In Re Selectmove [1995] 2 All ER 531 

Key point

  • The doctrine of practical benefit introduced in Williams v Roffey does not extend to promises to accept less


  • Selectmove (S) owed tax to Inland Revenue
  • D proposed that the debt be paid off in instalments
  • The tax collector said he will check with his superiors and let S know if it was possible
  • S did not hear back until it received a letter from the Inland Revenue demanding immediate payment threatening a wounding up petition, which was later served
  • S argued that the petition should be dismissed based on earlier agreement which was binding:
    • S had offered a promise to pay off existing liability by instalments which was good consideration
    • The Inland Revenue seeks to gain a practical benefit as it is likely to recover more taxes by accepting instalment payments than enforcing immediate payment which would push S into liquidation

Held (Court of Appeal)

  • S was liable to make immediate payment
  • The promise of future tax payments is not good consideration but an existing obligation under fiscal legislation

Peter Gibson LJ

  • The principle of Williams v Roffey cannot be extended to circumstances covered by Foakes v Beer
  • An agreement of payment by instalments can confer a practical benefit on the creditor, but the House of Lords in Foakes v Beer decided that the practical benefit of prompt payment of a lesser sum is not good consideration
  • Under the doctrine of precedent, it is impossible for the court to overrule Foakes v Beer, that is up to the House of Lords or Parliament