Part Payment C promised to accept lesser sum of the debt but later sue to claim full amount Justify

Pinnels case 1602 F: o D in debt with C. o C requested D to pay lesser sum before the due date o C later want to claim the full amount : o payment of a lesser sum on the [due] day in the satisfaction of a greater cannot be any satisfaction of the whole. o !"ception if requested by creditor : Part payment before the due date #ood $horse% haw& or robe'( tendered instead of money Part payment accepted at a different place $if requested by debtor% then there is no any benefit to creditor or no detriment to debtor( )o% C not allowed to claim since it is request by C $creditor to the debt( Foakes !eer *+ 1,-. F: o C/creditor obtains 0ud1ement a1ainst D/debtor. o 2n writin1 a1reement% D allowed to pay by instalment and C will not ta&e le1al proceedin1 a1ainst D. o C later remember there is interest needed to be char1ed. o C brin1 action : o Confirm Pinnel3s case o 4o consideration pro5ided by D% so C allow to claim Extra (obiter): Part payment can be beneficial to creditor +ord 6lac&burn: o Prompt part payment can be benefit to creditor than the whole payment o 7eason: if debtor has the ability to pay% he may not probably pay before the due date. o e can pay at last minutes. o Court will only as& for sufficiency of consideration but not adequancy o 2f creditor without any fault% accept the part payment in satisfication when it was not sufficient% it was on his own fault owe5er% he still assent to the ma0ority 0ud1ement.

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Commentary 8his common rule criticised as commercial unrealistic as debtor relied on the creditor3s word 8his a1ainst the rule of 9consideration can be not adequate3. o 7eason: o )ince the 1oods $re1ardless the 5alues( can e"chan1e with the whole sum o 8hen why part payment cannot satisfied the full sum of debt owe5er% this rule can produce 0ust result when debtor force creditor to accept part payment $discussed in promissory estoppel( # who pay for part payment argued that Creditor had the $practical benefit %ot Justify &e 'electmo e (td C)* 1::F: o D owed income ta" to 2nland 7e5enue. o D as& for instalment o *fficial said need to see& appro5al from superior and will inform if not acceptable o D hear nothin1 o Part payment by D $instalment form(. o ;fter fews months% C claim the money in full. : o ;1ain% there is no consideration from the debtor o o o o o D $debtor( ar1ued there is practical benefit to creditor 2f applied <illian 5 7offey% then Foa&es 5 6eer has no point to stand. Creditor has the practical benefit but there is no case precedents. +n ,illian &offey- there is ne er mentioned about Foakes !eer. 2t is better lea5e to *+ to decide or Parliament.

Promissory estoppel cannot used. o 7eason% official cannot ma&e such promise o 2nland 7e5enue had the ri1ht to insist full payment. Collier ,right 200, F: o Part payment by instalment in =oint a1reement made by D with C. o =oint/ only debtor pay the whole sum in instalment but the whole sum is di5ided amon1 partners $D has partners( o Partnership ended. o C claim for whole sum : o 4o consideration from debtor $D( o )o C had the ri1ht to claim. o 7e0ect practical benefit to debt issue.

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Exception .. Part payment to many creditors and one of creditor later want to claim full amount %ot /ustify Composition a1reement $many creditors( in part payment ; debtor cannot pay full amount to all creditors !ach of creditors will recei5ed a di5idend $an amount payable to the creditors of a ban&rupt indi5idual( ; creditor under such a1reement cannot sue for full amount later on 7eason: ; creditor who sues for full amount will commit a fraud to another creditors. o +et debt is 1000% and the di5idend is -00 and there is - creditors. o )o% each of them a1ree and will recei5ed 100 each. o +et said one of the creditor as& for full amount% then he will 1et 200 instead% this will be unfair to another creditors. 8his established in ,ood &obarts 1,1, 0. 1rd party pay part payment on behalf of debtor to creditor and creditor later want to claim full amount ,elby #arke 1,2F: o D owed to C o C accepted part payment from D3s father o +ater% C brin1 action : o Claim failed. 7eason: by suin1 the D% then C will commit a fraud to D3s father. % Justify %. Justify

1. #ebtor pay part payment by negotiable instrument and later creditor want to claim full amount ;cceptable% as in Pinnel3s case% 1oods can be tendered of the debt 'ibree 2ripp 1,.6 F: o Part payment by debtor in the form of ne1otiable security to C : o 4e1otiable security > sufficient consideration.

Commentary ow if part payment by cheque? owe5er% part payment by cheque is not considered as sufficient consideration $#ay 3c(ea .445(. +ord Dennin1: Cheque same as cash.

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6. Part payment by e7uity 8&aise Promissory 9stoppel issue: +ord Dennin1 $in High Trees case(: o Promise to accept smaller sum if acted upon will bindin1 e5en absence of consideration o 8his is fusion law and equity o 2n Foakes v eer $almost 100 years a1o(% this is ne5er considered. o 6ut today% law and equity ha5e been 0oined for so lon1% this combination of principle must be formed. o 7efer to Hughes case ;ughes 3etropolitan &ailway Co. 1,AA F: o D/tenant% C/landlord. o C 1a5e D si" month notice to repair. o 2f D failed to repair% C may e0ect D o ;fter a month% C ne1otiate with D for sale of freehold $2f you ha5e the freehold of a buildin1 or piece of land% it is yours for life and there are no conditions re1ardin1 your ownership.( o )o% D did nothin1 about the repairs o ;fter further 2 months% ne1otiation bro&e down. o ;t the end of 6 months% C want to e0ect D. : o C cannot do so% the 6 months had to run from the bro&e down of the ne1otiation o 2n the ne1otiation% C clearly stated that as lon1 as the ne1otiation continues then C will not enforce the notice. o D relied on this for not carry out the repairs. o C3s ri1ht will be suspended. o 2f C can enforce the ri1hts% then it will inequitable to D who relied on the promise.

Commentary why u1hes not quote in Foa&es 5 6eer $part payment issue( o Foa&es 5 6eer $ *+( decided A years afters. o !5en in Foakes! they felt that Pinnel case principle too ri1id but they ne5er mentioned about Hughes )o% can Dennin13s decision applied to it?

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"ecisions support PE raised in Part Payment 2n Combe Combe $+ord Dennin1( Creditor is not allowed to enforce a debt which he a1reed to wai5e% if debtor has carried on 6usiness or in other way in chan1in1 his position in reliance on the wai5er. (ord #enning in case below stated ps applied in part payment: #C !uilders &ees 1:66 F< o Promisor/creditor/claimant/firm of builder% promisee/debtor/D o Debtor &new that creditor under financial problem% and offered part payment. o Creditor promise to accept part payment o Creditor brin1 action ;< o 2f creditor and debtor under ne1otiation% o debtor led to belie5e that part payment co5er the full payment and creditor will not enforce payment of the balance o Debtor act upon the promise o Creditor accept it as satisfaction o 8hen creditor will not allowed to enforce the balance of the payment as it is inequitable. o )ame as in High Trees case o )o% under this principle% creditor not allowed 1o bac& to his promise when it is inequitable. o +ne7uitable situation< Creditor 5oluntarily a1ree to accept lesser sum in satisfaction and debtor act upon the promise by payin1 lesser sum and creditor accept it% then it is inequitable for Creditor 1o bac& to his promise. o 'o- this is not situation in present case. o Promisee in this case said: <e will pay you nothin1 unless accept part payment o Promisee put pressure on the promisor and compel them to do what they unwillin1 to do. 8economic duress:

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Collier P. = 3.J. ,right 8;oldings: (td $200A( o ; statutory demand was set aside where the debtor had an ar1uable case of promissory estoppel. o 8he appellant $C( appealed a1ainst a decision not to set aside a statutory demand ser5ed on him by the respondent $<(. o < had obtained a 0ud1ment by consent a1ainst three partners of whom C was one. o 8he partnersB liability was 0oint. o 8he consent order pro5ided for the three partners to pay the 0ud1ment debt by monthly instalments. o C had paid a third of the debt by instalments. o is partners had become ban&rupt. o < ser5ed a statutory demand on C for the balance of the 0ud1ment debt. o C applied to set aside the demand relyin1 on an alle1ed a1reement by < that if C continued to pay his share of the 0ud1ment < would not loo& to him but only to his partners for the balance. C submitted that a promissory estoppel pre5ented < from proceedin1 a1ainst him for more than a one/third share of the debt. ;rden +=: o 8he facts of this case demonstrate that% if o $1( a debtor offers to pay part only of the amount he owesC o $2( the creditor oluntarily accepts that offer- and o $@( in reliance on the creditorBs acceptance the debtor pays that part of the amount he owes in full% the creditor will% by 5irtue of the doctrine of promissory estoppel% be bound to accept that sum in full and final satisfaction of the whole debt. o For him to resile will of itself be inequitable. o +n addition- in these circumstances- the promissory estoppel has the effect of e>tinguishing the creditor?s right to the balance of the debt. o 8his part of our law ori1inated in the brilliant obiter dictum of Dennin1 =% as he was% in the i1h 8rees case. o 8o a si1nificant de1ree it achie5es in practical terms the recommendation of the +aw 7e5ision Committee chaired by +ord <ri1ht D7 in 1:@A. o 2t follows from the 0ud1ment of +ord Dennin1 D7 in D E C 6uilders which 2 ha5e already set out that that is enou1h to ma&e it inequitable for <ri1hts in those circumstances to pursue him for the balance because +ord Dennin1 held: o <here there has been a true accord % under which the creditor 5oluntarily a1rees to accept a lesser sum in satisfaction% and the debtor acts upon that accord by payin1 the lesser sum and the creditor accepts it% then it is inequitable for the creditor afterwards to insist on the balance.F

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#nother $udge% 8hat does% howe5er% re7uire there to be an accord . 4o sufficient accord was pro5ed in D E C 6uilders itself since the owner had ta&en ad5anta1e of the builderBs desperate need for money. For the reasons 2 ha5e 1i5en% + doubt if there was any true accord in this case because the true construction of the promise or representation may well be that there was only an agreement to suspend the e"ercise of the creditorBs ri1hts% not to for1o them permanently. <hether it would be inequitable for the company to resile from its promise. 2hat cannot be in7uired into on this appeal- but + agree that it is arguable that it would be ine7uitable. owe5er% +t is perhaps all the more important that agreements which are said to forgo a creditor?s rights on a permanent basis should not be too bene olently construed. 2 do% howe5er% a1ree with my +ady that it is ar1uable that 3r Collier?s promissory estoppel defence might succeed if there were to be a trial and that the current statutory demand should therefore be set aside. 2 a1ree the appeal should be allowed.

Commentary ;owe er- this case only ruling whether # had the estoppel as the defence but not whether part payment can be e>tinguish rights. )o% althou1h it is clearly mentioned% maybe it cannot be a stron1 authority.

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