Business Law: Liability for Part Payment of Debt and Negligence

Running Head: BUSINESS LAW
Business Law
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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