There is a concept in the law that one party should not be allowed to lead another party down a road, knowing full well that it is the wrong road, only later to say “a-ha” and attempt to take advantage of the other party. Where one party claims that the other has breached a contract, there may be the availability of the defense of “equitable estoppel.” The term “estoppel” refers to “stopping” someone from taking a certain position that differs from a prior position–and “equitable” refers to that certain degree of fairness that is expected of people.
In the Matter of N.Y. State Guernsey Br. Co-op v. Noyes, 260 AD 240, modified on other grounds, 284 NY 197, the court laid out the essential elements of an equitable estoppel claim, as follows: (1) As related to the party to be charged: (a) conduct which amounts to a false representation or concealment of material facts; (b) intention, or at least expectation, that such conduct shall be acted upon by the other party; and (c) knowledge, actual or constructive, of the real facts; and (2) As related to the party claiming the estoppel: (a) lack of knowledge; (b) reliance upon the conduct of the party estopped; and (c) action based thereon of such a character as to change his position prejudicially.
In the broad context of contracts,
In Ferlazzo v. Riley, 278 NY 289 (1938), the Court of Appeals pointed out that the contract rights of a mortgagee will be enforced in the absence of waiver, estoppel, bad faith, fraud, oppressive or other unconscionable conduct on its part.
In Caspert v. Anderson Apartments, 196 Misc. 555 (Sup. N.Y. Co. 1949), the court opined: “It may be unconscionable, however, to insist upon adherence to the letter of an agreement where a mortgagee indicates by his conduct or silence that his inaction may turn to his own advantage.”