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sarahjane90's avatar

Advice on structuring a good legal problem question involving part payment of a debt and promissory estoppel (UK)?

Asked by sarahjane90 (1805points) December 29th, 2010

I am not looking for anyone to answer my question for me, but simply to help point me in the right direction. I have some idea of where to begin, but I do not feel overly confident. I will begin with giving you the basis of my question, and how I am currently planning to answer it.

B bought a boat from A last year for £1,000, intended to be paid in two instalments of £500. B did not pay the last instalment to A. The fact that B owed money to A was not disputed.

A was sympathetic towards B, who had recently been laid off from her job soon after purchasing the boat from A. A stated that if B could pay half of the last instalment (£250) by the following Tuesday, he would excuse the remainder of the debt B owed.

B paid the £250 on the following Monday, and gave A a bottle of wine “in consideration of his kindness”.

On the Thursday B was successful with one of the job applications. On the first of the month she would be starting work with a much better salary.

A became aware of B’s job and realised that B will likely earn more than him. B now wishes to claim the remainder of the money which she had originally agreed to pay for the boat.

Advise A.

I would begin with defining a contract, and identifying the elements of it, and that A and B have entered one. It is important to point out that because A and B have entered a contract, B has a duty to fulfil their obligation of that contract. Whether B provided fresh consideration for A’s acceptance of B’s part payment would then become the focus of my argument. Define consideration. Introduce the rule in Pinnel’s Case, Etc.

I know that due to (Pinnel’s Case) the rule is that part payment of a debt is not good consideration for a promise to forgo the balance. However, there are some exceptions to this rule:

1) Part payment accepted on a date earlier than the due date. (Although B missed her initial due date for the second instalment, she paid one day earlier than when A stated he required the part payment) Does this constitute as an exception to the rule in Pinnel’s Case, or should I stick with the fact that she missed the initial due date?
2) Chattel is accepted instead of money (“a horse, hawk, or a robe” may be more beneficial than money) B gave A a bottle of wine “in consideration of his kindness”. Would this simply qualify as a gift? If not, could this + the £250 actually equate to fresh consideration for B’s part payment to A?

- If not, I would be able to argue that B did not provide consideration for A’s part payment in the first place, so the rule in Pinnel’s Case stands.

-Promissory estoppel may prevent A from recovering the remainder of debt owed to him by B. A voluntarily accepted the agreement to accept a part payment, and it could be suggested that B did not take advantage of her financial circumstances as she never disputed that she did in fact owe money to A. (Collier v P & J Wright Holdings)
-B would have a reliance upon her agreement with A, due to her financial situation. It is not clear whether B actually has improved her finances, or incurred other debt due to the belief that the debt with A had been dissolved.
-Is it really just or equitable for A to go back on his word?

Right now I would be inclined to advise A that due to these facts it would not be possible to recover his funds. If the wine amounts to consideration for a variation in A and B’s contract, an estoppel would not be necessary. If only the part payment is in question, then the estoppel may be able to take effect.

However, I feel like I am missing something. Have I missed a main objective in this question? Any advice is very much appreciated.

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1 Answer

trailsillustrated's avatar

no, you are right. Don’t over think it. It’s not recoverable, as A forgave B. No estopple is possible, partly because the amount is not large to begin with. It’s not a case worth persuing.

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