving rise to those rights. An estoppel must be based upon an informed choice, but: ‘When a party has legal advice, he will be more easily presumed to know the law and evidence or special circumstances may be required to rebut the presumption.’
May LJ said: ‘The next feature of the doctrine of election in these cases which in my opinion is important is that when the person entitled to make the choice does so one way or the other, and this has been communicated to the other party to the contract, then the choice becomes irrevocable even though, if and when the first person seeks to change his mind, the second cannot show that he has altered his position in any way.
This being so, I do not think that a party to a contract can realistically or sensibly be held to have made this irrevocable choice between rescission and affirmation unless he has actual knowledge not only of the facts of the serious breach of the contract by the other party which is the pre-condition of his right to choose, but also of the fact that in the circumstances which exist he does have that right to make that choice which the law gives him.’
Stephenson LJ said: ‘I therefore feel free to follow the decision of this court in Leathley v John Fowler and Co Ltd [1946] KB 579 and to hold that knowledge of the facts which give rise to the right to rescind is not enough to prevent the plaintiff from exercising that right, but he must also know that the law gives him that right yet choose with that knowledge not to exercise it.’

Stephenson LJ, May LJ
[1985] 1 Ch 457, [1985] CL 457
England and Wales
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Cited by:
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Lists of cited by and citing cases may be incomplete.

Estoppel, Landlord and Tenant

Updated: 05 January 2022; Ref: scu.188150