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GDL Law Notes GDL Contract Law Notes

Part Payment And Promissory Estoppel Notes

Updated Part Payment And Promissory Estoppel Notes

GDL Contract Law Notes

GDL Contract Law

Approximately 560 pages

A collection of the best GDL notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through applications from top students and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor". In short these are what we believe to be the strongest set of GDL notes available in the UK this year. This collection of GDL notes is fully updated for recent exams, also making them the most up-to-date GDL study materials ...

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General rule: At common law, payment of a lesser sum does not discharge the obligation to pay the full amount

  • Foakes v Beer: There is no consideration for a promise to accept less, so it is not binding

  • Re Selectmove: company tried to argue Williams v Roffey – but If this applied then Foakes v Beer would always be circumvented, so judge argued that Foakes v Beer was too well established

  • Therefore:

    • Promise to pay more –use Williams v Roffey

    • But promise to accept less – then must use Foakes v Beer

Exceptions to the Part Payment Rule

The Common Law

Pinnel’s Case :

  1. Different ‘thing’: – ‘a hawk, a horse, or a robe’

    • Confirmed in Sibree v Tripp: tender of a promissory note was a sufficient novelty to constitute consideration for the creditor’s promise to accept a lesser sum

    • D & C Builders v Rees :part payment by cheque (negotiable instrument) was in no way better than paying the full amount in cash – not sufficiently new

  2. Different ‘place’: needs to be an advantage of meeting in a different place – the advantage acts as good consideration

  3. Different ‘time’ – earlier: money sooner is better than money later

Welby v Drake : payment by a 3rd party

  • D’s son owed the C 18 – D’s father then made agreement to pay it off, but for a lesser amount (9)

    • Where a lesser amount is paid in satisfaction of a debt by a third party to that debt, the creditor cannot sue for the balance

    • Some cases have found fraud – e.g. CA Hirachand Punamchand v Temple – but breach of contract won’t amount to fraud at CL unless promisor knew at the time of promising that he had no intention of keeping to promise

Promissory Estoppel: An equitable exception to the general rule

  • E Cooke – ‘Estoppel is a mechanism for enforcing consistency; when I have said or done something that leads you to believe in a particular state of affairs, I may be obliged to stand by what I have said or done, even though I am not contractually bound to do so’: where it would be unjust or inequitable to go back (Denning)

  • Hughes v Metropolitan Railway : Notice to repair which allowed landlord to evict tenant if he didn’t complete within 6 months. After the notice was served L and T began negotiations for the purchase of the property but these broke down. L tried to evict T at the end of the 6 months

    • Lord Cairns – by conducting negotiations L gave impression that they wouldn’t stand by their strict legal rights: the clocks should have been suspended during the negotiations, this would have been reasonable

  • CLP Trust v High Trees House (1947)

    • Denning wouldn’t allow back payment because of ‘doctrine of promissory estoppel’ : ‘A promise intended to be binding, intended to be acted on and in fact acted on is binding so far as the terms properly apply’

    • Factors:

      1. Clear and unequivocal promise to suspend existing contractual rights

      2. Change of position by promise in reliance on the promise

      3. Reliance need not be detrimental

      4. Inequitable for promisor to go back on the promise

      5. Shield no a sword

  1. Clear Unequivocal promise to waive contractual rights

    • Either express or by conduct – can be implied (Hughes v Metropolitan Railway Co.)

      • But must be clear

    • Woodhouse v Nigerian Produce: promise to pay in one currency was not a clear promise: was just a company doing a favour for another

      • Wasn’t such a clear promise that had it been a contract it would have been a contractual promise

    • Businesses make concessions like this all the time – but not intended to be binding

  2. Alteration of position in reliance

    • Change of position must be in reliance on the promise

      • Ajayi v Briscoe– Owners had let lorries to the D who had experiences difficulties in having them serviced. Owner consented to withhold instalments as long as they were off the roads. Owners later sued to recover instalments due, and the D pleaded promissory estoppel. The PC held that promissory estoppel did not defeat the owner’s claim as the D had not altered his position in reliance on the promise: lorries would have been off the road anyway

    • Promise need not be the only reason for the promisee’s change in position but it must have influenced the promisee’s conduct in some way

    • Where the promisee has, after the promise, conducted himself in the way intended by the promisor, it will be up to the promisor to establish that the conduct was not induced by the promise (Brikom Investments v Carr)

    • Collier v P & MJ Wright (Holdings) Ltd: party payment...

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