Foakes v Beer (1884) App Cas 605

Key point

  • A promise to accept less than one is entitled to under a pre-existing contract is not binding for want of consideration

Facts

  • C obtained a court judgment entitling her to a sum of money plus interest from D
  • C agreed to forgo the interest and any proceedings to claim the interest if C paid £500 immediately and £150 on two occasions each year until the whole sum had been paid
  • After the total sum was paid, C brought an action claiming the interest
  • D argued that she was bound by her promise not to claim the interest

Held (House of Lords)

  • C was entitled to the interest
  • The promise is not binding for want of consideration

Earl of Selborne

  • Citing Lord Coke in Pinnel’s case: ‘payment of a lesser sum on the day in satisfaction of a greater cannot be any satisfaction of the whole’

Lord Blackburn

  • *While a lesser sum cannot be satisfaction of a greater sum, the gift of a horse, hawk or robe can be since it shall be intended that those be more beneficial to the promisor
  • Immediate payment of a lesser sum can be of greater value than insisting on full payment, even when the debtor is solvent, Lord Coke might have made a mistake of fact
  • However, his Lordship did not dissent as he felt bound by precedent

Commentary

  • Note the starred point above: it is an exception that can come up in problem questions
  • This approach creates a distinction between promises to pay more and promises to accept less, the former can be binding if it confers a practical benefit on the promisor but the latter can never be binding
  • This distinction was recently affirmed in MWB v Rock Advertising by the Supreme Court
  • Whether this distinction is right has been subject to considerable academic debate, a summary of which can be found in the commentary in MWB v Rock Advertising