Consideration & Promissory Estoppel Problem QuestionWatch
The Problem Question is as follows:
Cruisers plc, a car leasing company, enters into contracts in January with each of Donald, Edwina and Fiona. Cruisers agree to hire a car to each of them for a period of three years for £400 monthly. Donald, Edwina and Fiona each takes delivery of their respective cars that month. Subsequent international incidents cause a sharp rise in the rate of inflation. By February, Cruisers are aware that many of their customers will face difficulty in maintaining payments under their contracts. In order to prevent possible breaches of a large number of these contracts, Cruisers sends out a standard letter to each of their clients. The letter states that, “In view of rapidly rising costs, Cruisers will only require their customers to pay three quarters of the amount due under their agreements with Cruisers until the rate of increased costs subsides.”
Donald receives the letter but does not open it. In February, March and April, he sends Cruisers cheques for £200 “in full and final satisfaction of this month’s accounts.” Cruisers bank each of these cheques.
Edwina receives the letter late in February, after she had sent Cruisers £300 with an accompanying letter stating that in view of her increased costs, that amount was all she could afford.
When Fiona receives Cruisers’ standard letter she is pleased, as the nature of her business is such that her business is little effected by rising costs. Cruisers, later realizing the limited impact upon Fiona’s business, sends a letter stating that the reduction arrangement did not apply to Fiona. Fiona reads this letter and immediately sends Cruisers a cheque for £300 for February’s payment. She also does this in March and April.
By May, Cruisers faces financial ruin if it continues to accept only three quarters of the amount due under its various contracts.
Advise Cruisers as to its possible courses of action with regard to Donald, Edwina and Fiona.
More law resources on TSR