Case Study: Debt Discharge under Pinnel's Rule & Minor's Agreements

This case study examines two distinct legal issues. Part A analyzes the applicability of Pinnel's Rule in a debt repayment scenario between David and Rees, focusing on whether a partial payment discharges the full debt and exploring exceptions like payment in different currency or promissory estoppel. It concludes that Rees can likely claim the remaining debt and interest. Part B addresses the enforceability of a promise made to Emily when she was a minor. It discusses the capacity to contract, the liability of minors for necessities, and the concept of voidable contracts. The analysis suggests that Emily can enforce the promise from Margaret due to her continued work after reaching the age of majority, effectively ratifying the contract. The study references key cases like Pinnel's Case, Foakes v Beer, Central London Property Trust Ltd v High Trees House Ltd, and Nash v Inman to support its conclusions.

Part A
Issue: here the issue is if the rule known as the Pinnel's rule can be applied in case of the
transaction that took place between David and Rees.
Rule: in order to deal with this issue, the rule called the Pinnel's rule and its exceptions need to
be applied to the facts of this question. This rule provides that the payment of less money than
the money owed by one party to the other will not result in the complete discharge of the debt
obligations. The reason that has been given in favor of this rule is that in such cases the promise
of the credit according to which the creditor has given an assurance to the debtor that they were
not so for the balance amount is a promise that is not supported by any consideration that has
been given by the promisee in return. Therefore, the law does not allow the debtor to legally
enforce this promise. This rule was provided for the first time in Pinnel's case (1602).
The court stated in this case that by paying lesser sum on the due date and in satisfaction of a
larger sum cannot amount to the satisfaction of the complete debt. But the court stated that a "gift
of horse, hawk or robe" can be considered as the complete satisfaction of the debt. The reason
given by the court was that the gift of horse, hawk or robe would be more useful for the plaintiff
otherwise such gift would not be accepted by the plaintiff as the complete satisfaction off the
debt. However, it was also affirmed that the payment and the acceptance of a lesser amount than
the amount due, on the day before the date of repayment. As stated in the original agreement
should be considered as a valid consideration. In such cases, the premature settlement of their
debt is something more that is needed under the original agreement.

This rule was further reiterated by the court in Foakes v Beer (1884). In this case, Foakes had
obtained a judgment from the court for the recovery of debt and costs. But later on Beer agreed
that he was ready to accept 500 pounds immediately and 150 pounds in half yearly installments
until the total amount of debt has been repaid. Therefore, Beer agreed that he will not take any
further action regarding the judgment. Therefore, the amount of debt was paid by Foakes. But
later on, Beer, took action in the code for the governing interest on the judgment. Hence, the
court arrived at the conclusion that Beer can take action for recovering interest. The reasoning of
the court was that payment of smaller amount is not valid consideration in return of the promise
according to which no more action was going to be taken on the judgment.
However, the rule has to face a lot of criticism by the judges. This criticism is due to the fact that
with the help of this rule, a creditor may go back from his promise that the whole debt has been
discharge and as a result, the creditor may still decide to claim the balance amount. Due to this
reason, the rule became quite unpopular. The result was that certain exceptions were created by
the court regarding the rule. Therefore, the exceptions to this rule provide that the whole debt has
been discharge if:
The creditor has accepted a smaller amount as well as something different in kind (for example,
chattel)
The payment of smaller amount has been made before their debt is due, provided the payment
has been made at the request made by the creditor.
The payment of smaller amount at different place on different currency, made at the request of
creditor
Any other act that the creditor was not bound to perform

In case of fraud on third-party,
Promissory estoppel
The traditional estoppel was applicable only in cases related representations that have been made
regarding existing facts. Therefore, it did not cover the representations that have been made
concerning future intentions. But the traditional notion of estoppel was extended so that it may
cover the representations related with future intentions (Central London Property. v High Trees.
1947). In view of this decision, the doctrine has been called promissory estoppel.
Application: the facts of this case are that $100,000 have been borrowed by David from Rees.
According to the agreement, David was going to repay the amount within 120 days. The rate of
interest was 14%. However after the expiry of 120 days, David tells Rees that the development
did not sell as expected, and as a result, he was not in a position to pay the full amount. As a
result, David meeting of according to which he was going to pay $90,000 as the full payment of
the debt. This offer was accepted by Rees, but later on he initiated action in the code to claim the
rest of the amount of $10,000 as well as interest on the whole amount. In such a case it is argued
by David that he had already paid the debt as a result of the exception present to the rule
provided in Foakes v Beer. According to this exception, if the debt has been repaid in different
currency, it can be considered as the full repayment of debt. But in this case, David had not paid
in different currency but he had made the payment by cheque. This cannot be treated as payment
in different currency. The result is that Rees can still claim the remaining amount of $10,000 and
interest on the whole amount. On the other hand, David cannot rely on the promise made by
Rees where he accepted that $90,000 will be the complete repayment of the debt.
Part B

Issue: The issue is related with the enforceability of the promise made by Margaret to Emily.
The reason is that at the time of making the promise, Emily was 16 years old when she was a
minor. Therefore, it needs to be seen if contract. With a minor can be enforced by a minor.
Rule: The capacity to contract is related with natural as well as artificial persons. In this regard,
the law provides that the minor does not have the capacity to enter into a contract. Under the
common law, generally a person who is less than 18 years is considered as a minor. In this
regard, capacity is related with the ability of person to enter into a contract. Therefore, generally,
a minor does not have the capacity creative content, but the law provides that in some cases, the
minors can be held liable for the necessities, beneficial services and other voidable contracts.
Therefore, when the conference is related with the purchase of necessaries, the minor may be
held liable under the law to pay reasonable price for such goods. Basically, the necessaries can
be described as the things without which a person cannot be reasonably expected to exist.
Therefore, these things include food, clothing, lodging, education and training in a particular
trade or other vital services, for example medical services. Therefore, these things are not only
limited to goods, but they also include services.
In Chapple v Cooper a married minor, formed a contract for purchasing the coffin for burying
her husband. The court arrived at the conclusion that the contract can be described as one that
was related with necessaries and as a result the minor can be held liable to pay for it.
Another important case in this regard is Nash v Inman. In this case, a tailor at Saville Row
delivered 11 fancy waistcoats to a minor defendant who was an undergraduate student. Later on
the tailor initiated action against the defendant for recovering the price of these waistcoats.
However, it was held by the court that the action could not succeed. The reason was that during
the trial it was established that already adequate supply of clothes was present with the minor.

Therefore, the minor did not have any actual requirement for these clothes at the time of
delivery.
In Fawcett v Smerthurst, an infant formed a contract according to which he had hired a car for
transporting his baggage. It was mentioned in the contract that the infant will be completely
liable for any damage that may be caused to the car, whether by negligence or not. It was held by
the court that the contract cannot be enforced against the minor into the reason that the term of
the contract was harsh and onerous. Regarding the effect of a minors agreement, the court stated
that the minor cannot bind himself or herself by a contract. The reason is that a minor does not
have the legal capacity of giving his consent for the same. As a result, any obligations cannot be
imposed on a minor unless such obligations arise independently of the contract.
The law provides that in such cases the minor does not have the capacity to former contract.
Therefore, a minor, who signed the contract can either ratified the contract or void the contract.
At the same time, the contract can be avoided by the minor only while the person is still under
the age of majority. Therefore, if the minor does not do anything even after becoming a major
void the contract, it can be stated that the contract cannot be avoided by such person.
In the present case, Margaret was owner of antique shop specializing in rare porcelain dolls. She
started advertising on the Internet and the result was that soon the business grew to such an
extent that Margaret needed help for managing the business. Under the circumstances, there was
a discussion in the family. Everybody decided that Margaret would probably keep the business
going for some years more and then retire. It was also decided that Margaret’s youngest daughter
Emily, 16 years old then, would help her in the shop whenever required. In return, Margaret

would give any unsold dolls to Emily. However, when Margret retired in 2009, she made the
decision to give all the unsold stock to a charity so that they can auction the dolls.
In this way, the promise was made to Emily when she was a minor. According to the law, a
minor does not have the capacity to form a valid contract. But in this context it is worth
mentioning that the contract formed with minor is voidable at the option of the minor. Therefore
if the minor decides to enforce the contract against the other party, such contract is perfectly
valid and legally enforceable. In the present case, after attaining the age of majority, if Emily
decides to ratify the contract, she may enforce the contract against minor. In this case,
consideration has been provided by Emily in return of the promise made by Margaret in the form
of work that she was doing in the shop. The contract can be considered to be ratified by Emily
when she kept on working for Margaret even after attaining the age of majority. Moreover,
Emily had not done anything to avoid the contract. As a result, it is clear that in the present case
the contract has been ratified by Emily. Even if Emily was a minor, she can still enforce the
contract against Margaret, because the contract created with the minor is the voidable and not
void.
Conclusion: keeping in view the principles of contract law, in this case, it can be concluded that
Emily can enforce the promise made by Margaret according to which she was going to give all
unsold stock to Emily in return of the work done by Emily in the shop.

References
Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130
Chapple v Cooper (1844) 153 ER 105
Fawcett v Smethurst (1914) 84 LJ KB
Foakes v Beer [1884] UKHL 1
Nash v. Inman [1908] 2 KB 1
Pinnel's Case (1602) 5 Co Rep 117