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Part payment of debt is...
not good consideration.
Pinnel's case
also
Foakes v Beer
Dr Foakes - pay owed in instalments said Mrs Beer.
Then she tried to claim the interest. Their agreement made no reference to this. Therefore Foakes said wouldn't pay it. Beer claimed there was no consideration therefore non binding.
House of Lords - she wins. No consideration. 'naked attempt to usurp the rule in Pinnel's Case'
Likened to...
Williams v Roffey. Similar in that she benefited (F v B) in that he paid at all. The difference - Mrs Beer was accepting less, rather than paying more.
Case showing why Williams v Roffey shouldn't apply to Foakes v Beer like situations. (obiter)
Re Selectmove Ltd:
Owed Inland Revenue. Can we pay in instalments. Let me check - never got back to them. They started paying in instalments. Got hit with a fine.
Court said there was no contract, no consideration as above.
Obiter: Only Parliament or H of L can extend the rule in WvR to other situations.
Common Law Exceptions
- part payment of debt before due date can be good consideration - where payment of a lesser sum discharges obligation to pay greater sum.
- Payment of lesser sum by 3rd party
Pinnel's Case
P owed Cole
C lost on technical grounds but would've won because was paid early = consideration
"There will be good consideration for a promise to accept less if debtor provides 'fresh' consideration."
n.b. sufficient not adequate - Chappell v Nestle
affirmed:
Sibree v Tripp
Promisory note = new consideration.
Doing something not already bound to do.
Builders accepted less.
D&C Builders v Rees
Builder accepted less
Defendant said promissory estoppel meant they couldn't get the rest.
Failed - she had abused their financial difficulties to force them to accept less.
Must come into equity with clean hands etc...
Payment of a lesser sum by a third party
Where a 3rd party enters into agreement with the creditor where creditor accepts lesser sum in full satisfaction of debtor's obligation then creditor can't claim the rest.
Case:
Welby v Drake
Defendant's son owed 18 quid.
Had said would pay 9 and call it quits. Plaintiff still sued.
Can be see as a separate contract, one of the terms being extinguishing debt.
Would also be fraud to try and claim - Hirachand Punamchand v Temple
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