FvB scenarios Flashcards
DC Builders: What if there was no illegitimate pressure and the facts arise in NZ
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
Acknowledgment in writing of part payment in satisfaction of the full debt - The receipt in this case just says in completion of the account. The receipt doesn’t say part payment. The document must acknowledge PART PAYMENT is being received in satisfaction for whole payment – It could be full payment of the sum due – that is why the terms must be strictly applied.
DCB: What if the facts arise in NZ but there is the illegitimate pressure and the receipt does fulfil the requirements in s92? i.e. receipt makes it clear that there is part payment in satisfaction for the larger debt.
- 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”
However, Parliament wanted to create an exception to the FvB rule, but they couldn’t have intended s92 to be applied in cases where fraud was present, nor will Parl have intended s92 to be invoked if there was other forms of bad behaviour including illegitimate behaviour.
Then the next thing we would do is look at case law – Barns v Jacobson 1924 NZLR 653 which says “the rule of law referred to in s92 is as to the form of the release. It does not do away with protection of persons under a disability.” We could say this would include any receipt wrongfully obtained. However this cases says that if the creditor was mentally incapacitated at the time, s92 would apply.
DCB: 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?
- 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
DCB: What if there was no question of illegitimate pressure in Rees? Would the judges still have found for the plffs?
- 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 for promissory estoppel to apply. There was no evidence of that so he wouldn’t change his decision
- Lord Justice Winn: nothing mentioned about promissory estoppel.
Dalgety: What if it was a disputed debt and the judges said he’ll follow Homeguard and there is a deemed acceptance? Would he have found in favour of the Morton’s?
- Since its Generally Disputed we say there is satisfaction.
- Is there accord? We have a deemed acceptance. But was there an offer in this case? The cheque could have been an offer? The judge said that there was an invoice with the cheque - my estimation on work cost based analysis. The judge said this is not certain enough for an offer. This could mean either this is all youre going to get paid – sue me for the balance. There needed to be a clear offer of the cheque in full and final settlement of the debt. The judge said this wasn’t a clear offer.
dalgety: Suppose Morton went to Dalgerty’s office and offered 5,000 in full and final satisfaction. Dalgerty’s manager expressly agreed to take the payment on this basis. Dalgerty then seeks to recover the balance of the debt. Will they succeed?
• 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 even if there had been a clear offer and acceptance.
dalgerty: Suppose after agreeing to part payment, but debtor is then sued, it is discovered that the property was sold to a friend of the real estate agent and the price was misrepresented as the fair market value - 100,000 less.
debt, there’s a cause of action for breach of contract to recover the loss for breach of duty as loss suffered. If you were aware of the claim and you’re right, then there wouldn’t be anything to stop you to bring your cause of action. You may get your part payment.
There was no disputed debt in Dalgerty which meant FvB applies. Therefore, there is no satisfaction/consideration. Even if there had been a geniually disputed debt, the result would not have been different.
Dalgerty: Actual facts of the case but one difference: prior to sending in the cheque and the note on the invoice, the Morton 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.
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.
what if creditor, although no intending to accept debtors offer when cheque was banked, delays for 3 days or weeks in notifying debtor about cheque is only part payment - not full? We need to be reminded of the principle the judge applies:
The longer the delay of notification, the higher the risk that the debtor will form a reasonable belief that the offer has been accepted. The debtor might not that the cheque has been banked. Delays can’t be conclusive as in itself as in reality, the debtor will not be aware or form an actual reasonable belief that the offer has been accepted
SelectMove:
What would the position be in Selectmove if the Court had applied Williams v Roffery and found that there was consideration?
The officer didn’t have authority to conclude the agreement. If an agent doesn’t have authority then contract can’t be concluded. An agent is just the middle man. No question of Mr Polland making the K. An agent is a person who has authority to act on behalf of another - principal. If an agent acts within the scope of this authority then the agent can conclude a contract between the third party and the principle. There are two types of authority:
• Actual authority - actual authorisation of the agent to enter into the transaction , OR
• Ostensible/Apparent authority - this will be the case where the agent is held out as having the authority to do things but doesn’t actually have it, or some sort of representation by the principal that the agent has authority. Classic example in NZ is a real estate agent.
Since the agent is held out to deal with the public they are perceived to have authority. The agent can bind the principal to those statements and make them liable. The vendor may claim loss from agent but if they have gone bust, then they have to pay the bill.
The agent – Mr Polland – had neither actual nor ostensible authority. There was no conduct in the IRD that held out their officer being able to make binding deals. If there was authority, actual or apparent, the court was prepared to find that there could have been a binding acceptance by silence because the agent said if SM hasn’t heard back then they would accept.
SM argued that even if there wasn’t agreement, Promissory Estoppel applies so we will have a valid defence.
SM: was there an acceptance of Mr Ffookes proposal?
No. general rule - silence is not usually acceptance. Ffookes had no actual or osetnsible authority to accept
SM: if there was an agreement was it supported by consideration moving to the crown?
no. FvB applies
sm: If theres no agreement [supported by consideration], is the crown estopped that the debt is due?
If there is no agreement at all then PE wouldn’t have applied. The court held there was no binding promise. The promise wasn’t made as agent didn’t have authority to make the promise.
Even if there was authority, it would not be inequitable to retract the promise because SM made promise to pay future tax on time and didn’t pay others on time. When demand was made to pay whole tax, SM delayed even more. It is not inequitable for the IRD to go back on the bargin because SM haven’t fulfilled their obligations.
Even if there was a binding agreement - agreement made with authority and with consideration, it could have been cancelled by the crown because they could say SM breached their side of the bargin and the term breach was essential to the whole arrangement to pay on time.
