“AGREEING TO ACCEPT A LESSOR SUM OF MONEY THAN ACTUALLY DUE IS TO MAKE A PROMISE WHICH IS UNENFORCEABLE UNLESS SUPPORTED BY CONSIDERATION OR THE DOCTRINE OF PROMISSORY ESTOPPEL CAN BE RELIED UPON AS A DEFENCE TO STOP THE PROMISER GOING BACK ON THAT PROMISE.”
This essay will critically examine the statement in question. This will be achieved through the examination of the relative caselaw, and expert academic commentary in the field. Ultimately, this essay finds the statement in question to be accurate.
The doctrine of consideration was first defined in the case of Misa v Currie, however a more Detailed Definition was provided in the case of Dunlop v Selfridge. Consideration is an exchange of promises for another. In regard to consideration, there appears to be a number of requirements which must be satisfied in order to have good consideration. Firstly, the consideration must move from the Promisee, so only they can enforce the promise as seen in Twiddle v Atkinson. Secondly, consideration must not be past, as seen in Re McArdle, where it stated that performance prior to promise is not enforceable; justified by the case of Roscorla v Thomas. However, the case of Pao on v Lau yiu illustrated an example of an exception to past consideration. Thirdly, consideration must be sufficient, but need not be adequate, as seen in Thomas v Thomas and later in the case of Chappell & co v Nestle.
The Basic Part payment of debt was considered in Pinnell’s case, where it was considered that a promise to accept less and not sue for the balance, is unenforceable unless new consideration was provided. In the circumstances where the party only perform the existing obligation to repay the debt, then it is insufficient to support the promise to accept less, as the party is merely doing what they were already bound to do. This rule was later confirmed in Foakes v Beer: in which the House of Lords considered that any promise by Julia beer not to take any interest was not supported by consideration. Foakes has done no more than they were contracted to do. McKendrick argues that the judgement in Foakes v Beer highlights the harsh operation of the Part Payment of Debt Rule. This unfair decision lead to the development of the equitable doctrine of promissory estoppel.
The doctrine of promissory esstopel was established in Hughes v Metropolitan. The doctrine was further developed in the case of High Trees House, to mitigate the harshness from Foakes v Beer: as without it, Part Payment Promises were unenforceable.
The aforementioned doctrine can only operate under certain requirements. Firstly, there must be a clear and unequivocal representation; this was considered by Lord Hailsham in Woodhouse A.C. Israel Cocos SA. However, the representation need not be express as seen in Hughes v Metropolitan. Secondly the clear or unequivocal representation must have intended to affect the legal relationship between the parties, as seen in Spence v Shell. This must indicate that the promiser will not insist upon his strict legal rights. Thirdly Lord Hodson in E.A Ajayi and Co ltd interprets the reliance Requirement to mean that the Promisee’s position has been altered in reliance to the promise. However, Lord Denning in W.J Alan and Co stated that the Promisee must have acted in reliance to the promise. Fourthly, Lord Denning stated that it must be inequitable for the promiser to go back on the promise in D and C Builders v Rees. Fifthly, per Briskett Ld in Combe v Combe, the doctrine can only be used as a defence, as it is an equitable doctrine. Sixthly, the doctrine only temporarily suspends rights as seen in tool metal manufacturing.
In regard to the statement in question, it is true that an agreement to accept a sum of money that is less than actually due is unenforceable, unless supported by further consideration. This was conformed in the more rennet case of Collier v P and M.J. Wright Ltd, where Arden LJ and the COA reaffirmed the rule in Pinnell’s case that part payment of debt cannot discharge debt if not supported by further considerations. Furthermore, once promissory Estoppel is established and all the aforementioned requirements are satisfied, then it may be relied upon at the discretion of the court.
In conclusion, this essay has critically examined the statement in question, and after careful examination of the relevant case law and expert academic commentary. In the field, it appears that part payment of debt cannot discharge a contract unless supported by further consideration. Or doctrine of promissory esstopel may be relied upon. Furthermore, based on this essay’s finding, it is Recommended that the courts refrain from further develop the doctrine as it may interfere was the doctrine of consideration to much; as expressed by Roskill LD in Brikom investment v Carr.
Written by Eaad Albar