DON NAZAR

2018868046
LAW436 – LAW OF CONTRACTS
ASSIGNMENT

QUESTION A

In this issue is whether Ayra is required to pay the remaining RM2,500 after Fishies
Financial Services (FFS) have cashed the cheque of RM7,500 given by Ayra which
she requested if it can be considered as full settlement of the debt.

In the Contracts Act, section 64 states that “Every promisee may dispense with or
remit, wholly or in part, the performance of the promise made to him, or may extend
the time for such performance, or may accept instead of it any satisfaction which
he thinks fit”.

Any smaller payment is not a complete satisfaction to the settlement of a debt the
terms can be changed when there are new or additional consideration given.
Under the Pinnel’s case, he had sued Cole who owed him some money. However,
Cole told the court that he had paid part of the sum and it was considered
satisfactory to Pinnel. The court mentioned that even though it is not at a satisfactory
level when only part of payment is made from the whole debt, any action to
substitute the payment like exchanging the payment with a horse, hawk or robe is
only considered sufficient to discharge the debt.

Pinnel’s case was also applied in the case of Foakes v Beer where the appellant
owes the respondent $2000 and Beer agreed not to take Foakes for a judgement
debt if he had paid her $500 and the rest in instalments. Foakes complied with the
demand but however, Beer have asked for interest because any judgement debt
would have interest payment. The court favoured Beer and Foakes was required to
pay the remaining interest. Part payment for the debt does not complete the whole
debt remaining as there are some more debt for the interest that occurred. Hence, if
Ayra did not state in the letter “could be accepted as a full settlement of her debt”,
she will be required to pay.

So, in the the illustrations under section 64 shows that debt can be paid by either:

(b) A owes B RM5, 000. A pays to B, and B accepts, in satisfaction of the whole debt,
RM2, 000 paid at the time and place at which the RM5,000 were payable. The whole
debt is discharged.
DON NAZAR
2018868046
LAW436 – LAW OF CONTRACTS
ASSIGNMENT

(d) A owes B under a contract, a sum of money, the amount of which has not been
ascertained. A, without ascertaining the amount, gives to B, and B, in satisfaction
thereof, accepts the sum of RM2,000. This is a discharge of the whole debt, whatever
may be its amount

A payment of a lesser sum does not satisfy the debt of a larger sum but can be an
exception if there was a new or additional consideration given. The act of cashing
the cash by FFS can be noted as a new consideration given.

This can be further supported by the case of Seal Incorporated Bhd v Norsechem
Resins Sdn Bhd, the Court of Appeal found that the respondents were not able to
claim the balance of the debt after cashing in the cheque by the appellants.

Futhermore, in the case of Bidder v Bridges, a cheque that was given by a third-
party for a smaller sum to settle the larger debt was considered a complete
satisfaction of the debt after the defendant have cashed the cheque.

In our local case of Tiun Eng Jin v Wong Sie Kong, the plaintiff sued the defendant to
recover the amount owing but at the same time they have signed an agreement
where the plaintiff will accept goods as part of the payment in order to withdraw the
matter from the court case. The court decided that there will be no recovery of
amount owing after the defendant has done what is said in the agreement.

In conclusion, Ayra is NOT REQUIRED to pay the balance of RM2,500 because the
action of cashing in the cheque was seen as new consideration for the settlement of
the debt. What FFS should have done is to return the cheque in order to reject the
new consideration proposed by Ayra.
DON NAZAR
2018868046
LAW436 – LAW OF CONTRACTS
ASSIGNMENT

QUESTION B

This case discusses about advising Bala, a security guard of Simon’s company,
whether he can claim the amount of RM500 after chasing off a group of assailants
who were about to rob his boss Simon. This became an issue also because previously
Simon offered Bala RM500 if he could be extra alert and become his bodyguard
since he is going back late at night.

In the Contracts Act, section 2 (a) when one person signifies to another his willingness
to do or to abstain from doing anything, with a view to obtaining the assent of that
other to the act or abstinence, he is said to make a proposal;

The offer that was made by Simon to Bala “to be paid RM500 for becoming extra
alert and a bodyguard” was considered as a valid offer. The two comes are bind in
an agreement after Bala has accepted the offer just as it is stated in Contracts Act
section 9 “So far as the proposal or acceptance of any promise is made in words,
the promise is said to be express. So far as the proposal or acceptance is made
otherwise than in words, the promise is said to be implied.”

In the case of Glasbrook Bros Ltd v Glamorgan County Council, the appellants
requested an extra 30 policeman to be added to the 70 men patrol teams. It is
understood that the coverage only requires about 70 men but the appellants claim
they will pay the extra charges for the 30 policemen. However, after the coal strike
ended, the appellants refused to pay because they said the police force was
performing their public duty. The court decided that the appellants have to pay
because of the extra police force that was added to already a sufficient force for
the coal strike area. If this case was applied to Simon and Bala, Simon will be asked
to pay Bala for performing more than his pre-existing duty for the company.

This statement can also be strengthen by looking at Ward v Byham whereby the
defendant promised to pay a fee to take care of their child but said that plaintiff
was only performing her duty. The Court of Appeal said that there was consideration
and the plaintiff had exceeded her statutory duty to maintain the child.
DON NAZAR
2018868046
LAW436 – LAW OF CONTRACTS
ASSIGNMENT

On the contrary, Stilk v Myrick, performing the pre-existing duty is no consideration.

The defendant is not required to pay the plaintiffs after performing extra work to go
back to London. This is argued because they were already working as a seaman
and no new job scope were added to their pre-existing contract. The Court did not
grant extra fees to the plaintiffs. So, even though Bala is entitled to the sum of RM500
for his extra duties, he DID NOT perform his act as a body guard to Simon.

In conclusion, Bala is not entitled for the sum of RM500 because he did not fulfil his
“new duty” under the said agreement. He should have walked back with Mr. Simon
every day in order to claim such. Furthermore, his job description is already to work
as a security guard hence, at any time and if the situation ever occurs again, it is his
duty to ensure the safety of the employees that are working at the company.