Charlie has lost his job and that they are suffering from financial difficulties.

Amy also agrees that, although Charlie owes her 1000 pounds she will accept 55 pounds instead. Charlie pays Amy 500 pounds. (Foakes v Beer) unless the requirements of Pinnels Case have been met. A good answer would also consider and apply Re Selectmove. The fourth, and final, issue is whether or not the answer to the third issue would be different if Beryl has paid Amy the 500 instead of Charlie. Candidates needed to consider the general rule that partpayment of a debt by a third party, if accepted by the creditor in full settlement of the debtors liability, is a defence against a later action by the creditor (Hirachand Punamchand v Temple). This case (Re Selectmove Ltd [1994] BCC 349) further confirms the existing principle that an offer to fulfil an existing contractual obligation cannot be seen as consideration (see: Consideration) to support a new agreement. The Inland Revenue tried to wind up Selectmove for non-payment of debts. Although it had agreed to accept payments by installments, the Revenue claimed that it could not be held to that agreement because Selectmove had offered no consideration. The Court of Appeal supported the Revenue, that is, they applied the ruling in Foakes vbeer 1884 and not the (much more recent) decision in Williams vroffey bros 1991. The third issue that arises is the effect of Amys promise to Charlie Charlie has lost his job and that they are suffering from financial difficulties. Amy also agrees that, although Charlie owes her 1000 pounds she will accept 55 pounds instead. Charlie pays Amy 500 pounds. As a general rule, part-payment of a debt is not satisfaction of the whole Foakes v Beer (HPH 175)

Mrs Beer obtained a judgment against Dr Foakes for £2090 19s. Dr Foakes could not pay it all at once and so the parties came to an agreement about payment of the debt over time. An agreement was drawn up by Dr Foakes' solicitor under which Mrs Beer undertook not to take proceedings for enforcement of judgment and Dr Foakes promised to pay the debt by agreed instalments. Dr Foakes then paid the instalments and paid off the debt. The agreement said nothing about interest. It only dealt with the judgment debt itself. Mrs Beer was in fact entitled to interest on a judgment debt. She sued for the interest after Dr Foakes had paid off the capital sum. So, the issue which went to the House of Lords was very straightforward: could she sue for the interest after having agreed to accept the judgment debt without interest? The House of Lords re-affirmed the rule in Pinnel's case and held that Mrs Beer could sue for the interest. Lord Selborne made the point that, had this agreement been in a deed under seal, then Mrs Beer would have been precluded from suing for the interest. This is because using a deed is an alternative to contract for making a legally enforceable promise. Lord Blackburn would have decided the other way but was just persuaded to go along with his brethren. What Lord Blackburn said was p

"I assent to the judgment proposed, though it is not that which I had originally thought proper." (at 623 of Report). Lord Blackburn also said (see p 178 of HPH): "...all men of business...do every day recognise and act on the ground that prompt payment of a part of their demand may be more beneficial to them than it would be to insist on their rights and enforce payment of the whole. Even where the debtor is perfectly solvent, and sure to pay at last, this often is so. Where the credit of the debtor is doubtful it must be more so." . In England the argument that Williams v Roffey Bros must necessarily mean that the lesser sum rule should be abandoned or modified has been rejected in the case of Re Selectmove Ltd which is noted on p 179 note 1. Remember that Santow J in Musumeci considered that the two rules were inextricably linked. The rule, like the existing duty rule, does protect against extortionate demands. The case of D & C Builders v Rees, mentioned on p 179 note 2, was a case where the debtor knew that the creditor was in financial dire straits and said that he would pay a smaller sum which the creditor must accept or the creditor would get nothing. The creditor did take the smaller sum but it was held that he could claim the rest of the debt. However, protection against extortionate demands can now be provided by the doctrine of economic duress. There are exceptions to the lesser sum rule and situations where it does not apply. It does not apply if the amount of money owed is in doubt or there is a dispute about it. If this is the case, then any promise to pay will be treated as a compromise or settlement of the dispute. Of course, the rule will not apply if something can be found which makes up the difference. But this something must be at the request of the creditor. I have already mentioned how paying earlier than the due date, or at a different place, would make up the difference. Santow J in Musumeci found that a practical benefit was sufficient to make up the difference. You will recall that in that case the landlord was bound by a promise to accept less rent because the tenant, by staying on as a tenant, provided a practical benefit to the landlord. One rather curious view has been that if lesser amount is paid by a negotiable instrument such as a cheque, then this makes up the difference. This is mentioned briefly by Lord Selborne in Foakes v Beer on p 176 (reference to "negotiable paper") and by the judge in Budget Rent a Car v Goodman on p 180. But this exception is doubted by Lord Denning in D & C Builders v Rees. The rule does not apply in what is called a composition of creditors. What this is about is where a debtor is surrounded by a number of creditors, all of whom are looking to be paid. When it becomes clear that none will be paid in full, they all agree to take a percentage, say, 50 cents in the $1. The compostion agreement under which each creditor gets paid 50% of the amount owing is binding and discharges the various debts. There has for many years been a debate about how this can be justified by reference to the doctrine of consideration. What has the debtor provided in exchange for the creditors' promises not to sue for the balance? It is difficult to see that there is a consideration. Nevertheless it has never been doubted that a composition with creditors agreement is binding. One reason which is advanced is that it would be fraud on the other creditors if one of them attempted to sue for the balance. But this justification is not about the doctrine of consideration.

The following is an explanation of promissory estoppel from the Restatement of Contracts 2d: RESTATEMENT (SECOND) OF CONTRACTS (1981) 90. Promise Reasonably Inducing Action or Forbearance 1. A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. 2. A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance. In courts that follow the above Restatement, a promise to give money to a charity is a classic example of promissory estoppel which will be enforced by a court when the charity makes expenditures or incurs obligations in reliance upon the promise. The promisor is estopped from denying the promise or raising technical legal defenses, such as no consideration or statute of frauds ..