{"id":2832,"date":"2018-09-02T20:00:08","date_gmt":"2018-09-02T20:00:08","guid":{"rendered":"https:\/\/askanacademic.com\/uncategorized\/can-the-part-payment-of-a-debt-amount-to-consider-496\/"},"modified":"2019-08-28T15:13:54","modified_gmt":"2019-08-28T15:13:54","slug":"can-the-part-payment-of-a-debt-amount-to-consider-496","status":"publish","type":"post","link":"https:\/\/askanacademic.com\/law\/can-the-part-payment-of-a-debt-amount-to-consider-496\/","title":{"rendered":"Part payment of a debt and consideration in Contract Law."},"content":{"rendered":"
Can the part payment of a debt amount to sufficient consideration in contract law and form a binding agreement?<\/p>\n
Consideration is a key component of a legally binding contract, usually defined as a benefit to one party, and a detriment to the other.<\/p>\n
The common law rule confirmed in in Foakes v Beer (1883) is that the part-payment of a debt will not amount to sufficient consideration. Take the following example:<\/p>\n
Party A has contracted with Party B for the purchase of a car at the cost of \u00a35,000. Party A offers to pay \u00a34,000 instead, two weeks earlier than the due date of the \u00a35,000. Party B agrees to take the \u00a34,000 and will not demand the remaining \u00a31,000.<\/p>\n
Following Foakes v Beer, this promise is not enforceable, and Party B can demand the remaining \u00a31,000 despite promising not to. The reason behind this position is to prevent the exploitation of parties in poor financial positions, as shown here:<\/p>\n
Party A owes Party B \u00a31,000, but is aware Party B is in dire financial need of \u00a3500. With this knowledge, Party A can offer \u00a3500 as part-payment of the debt if Party B waive the remaining \u00a3500, knowing that Party B have no choice but to accept the money.
\nThe case which developed the rule, Pinnels Case (1602), established some limited exceptions:<\/p>\n
Foakes v Beer [1884] UKHL 1<\/p>\n
Pinnel’s Case [1602] 5 Co. Rep. 117a<\/p>\n","protected":false},"excerpt":{"rendered":"
An explanation of the principle of consideration in relation to the part payment of a debt. An examination of a practical example and the exceptions.<\/p>\n","protected":false},"author":1,"featured_media":1938,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[],"yoast_head":"\n