Business Law: Liability for Part Payment of Debt and Negligence

This article discusses the liability for part payment of debt and negligence in business law. It covers the rules of part payment of consideration, doctrine of promissory estoppel, and tort of negligence. It also provides an analysis of the application of these rules in two different scenarios.

Running Head: BUSINESS LAW
Business Law
Name of the Student:
Name of the University:
Author Note

1BUSINESS LAW
Answer 1
Issue
The question that needs to be addressed in relation to the Brandon’s and Rees’s circumstances is
that whether Brandon has the liability to pay Rees the remaining $10000 and the interest @ 15%
based in the rules of Part payment of consideration and the doctrine of promissory estoppel.
Rule
The famous Pinnel's case 1602 5 Rep, 117 deals with the question relating to a part
consideration. The landmark judgement of this case signified that the “part payment of debt is
not a valid consideration” unless “accompanied by an additional chattel or fixture, paid at a
different place or paid at a earlier date”. In this case the defendant had taken a loan from the
plaintiff which he repaid in part and claimed full settlement of debt. The court stated that the
defendant is liable for paying the amount due even where there was a promise to accept the part
amount as a full settlement of debt on the part of the plaintiff unless the additional features asked
above are not present.
The same principles had been discussed and applied by the court in the case of Foakes v
Beer (1883-84) L.R. 9 App. Cas. 605. Here the plaintiff had received compensation from the
defendant. The defendant requested the plaintiff to accept the payments in instalments without
interest. The plaintiff accepted the request. The plaintiff latter made a claim for the interest on
the sum. The court held that as there is a rule that interest needs to be paid in relation to delay in
compensation payment the plaintiff was entitled to the payment of interest even where she made
a promise not to charge the interest.

2BUSINESS LAW
The primary reason behind both the judgements was that there was no valid consideration
provided by the defendant against the promises made by the plaintiff to give right to a legal
obligation.
However the doctrine of promissory estoppels may intervene as an exception to the rule
of part payment of debt. This is a doctrine provided by rules of equity. There are some specific
elements which need to be present for the doctrine to be applied. Firstly as per the case of Combe
v Combe [1951] 2 KB 215 there must be a legal relationship between the parties. Secondly, as
per the case of Woodhouse A.C. Israel Cocoa Ltd. v. Nigerian Product Marketing Co. Ltd.
[1972] AC 741 it must be inequitable for the promisor to go back on promise made them to the
promisee. Thirdly, as per the case of D & C Builders v Rees [1966] 2 WLR 28 the promise has
to be unambiguous and clear.
Application
It has been provided via the facts that Brandon has taken a loan from Rees worth
$100000 @15% interest for the purpose of a development project. However due to some market
difficulties he has not been able to receive adequate funding from the project. Brando has further
requested Rees to accept $90000 as a “full settlement of debt” and forgive the remaining amount.
This request was accepted by Rees. Rees now wants to make a claim from the remaining amount
and interest. In line with the judgement provided by Pinnel's case it can be stated that Rees will
be entitled to make a claim for the amount of $10000 and the interest. This is because “part
payment of debt is not a valid consideration” unless “accompanied by an additional chattel or
fixture, paid at a different place or paid at a earlier date”. The case decision signifies that the
defendant is liable for paying the amount due even where there was a promise to accept the part

3BUSINESS LAW
amount as a full settlement of debt on the part of the plaintiff unless the additional features asked
above are not present. The position of Rees can be further strengthened through the application
of the case of Foakes v Beer where the court stated that plaintiff was entitled to the payment of
interest even where she made a promise not to charge the interest. Thus Rees is entitled for the
payment.
However as analyzed above the doctrine of promissory estoppels may intervene as an
exception to the rule of part payment of debt. The doctrine will apply where there is an existing
legal relationship which is actually present in the situation between Brandon and Rees. There
must be a clear and unambiguous promise which has to be made and here also the promise not to
claim the money is clear. However it must be inequitable for the promisor to go back on the
promise. In this case it is not so. This is because there is no detriment which would be suffered
by Brandon as a result of the promise and thus the doctrine cannot be applied in the situation.
Conclusion
Brandon has to provide the remaining payment and interest to Rees.

4BUSINESS LAW
Answer 2
Issue
In this situation the rights and liability of Hillary with respect to the injury caused to her has to
be analyzed in line of the law of negligence.
Rule
The most relevant rule which should be applied to address the issue question is that of the tort of
negligence. These rules had been analyzed by the case of Donoghue v Stevenson [1932] AC
562.
The case dealt with the issue of personal injury which has been faced by the plaintiff due to the
carelessness of the defendant. There was no contractual relationship between the defendant and
the plaintiff. The court stated that the basis of claim in this case is that of a “duty of care”. Any
person by whose actions or omissions another person can be harmed ought to have a duty of care
towards such person. The court applied the test of foreseeability to find out the duty of care in a
situation. A duty of care is ought to be present as per the test if a reasonable person can foresee
that by his actions or omissions another person can be harmed.
The next element which was requires identification in relation to negligence is “breach of the
duty of care”. The test of analyzing the duty is “objective”. A reasonable person placed in the
situation of takes precautions which are more than what has been taken by the defendant to avoid
the harm to the plaintiff it would lead to “breach” of the duty on the part of the defendant. The
court applied the test in Stokes v House With No Steps [2016] QSC 79.

5BUSINESS LAW
The final element is known as “factual causation”. The element is best analyzed by a specific test
provided by the case of Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428 known as
the “but for” test. The “harm” to the plaintiff has to result out of the “breach” by the defendant
and not otherwise. The satisfaction of all of these elements will result out in a successful claim of
negligence.
Any damage resulting out of the harm which is reasonably foreseeable and are not too remote
will be considered as eligible for compensation as provided via the ruling in The Wagon Mound
no 1 [1961] AC 388
The claim of negligence is entitled to be defended successfully in part on full via the use of
“contributory negligence” principle. The principle was discussed by the case of Podrebersek v
Australian Iron and Steel [1985] HCA 34. The court stated that plaintiff has a duty of care to
himself to take reasonable care of avoiding injury. The breach of the duty results in contribution
to own harm. The court may proportionate the damages in such circumstances by analyzing the
breach on the part of the plaintiff and the defendant.
Application
The principles of duty of care, breach of the duty of care and causation as well as contributory
negligence has to be applied in the situation to analyze the issue.
Nicky is driving her car down the road and reasonable people in her position ay foresee that
others on the road have the risk of getting harmed due to her act or omission. Therefore Nicky
also has a duty of care to Hillary who is crossing the road as per the test of foreseeability
provided in the case of Donoghue case.

6BUSINESS LAW
Nicky has breached her duty owed to Hillary and this can be confirmed by applying the
objective test. Any reasonable person in the position of Nicky would not apply lipstick while
driving a car as there is a risk of accident.
The injury to Hillary could have been avoided if Nicky did not divert her attention from the road
and would not have been caused otherwise. This means that the “but for” test is satisfied. Here
Hillary has broken her arms due to the breach of duty and the three elements of negligence are
satisfied.
Hillary also evidently contributed to her injury as she crossed the road without looking for traffic
under the influence of alcohol. Thus as per the principles of Podrebersek v Australian Iron and
Steel case the courts will proportionate the damages with respect to the harm caused to Hillary.
Conclusion
Nicky is negligent but Hillary is also contributorily negligent and thus the courts will
proportionate the damages with respect to the harm caused to Hillary.

7BUSINESS LAW
References
Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428
Combe v Combe [1951] 2 KB 215
D & C Builders v Rees [1966] 2 WLR 28
Donoghue v Stevenson [1932] AC 562.
Foakes v Beer (1883-84) L.R. 9 App. Cas. 605
Pinnel's case 1602 5 Rep, 117
Podrebersek v Australian Iron and Steel [1985] HCA 34.
Stokes v House With No Steps [2016] QSC 79.
The Wagon Mound no 1 [1961] AC 388
Woodhouse A.C. Israel Cocoa Ltd. v. Nigerian Product Marketing Co. Ltd.