The defendant subcontracted some of its work under a building contract to the plaintiff at a price which left him in financial difficulty and there was a risk that the work would not be completed by the plaintiff. The defendant agreed to make additional payments to the plaintiff in return for his promise to carry out his existing obligations. The plaintiff sued for payment under the original agreement and the further agreement. The defendant argued that its promise to make additional payments was unenforceable, having been made under commercial duress.
Held: The rule in Pinnell’s Case does not apply where the debt arises from the provision of services. A promise to perform an existing obligation can amount to good consideration provided that there are practical benefits to the promisee – an expectation of commercial advantage was good consideration.
Glidewell LJ said: ‘(i) if A has entered into a contract with B to do work for, or to supply goods or services to, B in return for payment by B and (ii) at some stage before A has completely performed his obligations under the contract B has reason to doubt whether A will, or will be able to, complete his side of the bargain and (iii) B thereupon promises A an additional payment in return for A’s promise to perform his contractual obligations on time and (iv) as a result of giving his promise B obtains in practice a benefit, or obviates a disbenefit, and (v) B’s promise is not given as a result of economic duress or fraud on the part of A, then (vi) the benefit to B is capable of being consideration for B’s promise, so that the promise will be legally binding.’
Glidewell, Purchas and Russell LJJ
[1989] EWCA Civ 5, [1991] 1 QB 1, 10 Tr LR 12, [1990] 2 WLR 1153, (1991) 48 BLR 69, [1990] 1 All ER 512
Bailii
England and Wales
Citing:
Cited – Pinnel’s Case, Penny v Core CCP 1602
Payment of Lesser Sum Not Satisfaction
(Court of Common Pleas) The payment of a lesser sum on the day in satisfaction of a greater, cannot be any satisfaction for the whole. The gift of a horse, hawk, robe, etc., in satisfaction, is good. Payment of part before the day and acceptance may . .
Cited – Stilk v Myrick KBD 16-Dec-1809
No Obligation Incurred without Consideration
The plaintiff agreed to sail with the defendant on a voyage being paid pounds 5.00 a month. Two crew deserted and the captain asked the remainder to do their work sharing the wages saved. The plaintiff sought the additional sum above the articled . .
Cited – Foakes v Beer HL 16-May-1884
Mrs Beer had obtained judgment against Dr Foakes for andpound;2,090 19s. He asked for time to pay and they agreed with him, acknowledging the debt, and paying part immediately and undertaking to pay the balance over a period of time. In . .
Cited by:
Not followed – In Re Selectmove Ltd CA 21-Dec-1993
Promisse to Pay Tax due is not Consideration
The company appealed against an order for its winding up, saying that the debt was disputed, an accomodation having been reached with the Revenue.
Held: The court declined to regard a promise to the Revenue by a company to pay its existing . .
Cited – Collier v P and M J Wright (Holdings) Ltd CA 14-Dec-2007
Agreement for payment by joint debtor not contract
The claimant appealed against refusal of an order to set aside a statutory demand. He said that he had compromised a claim by the creditors. He argued for an extension to the Rule in Pinnel’s case, so that where a debtor agrees to pay part of a . .
Cited – Horwood and Others v Land of Leather Ltd and Others ComC 18-Mar-2010
The claimants sought to claim for personal injuries against the defendant company, now in administration, and their insurers using the 1930 Act. The insurers said they were not liable to indemnify the company. The parties disputed the standing of an . .
Cited – Parties Named In Schedule A v Dresdner Kleinwort Ltd and Another QBD 28-May-2010
The defendant merchant banks resisted two group claims for annual bonuses for 2008 made by the employee claimants. They now sought summary judgment against the claims. The employer had declared a guaranteed minimum bonus pool available to make the . .
Cited – Adam Opel Gmbh and Another v Mitras Automotive (UK) Ltd QBD 18-Dec-2007
The parties had agreed for the supply of automotive parts by the defendant to the claimant under a sole supply arrangement. None were in fact ordered for the first few years. The manufacturer then changed its design and made a new arrangement with a . .
Cited – Regency Villas Title Ltd and Others v Diamond Resorts (Europe) Ltd and Another ChD 7-Dec-2015
Claim by time share owners for easements over neighbouring land. The easements were for various sporting rights and facilities.
Held: The Claimants were entitled to appropriate declaratory relief confirming that they have the rights they claim . .
Cited – Regency Villas Title Ltd and Others v Diamond Resorts (Europe) Ltd and Another CA 4-Apr-2017
Can a recreational purpose underlie an easement
The court considered the validity of easements of recreational facilities. A property had been developed with timeshare leases within a substantial and attractive grounds area. Later a second development was created but with freehold interests, but . .
Cited – Rock Advertising Ltd v MWB Business Exchange Centres Ltd SC 16-May-2018
The parties disputed whether a contract (licence to occupy an office) had been varied by an oral agreement, where the terms prohibited such.
Held: The ‘no oral variation’ clause applied. Such clauses were in common commercial use and served a . .
Lists of cited by and citing cases may be incomplete.
Contract
Leading Case
Updated: 01 November 2021; Ref: scu.259379