Re Selectmove Ltd
The practical benefit principle in Williams v Roffey does not apply to promises to accept part payment of a debt.
Facts
Selectmove owed the Inland Revenue arrears of PAYE income tax and national insurance contributions. At a meeting in 1991, the company's managing director proposed to a collector of taxes that the company would pay future tax as it fell due and pay off the arrears at £1,000 a month. The collector said he would have to seek approval and would come back to the company if the proposal was not acceptable. He did not come back. Some months later the Revenue demanded payment of the arrears in full and presented a petition to wind up the company.
Legal principle
The Court of Appeal held that there was no binding agreement. The collector had no authority to accept the proposal, and his silence could not amount to acceptance. In any event, a promise to pay an existing debt by instalments is not good consideration for the creditor's promise to accept that arrangement, because of the rule in Foakes v Beer. Peter Gibson LJ held that the practical benefit principle in Williams v Roffey, which concerned a promise to pay more for the supply of goods or services, could not be extended to an obligation to pay money, because that would leave Foakes v Beer without any application. Only the House of Lords or Parliament could change that rule.
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
- D & C Builders Ltd v Rees [1966] 2 QB 617
- Foakes v Beer (1884) 9 App Cas 605
- Glasbrook Bros Ltd v Glamorgan County Council [1925] AC 270
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