Consideration - Case Study Example

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Since the Court of Appeal decision in Williams & Roffey Bros [1990] a new area of uncertainty has arisen in the doctrine of consideration, as we shall see. Effectively the Court of Appeal ignored a House of Lord's decision; a decision which has been around for more than 400 years.
Pinnel's Case [1602] examines the doctrine from the view point of Creditors who are already owed something [a legal duty or money], and appear to agree to accept part-payment of the debt. The facts of the case were that a borrower, Cole, owed Pinnel [the lender] the equivalent of 8.50 [8-10s-0d] which was to be repaid on 11 November. At the lender's request, the borrower paid 5.11 [5-2s-2d] on 1 October, which the lender claimed to accept in full settlement of the debt. The lender then successfully sued the borrower for the outstanding amount. The House of Lords held that since no consideration was exchanged to enforce the promise of the lender to accept part-payment of a debt on the due date from the borrower, then the lender could pursue full payment of the debt at a later date.
This remains the general rule at common law. However in Pinnel's Case it was also said that the agreement to accept part payment would have bound the lender if fresh consideration had been provided to show accord and satisfaction. This might be:
Although influential, this case was actually decided on a technicality. ...
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A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to the one party, or some forebearance, detriment, loss or responsibility, given, suffered or undertaken by the other." - Lush J: Currie v Misa [1875], para 162
Author : shannastiedeman

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