The legal concepts and rules employed in the adjudication of waiver situations have often lacked strong logic and consistency. The result is that the distinctions among waiver, estoppel, and election have become decidedly blurred, perhaps irretrievably so. Basically, however, the legal conceptions of waiver, estoppel, and election are derived from these two elemental principles:

The first principle is at the foundation of waiver and election, while the second suggests the basis for several varieties of estoppel.

The term "waiver" has been used with so many meanings that it almost defies analysis. Some courts try to distinguish it from estoppel, while other courts treat it as synonymous or interchangeable with estoppel. For example, one court might hold that the failure to demand an answer to an unanswered question in an application for life insurance constitutes a waiver of the right to make the demand, whereas another might hold that the company was estopped from demanding the answer. When a court does attempt to distinguish between waiver and estoppel, it ordinarily treats waiver as an act that indicates a manifestation of assent to something. For example, if a company elects to issue a policy even though the medical questions were not answered, it will be presumed to have waived the right to get the answers. On the other hand, an estoppel is treated as nonconsensual. This is because the purpose of the concept of estoppel is to redress a wrong and to prevent inequitable treatment of one party to a contract by the other. Thus if waiver is to be given a specific meaning, it would probably be appropriate to define it as a "manifestation of intent to relinquish a known right or advantage." This meaning is similar to the following definition provided many years ago by the highest court of New York: "A waiver is the voluntary abandonment or relinquishment by a party of some right or advantage."

While the foregoing definitions set waiver apart from estoppel, they do not distinguish it clearly from election, which, as noted in the discussion later in this chapter, likewise connotes a voluntary act.

The doctrine of estoppel, developed centuries ago in the English courts, is a limitation on a person�s right to change his or her mind. The law recognizes the right of individuals to change their minds, but it imposes certain restraints on that right when a contract has been created or when parties have acted reasonably in reliance on another person�s representations or promises. The law of contracts attempts to distinguish the serious promise from the casual or jesting promise by means of a consideration. In the law of estoppel, a detrimental reliance or change of position by the other party is the test.

There are two broad types of estoppel: (1) equitable estoppel (also called estoppel by representation and estoppel in pais) and (2) legal or promissory estoppel.

Historically, equitable estoppel, so called because it originated in the equity courts, was the first to develop. It was confined to a representation of past or present fact; it did not apply to promises about future behavior. This original meaning has been preserved through the years and is reflected in the following comprehensive definition: "An [equitable] estoppel is a representation of fact made by one person to another which is reasonably relied upon by that other in changing his position to such an extent that it would be inequitable to allow the first person to deny the truth of his representation."

The essence of the equitable estoppel is that if a party purports to make a true statement about a past or present fact to another party who relies on the truth of the statement to his or her substantial detriment, the first party will not be permitted to later deny the truth of the statement. The case is tried on an assumption contrary to fact. Thus equitable estoppel is a rule of evidence rather than one of substantive law.

The doctrine of legal or promissory estoppel has developed within the last century and is concerned with a statement of future conduct. It has been defined as "a statement as to his future conduct made by one person to another which is reasonably and foreseeably relied upon by that other in changing his position to such an extent that it would be inequitable to allow the first person to conduct himself differently from that which he stated." In other words, if you make a promise in some circumstances you won�t be allowed to change your mind.

The example that follows illustrates a promissory estoppel. Suppose P promises to give C $25,000 if C enters a particular college and receives a bachelor�s degree. Suppose further that C matriculates at the designated college and completes all the requirements for the degree except passing the examinations for the final term when P notifies C of an intention to revoke the promise. Since C has made a substantial sacrifice in effort and money to attend college in reliance on P�s promise, the courts would not permit P to revoke the promise. P�s promise would be enforced, despite the fact that it was not supported by a consideration. In other words, the law would recognize a valid contract. Some would even argue that C�s actions in reliance on P�s promise provide the consideration (or at least an equitable substitute) to support the contract.

The foregoing example illustrates the creation of a new obligation through a promissory estoppel. Some courts will not go that far in applying the doctrine, limiting its application to modifications of existing contracts, which is the typical application in life insurance situations. This application of promissory estoppel is of growing importance.

In its original sense, election means a voluntary act of choosing between two alternative rights or privileges. Thus if a married man dies testate (with a will), his widow usually has the right to take under the will or under the appropriate intestate law. These are alternative rights, and the widow�s act of choosing one is a voluntary relinquishment of the other. The similarity of an election to a waiver is readily apparent.

The concept of election has had only limited application in life insurance. Despite the fact that an election is an overt, manifested intent to be bound, the courts have occasionally found an election to exist in the inconsistent conduct of an insurer. For example, a company�s acceptance of a premium after the discovery of a material misrepresentation has been viewed as an election by the company not to void the contract.