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Part-Payment of Debt In Law - Help Please!!! Watch

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    Hi all,

    I have a quick question. I am doing part of my coursework at the moment where I am required to make submissions for a moot. The scenario given is as follows:

    Company A owes Company B £2m. Company B realised that company A could not pay the full amount by the deadline, and agreed to accept £500,000 as full satisfaction of the debt on the deadline date. Company A duly paid this. Company B, after receiving this payment, were fined by the Health and Safety Executive and had to pay a substantial amount in fines. Company B then went on to sue for the remaining £1.5m owed.

    Company A won in the original case. Company B then appealed to the High Court, and their appeal was upheld. Company A then appealed this in the Supreme Court, and their ground of appeal was that the original judge had not erred in using the principle of consideration in Williams v Roffey, and that the benefits obtained under part-payment of debt should be treated the same as those benefits obtained under a contract for the provision of goods and/or services.

    I am the appellant in this case, and I need to show that the part payment of debt was full satisfaction of the debt and that Company B cannot go back on their promise that the payment of £500,000 was full satisfaction. I believe that I need to use Promissory Estoppel to show this, but I am struggling to find cases that back this theory up.

    Any help or pointers in the right direction will be greatly appreciated!!!

    Thank you all so much in advance,

    Stace
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    Hey Stacey! Welcome to TSR

    I just moved this to 'Law Study Help', you should get better responses here
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    (Original post by Steljoy)
    Hey Stacey! Welcome to TSR

    I just moved this to 'Law Study Help', you should get better responses here
    Thank you for that! I'm brand new here so that's appreciated!
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    (Original post by Staceytom88)
    Thank you for that! I'm brand new here so that's appreciated!
    Don't worry about it! Hope you enjoy your time here

    If there is anything else I can do for you, don't hesitate to ask
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    There has been a similar thread here: https://www.thestudentroom.co.uk/sho....php?t=1501943

    Generally, the most famous cases here are Pinnel's case and Foakes v Beer, saying that generally a lesser payment cannot be in satisfaction of the whole debt. There are exceptions including (see https://www.australiancontractlaw.co...ml#partpayment):

    "(a) Earlier payment is made
    Receiving the lesser sum earlier is good consideration.

    (b) Payment is made with something else
    The additional factor provides consideration. This is one of the sources of criticism of the general rule: payment of $999 out of $1,000 will not be good consideration for a promise to forgo the $1 balance. However, payment of $10 plus book worth $5 will be good consideration (provided stipulated by the promisor) for the promise to forgo the balance of $990)

    (c) Where it arises from a composition Agreements
    Where a debtor agrees with all his creditors and they agree to accept a dividend, payment will discharge the debtor from further liability to the creditors. This is to prevent fraud between the other debtors.

    (d) Where payment is made by a third party
    This exception is explained on the basis that it would be a fraud on the 3rd party to allow the creditor’s claim

    (e) Where the claim is unqualified
    Rule does not apply to unliquidated or disputed claims."
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    (Original post by jessjanellbhons1)
    There has been a similar thread here: https://www.thestudentroom.co.uk/sho....php?t=1501943

    Generally, the most famous cases here are Pinnel's case and Foakes v Beer, saying that generally a lesser payment cannot be in satisfaction of the whole debt. There are exceptions including (see https://www.australiancontractlaw.co...ml#partpayment):

    "(a) Earlier payment is made
    Receiving the lesser sum earlier is good consideration.

    (b) Payment is made with something else
    The additional factor provides consideration. This is one of the sources of criticism of the general rule: payment of $999 out of $1,000 will not be good consideration for a promise to forgo the $1 balance. However, payment of $10 plus book worth $5 will be good consideration (provided stipulated by the promisor) for the promise to forgo the balance of $990)

    (c) Where it arises from a composition Agreements
    Where a debtor agrees with all his creditors and they agree to accept a dividend, payment will discharge the debtor from further liability to the creditors. This is to prevent fraud between the other debtors.

    (d) Where payment is made by a third party
    This exception is explained on the basis that it would be a fraud on the 3rd party to allow the creditor’s claim

    (e) Where the claim is unqualified
    Rule does not apply to unliquidated or disputed claims."

    Thank you for your reply! My issue is that I'm the appellant and the part-payment doesn't fall into any of those exceptions...

    I'm so stuck on what argument to bring...I know this is a case I have no hope of winning lol
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    (Original post by Staceytom88)
    Thank you for your reply! My issue is that I'm the appellant and the part-payment doesn't fall into any of those exceptions...

    I'm so stuck on what argument to bring...I know this is a case I have no hope of winning lol
    I see. The decision in Re Selectmove Ltd [1995] 1 WLR 474 does seem to go against your point because Peter Gibson LJ in that case says that:

    "if the principle of Williams v Roffey Bros Ltd is to be extended to an obligation to make payment, it would in effect leave the principle in Foakes v Beer without any application. When a creditor and a debtor who are at arm's length reach agreement on the payment of the debt by instalments to accommodate the debtor, the creditor will no doubt always see a practical benefit to himself in so doing. In the absence of authority there would be much to be said for the enforceability of such a contract. But that was a matter expressly considered in Foakes v Beer yet held not to constitute good consideration in law. Foakes v Beer was not even referred to in Williams v Roffey Bros Ltd, and it is in my judgment impossible, consistently with the doctrine of precedent, for this court to extend the principle of Williams's case to any circumstances governed by the principle of Foakes v Beer. If that extension is to be made, it must be by the House of Lords or, perhaps even more appropriately, by Parliament after consideration by the Law Commission."

    However, you can cite the Australian case of Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723, where Santow J while noting Re Selectmove Ltd applied the Williams v Roffey Bros Ltd approach in the case where a promise was made to accept a reduction in the rent payable for a lease. So this restriction appears not to apply in Australia. Convince the UK courts that the Australian approach is the way to go.

    Furthermore, as noted in this article: http://www.austlii.edu.au/au/journal...Jl/2015/14.pdf by a contracts lecturer of the Australian National University whom I've worked with closely before when doing research on the doctrine of mistake, there are numerous cases that seem to apply Williams v Roffey to part payment of a debt. In Australia: Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723; W & K Holdings (NSW) Pty Ltd v Laureen Margaret Mayo [2013] NSWSC 1063; Tinyow v Lee [2006] NSWCA 80; Foyle Enterprises Pty Ltd v Steve Parcell Building Services Pty Ltd [2015] QDC 225; Slipper v Berry Buddle Wilkins Lawyers [2015] NSWSC 810; In Singapore: Sea-Land Service Inc v Cheong Fook Chee Vincent [1994] 3 SLR 631; Gay Choon Ing v Loh Sze Ti Terence Peter & Another [2009] SGCA; In Canada: Greater Fredericton Airport Authority Inc v NAV Canada. (2008) 290 DLR (4th) 405 (NBCA).

    And most relevantly in your case: In the UK, Williams v Roffey Bros has been followed in Anangel Atlas Compania Naviera SA v Ishikawajima-Harima Heavy Industries Co Ltd (No 2) [1990] 2 Lloyd’s Rep 526; Lee v GEC Plessey Telecommunications [1993] IRLR 383; and WRN Ltd v Ayris [2008] EWHC 1080 (QB).

    All the best!
 
 
 
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