D & C BUILDERS LTD V REES

COURT OF APPEAL
12 NOVEMBER 1965
 RELEVANT FACTS
• The plaintiffs, jobbing builders ( D & C Builders Ltd) agreed to work for the defendant (Rees) during
May-June 1964.
• The Plaintiff did the work and rendered accounts in May, June which came up to a sum of £746
altogether of which the defendant paid £250 on account, and then an addition of £14.
• In July 1964, the defendant owed the plaintiff the remaining sum of £482.
• On August 31, 1964, the plaintiff wrote to the defendant claiming the remaining money. Due to the
absence of a response, the plaintiff wrote another letter on October 19, 1964.
• On November 13, 1964 the defendant’s wife contacted the plaintiff and complained about poor
workmanship, and offered £300 as full settlement in satisfaction by threatening to not pay any
amount if this offer was denied.
• Owing to the desperate financial straits the plaintiffs company was undergoing, the settlement was
accepted.
• November 14, 1964, the plaintiff collected the cheque amounting to £300. The defendant insisted
on a receipt which said “Received sum of £300 from Mr. Rees in completion of the account”.
• November 23rd 1964, the solicitors wrote complaining that the defendant had extricated a report of
some sort and treated £300 as full account of the payable amount.
• November 28 1964, defendant responded by alleging bad workmanship and the existence of a
binding settlement.
 TIMELINE
1964

1. May, June Work carried out by plaintiff.

2. July Defendant owed plaintiff £482 13s 1d.
3. August 31 First letter demanding remaining payment wrote to defendant.
4. October 19 Second letter demanding remaining payment wrote to defendant
5. November 13 Defendants wife got in contact with plaintiff and offered £300 on full account.
6. November 14 Cheque received by plaintiff for £300.
7. November 23 Solicitors complained against defendant.
8. November 28 Defendant responded with allegations.
 ISSUE

•Whether or not agreeing to take a lesser amount in satisfaction of a

larger sum to be covered under the realm of Promissory Estoppel?

•Whether the settlement constituted a valid accord and satisfaction

discharging the debt in law?
 PROVISION OF LAW

•FOR ANY AGREEMENT TO BE VALID, IT IS ESSENTIAL TO BE EITHER MADE UNDER

SEAL OR SUPPORTED BY CONSIDERATION

•DOCTRINE OF PROMMISORY ESTOPPEL CAN ONLY BE APPLIED IF THERE IS TRUE

ACCORD AND SATISFACTION, AND AN INTENTION TO CREATE A LEGAL
RELATIONSHIP.
 PLAINTIFF’S ARGUMENTS.

• The plaintiff raised two questions ; Whether there was an accord and whether there was
satisfaction?
• The plaintiff held “Cumber V Wane” ; which said that giving a note for a smaller sum
cannot be pleaded as a satisfaction for a larger sum.
• No case has been found where a cheque by a party has been found to be a got satisfaction
in settlement for larger sum.
• The cheque accepted was taken on account of the pending payment and there was no
accord.
• There existed no valid contract when the cheque was accepted for partial payment.
 DEFENDANT’S ARGUMENTS

• Argues that there existed accord and satisfaction.

• The accord was when the plaintiffs agreed to accept the cheque for £300 which was
paid in settlement of the debt and satisfaction was when the plaintiffs accepted the
cheque in settlement and it was honoured.
• The argument relies on “Goddard V. O’Brien, where the technical rule stated that the
payment of a lesser amount by cheque is a good accord and satisfaction.
• The payment made was conditional and immaterial ; there exists a valid line of cases
which shows that the cheque or any other negotiable instrument may be taken as
satisfaction of a debt for a larger amount.
• The defendant raised the argument of promissory estoppel relying on the written
receipt as a demonstration of a promise to accept lesser amount.
 REASONING

• No agreement can be binding unless it is either made under seal or supported by

consideration.

• There existed a threat to pay nothing less than £300 which was the reason for the
acceptance of the cheque by the plaintiff. Therefore, there was no true accord and no
equity for the defendant to prevent the plaintiff from recovering full amount of the
debt.

• The judges held the common law rule concluded from the Pinnel’s case; a part
payment of the debt is not good consideration for a promise to forgo the balance,
unless there is some benefit for the creditor which will amount to accord and
satisfaction.

• The cheque was a not a good consideration to support an accord and satisfaction to
discharge a debt.
• The debtor’s wife placed the creditor under undue pressure with prior knowledge of the
financial difficulties of the debtor and pose the threat to the break the contract
compelling the creditor to accept the lesser amount in settlement, despite the reluctance
of the creditor. This was comprehended as intimidation and therefore true accord.

• The judges held that no person can insist on a settlement procured by intimidation.

• The judges held that the cheque accepted was a conditional payment, and does not
expire the creditors right to demand the remaining payment.

• The argument of promissory estoppel was dismissed as there existed no true agreement
to accept the lesser amount as the agreement was entered owing to undue pressure and
intimidation.
 HOLDING

•Issue was settled in favour of the plaintiff.

• Appeal dismissed ; payment made by the debtor, whether in cash or

by cheque of a lesser sum than the amount of the debt was not a
settlement of the debt under law.
 RATIONALE

• The Plaintiffs were under undue pressure and intimidation when entering into
the agreement. Therefore the agreement cannot be held valid under law.

• Doctrine of Promissory Estoppel is a child of equity which can only be

applied when there is true accord and satisfaction

• Payment made by the debtor, whether in cash or cheque, of a lesser amount

than the amount of the debt was not a settlement of the debt which was
binding at law on the creditor.