Part-payment of a debt
⇒ The act of part-paying a debt is not considered valid consideration.
In Pinnel’s Case (1602), it was established that "payment of a lesser sum on the day in
satisfaction of a greater cannot be any satisfaction for the whole, because it appears
to the judges that by no possibility a lesser sum can be a satisfaction to the plaintiff
for a greater sum." This case firmly asserted that part-payment of a debt lacks valid
consideration. The rule was endorsed in Foakes v Beer [1884]. Collier v P and MJ
Wright (Holdings) [2008] noted that part payment, as a general rule, does not
constitute consideration. Still, if promissory estoppel can be proven, an exception
may apply.
THE CONSEQUENCES OF THE RULE IN PINNEL’S CASE (1602) ⇒ The rule can be
stringent, as illustrated by a scenario where X owes Y £500, and Y promises to waive
the remaining money upon receiving £250. Legally, this promise is unenforceable,
allowing Y to change their mind and demand the outstanding amount.
⇒ However, this rule can safeguard the creditor from potential exploitation by the
debtor, as seen in D&C Builders Ltd v Rees [1966].
⇒ At times, recovering only a portion of the money may be more advantageous to
the creditor than insisting on full payment. Nevertheless, the court has maintained a
strict stance on part-payment of debt.
THE EXCEPTION TO THE RULE IN PINNEL’S CASE (1602) ⇒ To reiterate, Pinnel's case
declared that part-payment of debt is not valid consideration. However, there is a
potential exception to this rule:
Introducing a new element can be considered valid consideration. For instance, "the
gift of a horse, hawk, or robe in satisfaction is good, for it shall be intended that a
horse, hawk, or robe might be more beneficial to the plaintiff than the money, in
respect of some circumstances, or otherwise the plaintiff would not have acted it in
satisfaction." In simpler terms, paying 99% of a £1000 debt may not be valid
consideration, but £10 plus an iPod (even if the iPod is worth only £100) is valid
consideration because the iPod may hold more value to the creditor than £990.
Consideration need only be sufficient and not necessarily adequate.
⇒ Pinnel’s case also acknowledged that if payment is made in a different form or at a
different time, this could be valid consideration:
For example, paying £5 in Edinburgh instead of £10 in London is acceptable. This is
because the promise goes beyond the original agreement, potentially holding more
⇒ The act of part-paying a debt is not considered valid consideration.
In Pinnel’s Case (1602), it was established that "payment of a lesser sum on the day in
satisfaction of a greater cannot be any satisfaction for the whole, because it appears
to the judges that by no possibility a lesser sum can be a satisfaction to the plaintiff
for a greater sum." This case firmly asserted that part-payment of a debt lacks valid
consideration. The rule was endorsed in Foakes v Beer [1884]. Collier v P and MJ
Wright (Holdings) [2008] noted that part payment, as a general rule, does not
constitute consideration. Still, if promissory estoppel can be proven, an exception
may apply.
THE CONSEQUENCES OF THE RULE IN PINNEL’S CASE (1602) ⇒ The rule can be
stringent, as illustrated by a scenario where X owes Y £500, and Y promises to waive
the remaining money upon receiving £250. Legally, this promise is unenforceable,
allowing Y to change their mind and demand the outstanding amount.
⇒ However, this rule can safeguard the creditor from potential exploitation by the
debtor, as seen in D&C Builders Ltd v Rees [1966].
⇒ At times, recovering only a portion of the money may be more advantageous to
the creditor than insisting on full payment. Nevertheless, the court has maintained a
strict stance on part-payment of debt.
THE EXCEPTION TO THE RULE IN PINNEL’S CASE (1602) ⇒ To reiterate, Pinnel's case
declared that part-payment of debt is not valid consideration. However, there is a
potential exception to this rule:
Introducing a new element can be considered valid consideration. For instance, "the
gift of a horse, hawk, or robe in satisfaction is good, for it shall be intended that a
horse, hawk, or robe might be more beneficial to the plaintiff than the money, in
respect of some circumstances, or otherwise the plaintiff would not have acted it in
satisfaction." In simpler terms, paying 99% of a £1000 debt may not be valid
consideration, but £10 plus an iPod (even if the iPod is worth only £100) is valid
consideration because the iPod may hold more value to the creditor than £990.
Consideration need only be sufficient and not necessarily adequate.
⇒ Pinnel’s case also acknowledged that if payment is made in a different form or at a
different time, this could be valid consideration:
For example, paying £5 in Edinburgh instead of £10 in London is acceptable. This is
because the promise goes beyond the original agreement, potentially holding more
