Case Briefs
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Foakes Vs. Beer (1884)


Author: Dhruv Khurana, student at ICFAI Law School, Hyderabad.

Citation- [1884] UKHL 1

Date of Judgement – 16th May 1884

Bench –   Lord Blackburn, Lord Watson & Lord Fitzgerald

Original Copy –  View

Issue in question

  • Is paying half of the debt sufficient as consideration for the agreement between appellant and respondent?

Background of the case

  • John Wetson Foakes (appellant) owed Julia Beer (respondent) a sum of £2,090 19s after the court judgment. Beer said that she would not take any action if he signed an agreement to pay an amount of £500 and pay £150 twice yearly until the whole amount was paid back.
  • However, the appellant was not in a financial position to pay the amount. Also, There was a statutory rule that judgment debts contain interest. Foakes, after some time, paid the whole principal back to Beer. However, he did not pay the interest.
  • Foakes, with the help of a solicitor, made an agreement to waive off the interest on the principal amount but Beer claimed that she was entitled to the interest on the amount as there was delay in payment of the debt.
  • Foakes claimed that the agreement had no mention of the interest. Beer claimed that it was invalid as she did not receive any consideration and filed a suit against Foakes for the non-payment of the interest.

Judgment

  • At the Queen Bench, the court gave a judgment in favour of Foakes. Watkin Williams J gave this decision and said that the signed agreement states that the debtor shall not bind himself to pay the creditor’s nominee. Also, there is enough consideration for the agreement.
  • In the Court of Appeal, a short judgment was made and the decision was in favour of Beer as there was no consideration for the agreement.
  • The House of Lords upheld the decision of the Court of Appeal i.e., in favour of Beer. However, a different reason was given. It was said that the agreement did not contain the interest owed but it can still be implied, given an enforceable agreement.
  • In the present case, the promise to pay the principal amount was not a sufficient consideration as there was no additional benefit going to Beer that was not already owed to her. The House of Lords referred to Pinnel’s case[1]. The principle of Pinnel’s case was applied. In Pinnel’s case, the rule that the promise to pay half of the debt or a part of the payment cannot be a consideration for a discharge of the entire debt and has been mentioned by Street as one of the “greatest mysteries of the common law.”‘ This rule is usually referred to, notably in England, as the rule in Pinnel’s Case. As per the case mentioned, part payment of debt is not satisfaction of the whole.
  • There should be some benefit for Beer i.e., there should be consideration involved for Beer, not just promise to pay something that was already owed. The payment of lesser pay cannot be satisfied as a whole. As a result, the appeal was dismissed and Foakes was liable to pay the interest which was due to Beer.

Analysis-

  • The rule which was laid down by all the judges of the Common Pleas in Pinnel’s case was applied by the House of Lords in Foakes v. Beer. Although Pinnel’s case was an action in debt, the rule is now generally established as an elaboration of two contractual rules: first, a contract cannot be discharged by agreement unless the agreement is supported by consideration, and secondly, that the performance of an existing contractual duty owed to the promisor is no consideration.
  • Pinnel’s Case seems to assume that the creditor is always in the better bargaining position. In fact, this is rarely true. Not only some debtors are financially sturdy, but also those who are financially weak retain a powerful negotiation advantage, namely, the issue of implementing a debt against a determined debtor. Due to this problem, creditors eventually feel bound to accept virtually any terms, related to payment, which their recalcitrant debtors offer. The law need not provide any more weapons for the debtors’ armoury: it should not encourage debtors to bargain for a reduction of their debts.
  • All Dr. Foakes asked Mrs. Beer was some time to make the payment which he received. It seems clear that the question of interest was overlooked by both parties. It is hard to see why Dr. Foakes should not pay the interest. Even if there had been a deliberate waiver of interest by Mrs. Beer, the case for relieving Dr. Foakes from the payment of interest is still not very strong. There is no obvious reason why the law should favour a person who has excused money which he is liable to pay, any more than a person who has promised the money which he has not earned.[2]
  • It is submitted that the House of Lords was right in holding that both kinds of agreements were governed by the same rules; as long as the English Law of Contract does not allow a gratuitous promise to create an obligation there is no logical reason for allowing a gratuitous promise to discharge an obligation.

[1]  Pinnel’s Case, (1602) 5 Co Rep 117.

[2] In Support of Foakes v Beer, V.U.W. LAW REVIEW 109, 7, http://www5.austlii.edu.au/nz/journals/VUWLawRw/1964/12.pdf.

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