Contract Lecture - week 9 - Variation of Contracts, Part-payment, absence of consideration & promissory estoppel. Variation of Contracts - changing terms: - Need for agreement (offer plus acceptance) - Need for consideration Particularly as it relates to the performance of existing contractual obligations to the same party Stilk v Myrick 1809 Hartley v Ponsonby 1857 Williams v Roffey Bros 1990 - Supply of goods and services - a new promise which varies the contract when the promisee is only performing an existing obligation is binding on the promisor if the promisor receives a 'practical benefit'. (Williams v Roffey Bros) Part payment of debts: Can a promise to accept less than is owed in order to extinguish a debt be enforceable? EXAMPLE - Bill is owed £2000 by Andy, Andy offers to pay £1500 - says he cannot afford any more. Bill accepts, and promises not to try to recover the remaining £500. Is Bill (the promisor) bound by this promise? Common Law position - Pinnel's Case (1602) Part payment of a debt on the date on which it is due can never be satisfaction for the full amount owed. HOWEVER - - Early part payment at the request of the creditor - Payment on the due date but at a different location from the one specified in the contract - Provision of goods or services instead of money - Something additional offered - 'the gift of a horse, hawk, robe' WILL amount to consideration if acceptable to the creditor. This case is obiter because the debtor in that case had actually paid early and has therefore provided sufficient consideration to discharge the entire debt. This was confirmed in Foakes v Beer 1884 Dr Foakes owed money to Mrs Beer. Mrs Beer agreed to accept payment by instalments. At the end of the instalment payments, Mrs Beer claimed the interest on the debt, because of the instalment (so delayed) payments. The Hol confirmed that she was entitled to recover the interest and any promise to accept less than she was owed was not binding. Even is Mrs Beer has promised not to demand the interest, that promise was unenforceable because Dr Foakes provided no consideration for it. So, the part payment (instalments) could not extinguish the entire debt (full amount and interest).
Re Selectmove 1995 2 All ER 534 A company asserted that it had made a binding contract with the Inland Revenue to pay its tax by instalments. The Inland Revenue argues that this agreement was not binding on them because the company provided no consideration. The company was only purporting to do what is was already obliged to do. The company argued that the arrangement to pay in instalments provided 'practical benefit'. The CoA rejected and reiterated the position in Foakes v Beer. Practical Benefit? Williams v Roffer Bros - if 'practical benefit' is provided, then that will amount to sufficient consideration for the enforcement of a new promise, even when there was an existing obligation to the