Business Law and Ethics: Contractual Breach Case Analysis - Report

This report provides a detailed analysis of a business law case centered on a breach of a contractual agreement. The case involves Raymond and Samantha, where Raymond seeks to claim the remaining balance of an earlier agreement. The analysis delves into the legal principles, including the rule in Pinnel's case, exceptions such as accord and satisfaction, part payment by a third party, composition with creditors, and the equitable doctrine of promissory estoppel. The report examines the applicability of these principles to the case facts, advising Raymond on the legal options available. Furthermore, the report considers the ethical implications for Samantha, emphasizing the importance of corporate governance and ethical values in business dealings. It concludes with recommendations for both parties, highlighting the legal and ethical considerations for a successful outcome. The analysis also considers different scenarios where the payment terms or amounts may vary, but the legal position will remain same.

Business Law and Ethics

TABLE OF CONTENTS
REFERENCES................................................................................................................................6

The case provided in the question is based on the breach of the contractual relationship
and the remedies being available. The case will be evaluated based on the business and the
corporate laws. In the case given, Raymond agreed to work for Samantha at the price of £200 in
full and final settlement of the account instead of £800 which was demanded earlier. As the
paintings of Samantha began to sell at the higher prices, Raymond wishes to claim the remaining
£400. Therefore, the question is whether Raymond can go back to the agreement and sue
Samantha for the remaining balance.
As per the rule stated in the Pinnel's case (1602) which states that the payment of the
small amount of money do not discharge the debt liability of the greater sum. This is mainly
because of the reason of the reason that the debtor has not given vociferation pertaining to the
creditor's agreement for accepting the reduced amount as provided under the case of – Foakes v
Beer (1884) (Roberts, 2018). According to this rule, Raymond can go back to the agreement and
sue Samantha for the due amount of £600. There are certain exception to rule of Pinnel's case
which are – accord and satisfaction, in which accord refers to the agreement which must be
entered freely by the creditors. As per the case in D & C Builders v Rees (1966), Mrs Rees
owes a sum in respect to the some work knowing that the claimants are in a parlous financial
situation forces them to accept the small sum, under which the claimant accepts the sum (Roberts
and Blanchard, 2020). Under such situation, there is not true accord and in the similar way
Raymond after an argument accepted the £200. Here satisfaction refers to the consideration
(Shaw-Mellors, 2016). There is no distinction between payment by cash or cheque. Thus, the
Samantha's payment of £200 through cheque adds no advantage in comparison to the £800 in
cash. Thus, in this case, there is no accord and satisfaction to prevent him from suing Samantha.
Another exception is the part payment by a 3rd party, in this the part payment is made to
creditor by not debtors but by a 3rd party then the creditor cannot sue the debtor for the remaining
balance. Based on the facts given, Samantha paid the £200 therefore, this exception does not
apply (Tashkandi, 2019). The third exception is composition with creditors, in this there is an
agreement between the debtor and its creditors and all the creditors accepts the proposal of the
debtor and thus, they cannot pursue the debtor for any shortfall. The facts given in the case, do
not depict that Samantha entered into any such composition, therefore, this exception is not
applicable.

The last exception is the equitable doctrine of promissory estoppel, as per this, there are
certain situations in which the creditor is stopped from going backward on his or her promise in
regard to accepting the smaller amount (Collins, 2017). As given in the case of Central London
Property Trust v High Trees House (1947), it was stated that the doctrine is applicable only
when the creditor has waived his rights with the intention that the debtor shall alter his legal
position dependent upon his waiver and as an outcome of this reliance there would be in all
circumstances will be just and equitable for holding the creditors to his words (Davies, 2016).
But there are certain restriction imposed on the application of the doctrine. The first limitation is
that it is not applicable to the general debtor and creditor situations as in the case of Samantha
and Raymond - Re Selectmove (1995) in which the inland revenue was stopped from the going
back on its agreement stating to accept the overdue tax through the way of instalments. In
comparison to it, Central London Property Trust v High Trees House (1947), in this case the
landlord agreed to reduce the rent so that the tenant can sub-let at the lower rent during the war
(Nkem and Oraegbunam, 2018). The second limitation is this doctrine is not applicable under the
situation where the debtor has acted unfairly like in the case law of D & C Builders v Rees
(1966) in which creditor's promise was taken under the pressure while in case of Central London
Property Trust v High Trees House (1947), the landlord agreed to reduce the head rent without
any pressure and freely. But the Raymond did not freely agree for settling for the lower sum.
Therefore, based on the above, it is advisable to the Raymond that none of the exceptions
to the rule of Pinnel's case is applicable and thus, Raymond may exercise the option to sue
Samantha for the £600 remaining due amount.
Under the situation, if Samantha had paid Raymond £200 three weeks in advance before
the actual due date and the Raymond agreed for the same then too, the answer will not change as
even if the amount paid in advance is the same which does not make any change in the laws
applicable above. Also, in the another situation given if the Raymond requested for the amount
of £400 from Samantha in the full and final settlement. The legal position of Raymond will
remain the same and there will be not change but the amount for the claim will be then replaced
to £400 with the applicability of the same laws and limitations. The situation remains the same
with the only change in amount settled for as full and final.
On the part of Samantha, it is advisable for her to take into consideration the corporate
governance and the ethical value while carrying out the business (Stewart, Swain and

Fairweather, 2019). Samantha is required to effectively recognize the ethical values which is the
most important aspect for a professional which shows one's behaviour and the level of maturity.
Through this way, Samantha would be responding in a mature and reflective manner for
effectively and efficiently tackling the ethical issues and conflicts which might come across as an
issue (Roberts, 2017). If Samantha would agree to the claim of the Raymond for paying back the
due amount left it will show her ethical and moral value and creates a good reputation and along
with this, it will create a good image of her and will result into having a good business relation.
But in the opposite situation, if Samantha, do not agree with the Raymond then under such
situation, legal action can be taken against her and it will be in favour of Raymond based on the
laws analysed above (Qadri, 2019). Therefore, it is advisable to Samantha to carrying out the
business dealing in an ethical way which will help in avoiding the chances of getting into the
turbulence and legal cases affecting the image and reputation of her.
Thus, it can be concluded from the above that the based upon the situation presented in
the case and facts provided, it is advisable to Raymond that he can sue Samantha for the
remaining due amount and none of the exception is applicable to him. Also, in the other
situations as well either the amount received early or the sum of amount changed but the legal
position of the Raymond does not changes. Along with this, It is advisable to Samantha for
carrying the business activities in a better and effective way by following the ethics and morals.
This will help in avoiding any legality in the situation and will be beneficial for the Samantha in
her professional career and growth.

REFERENCES
Books and Journals
Collins, D. M., 2017. Part-payment of debt: a variation on a theme?. International Company and
Commercial Law Review. 28(7). pp.253-258.
Davies, P. S., 2016. Varying contracts. The Cambridge Law Journal. 75(3). pp.455-458.
Nkem, A. and Oraegbunam, I. K., 2018. JURISPRUDENCE OF CORPORATE
PERSONALITY: RETHINKING THE PARADOX OF SEPARATE PERSONHOOD
IN FICTION THEORY. African Journal Of Law And Human Rights. 2.
Qadri, H. M. U. D., 2019. The legal status of contracts. In Business Ethics in Islam (pp. 161-
167). Routledge.
Roberts, M. and Blanchard, G., 2020, April. Estoppel in New Zealand: Where we're at. In ADLS
CPD Seminar.
Roberts, M., 2017. MWB Business Exchange Centres Ltd: The practical benefit doctrine
marches on. The Modern Law Review. 80(2). pp.339-351.
Roberts, M., 2018. Foakes v Beer: Bloodied, Bowed, but Still Binding Authority?. King's Law
Journal. 29(3). pp.344-353.
Shaw-Mellors, A., 2016. Contractual variations and promises to accept less: pragmatism in the
Court of Appeal. Journal of Business Law. 8. pp.696-706.
Stewart, A., Swain, W. and Fairweather, K., 2019. Contract law: principles and context.
Cambridge University Press.
Tashkandi, M., 2019. Judicial Reasoning: The Production of Legal Knowledge. Available at
SSRN 3386200.