D & C Builders Ltd v Rees
A creditor pressured into accepting part payment is not bound, because a debtor who acts inequitably cannot rely on promissory estoppel.
Facts
D & C Builders, a small building company, carried out work for Mr Rees, who owed them £482. After months of delay, Mrs Rees, who knew that the builders were in financial difficulty and close to bankruptcy, offered them £300 in settlement. She said that if they did not accept it, they would get nothing. The builders accepted a cheque for £300 and gave a receipt stating that it was in completion of the account. They later sued for the balance of £182.
Legal principle
The Court of Appeal held that the builders could recover the balance. Payment of a lesser sum, whether in cash or by cheque, is no consideration for releasing the rest of the debt, under the rule in Pinnel's Case and Foakes v Beer. Lord Denning MR held that Mrs Rees could not rely on promissory estoppel either, because she had not acted equitably: she had held the builders to ransom, putting undue pressure on them by exploiting their financial difficulties. There was no true accord, because the builders had agreed under intimidation.
Related cases on consideration and promissory estoppel
- Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130
- Chappell & Co Ltd v Nestlé Co Ltd [1960] AC 87
- Collier v P & MJ Wright (Holdings) Ltd [2007] EWCA Civ 1329, [2008] 1 WLR 643
- Combe v Combe [1951] 2 KB 215
- Currie v Misa (1875) LR 10 Ex 153
- Foakes v Beer (1884) 9 App Cas 605
- Glasbrook Bros Ltd v Glamorgan County Council [1925] AC 270
- Hartley v Ponsonby (1857) 7 E & B 872
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