Foakes v Beer

Question 1

what is the rule in Foakes v Beer?

Answer 1

Payment of a lesser sum in satisfaction of the debt of a greater sum cannot be satisfaction. However, it is subject to a few exceptions

Question 2

what are the exceptions to the FvB rule?

Answer 2

1. the rule wont apply where debt is unliquidated
2. the rule wont apply where debt is disputed
3. introduction of new element
   - early payment
   - payment in a different form
   - payment by cheque, but no longer exists (Rees)
4. Section 92 Judicature Act 1908
5. payment by third party
6. composition of creditors
7. Promissory Estoppel

Question 3

what does s92 Judicature Act require?

Answer 3

1. must have acknowledgment in writing
2. acknowledgment has to be by creditor or anyone authorisd by him/her in writing on behalf
3. has to be an acknwoledgment of reciept of part payment in full satisfaction of the debt

Question 4

what is required for there to be accord?

Answer 4

1. was there an offer?
   □ Homeguard/Dalgety: it must be clear that pat payment is offered in the condition that it is taken in full settlement
2. Was there acceptance
   □ Magnum: mutual agreement of offeror must have reasonably been led to believe that offeree intended to accept [objective principle]

Does banking a cheque constitute acceptance? - No. HG said it was conclusive evidence but that was followed in Dalgety and was rejected in Magnum. Banking the cheque is not conclusive evidence but can lead to offeror to have reasonable belief that they did accept [e.g. if it was more than a year, etc].

Question 5

D C Builders v Rees - what if there was no illegitimate pressure and the facts arise in NZ?

Answer 5

FvB is still good law prima facie there is no consideration. Arguments for Rees?
• Exception in Judicature Act because we have a receipt - “received from Rees of 300 pounds in completion of the account”. The creditor may be trying to claim but Rees can use section 92
o Acknowledgment in writing of part payment in satisfaction of the full debt - The receipt in this case just says in completion of the account. Doesn’t say part payment. The document must acknowledge PART PAYMENT in satisfaction for whole payment - terms must be strictly applied.

Question 6

D C Builders - what if the facts arise in NZ but there is illegitimate pressure and teh recipet does fulfill the requirements of s92?

Answer 6

Plffs are going to argue that you can’t rely on s92 as there was economic duress?
Response of the def would be that once section was complied with, it overrides common law
ANY RULE OF LAW NOTWITHSTANDING….

Question 7

D C Builders - what If there was no question of illegitimate pressure, debtor was a general debtor in difficult finances, and there was no question exploitation, def didn’t know about financial pressure. Would judges still find for plff?

Answer 7

• There may be accord but satisfaction is missing - must need BOTH. Since no duress is present, we look at whether there are any exceptions. The def may say if they didn’t behave badly, Foakes may apply but they will invoke promissory estoppel. The judges in this case would then say - rule of Foakes would apply with no exception - PE wouldn’t apply
• Judicature act would apply in this case was in NZ

Question 8

D C Builders - What if there was no question of illegitimate pressure in Rees? Would the judges still have found for the plffs?

Answer 8

• Still would have held no consideration? FvB still applies on the surface?
• Denning: Judge would have applied promissory estoppel though - it would be inequitable for the creditors to go back on their promise. No consideration and no contract, but youre precluded by equity to go back on your promise.
• Dankwiths - there needs to be detrimental reliance. There was no evidence of that so he wouldn’t change his decision
• Lord Justice Winn: nothing mentioned about promissory estoppel.

Question 9

Dalgety - Suppose that in Dal, M went to D’s office and offered 5,000 in full and final satisfaction. D’s manager expressly agreed to take the payment on this basis. D then seeks to recover the balance of the debt. Will they succeed?

Answer 9

Yes. Even though there is a clear offer and an express acceptance, the still no consideration because FvB applies. This shows that this would have been the outcome of the case

Question 10

Dalgety - Suppose that the facts were the same in S1 except that after an argument, M increased his offer to 6,000 which D accepts.

Answer 10

Answer is that this makes no different either because FvB would still apply. We just have a dispute about the debt, not a disputed debt. - The dispute is essentially about how much less will be taken as the final payment. The dispute is about the extent of the indulgence that the creditor will give. This doesn’t turn it into a disputed debt.

Question 11

Dalgety - Actual facts of the case but one difference: prior to sending in the cheque and the note on the invoice, the M had honestly claimed that D had reached its duty by say telling the purchaser that they would accept a price significantly less than then asking price.

Answer 11

• That would mean there was consideration but of course as the judge found there was no clear offer. Simply saying that’s all the job was worth will not be sufficient. Even if they had said that this was full and final amount of dispute debt, theres no accord or satisfaction on the facts because the judge found that there was no acceptance.