Part Payment

The rule established in the Pinnel’s Case 1602 was that part payment of a debt cannot clear the
whole payment since it is not supported by consideration. The debtor was already obliged to pay the
full debt, he gives no fresh consideration by providing part of the payment, this rule is subject to
exceptions though.

This rule was reaffirmed in the case of Foakes v Beer 1884 almost 300 years later. The court held that
the debtor was liable to pay her back the interest even after an agreement had been made between
them because he did not provide any consideration for the promise and that making part payment of
a debt could not amount to a whole. This case has been criticized for the courts ignoring the practical
benefit gained by the creditor by getting part of the payment. “It is not really unreasonable or
practically inconvenient that the law should require particular solemnities to give to a gratuitous
contract the force of a binding obligation.” – Earl of Selborne

Irrelevance of Practical Benefit:

The concept of consideration in regards to practical benefit was emphasized in the case of Williams v
Roffey Bros by Lord Blackburn. Getting a loaned partially paid off can have a number of advantages
such as a practical benefit for the person who loaned the money. However, courts in cases relating to
part payment of a debt use this inconsistently. As aforementioned, it was denied in the case of
Foakes v Beer and in another case of Re Selectmove 1995. On the contrary, it was accepted as valid
and sufficient consideration in the case of MWV Business Exchange 2018.

The exceptions for when part payment can be accepted are when the payment was made before the
due date or at a different place than what was originally agreed on. If the creditor requests the
debtor to pay it earlier than he is supposed to, then part payment will be considered a payment of
the whole sum owed because paying earlier will be the consideration by the debtor.

Exceptions:
The second exception is if something else is paid instead of cash, for instance, any goods or services.
This will be considered as the debt fully paid even if the value of the goods in subject is less than the
money owed. (Pinnel’s Case 1602). It may be absurd as for a debt owed of a 1,000 pounds, 999
pounds will not be accepted but 10 pounds and less valued object may. However, it is usually of more
benefit to the plaintiff since he accepted it.

The third exception is when a third party is involved. If a third party makes the payment of a debt on
behalf of the debtor, but it is a smaller sum of the money, the debt will be considered fully paid. This
rule was laid down in the case of Cook v Lister 1863 and subsequently followed in the landmark case
of Hirachand Punamchand v Temple 1911, in which the father paid the money to the creditor on
behalf of his son, the debtor and the court ruled that the creditor will be unable to claim for the
residual balance.

When it comes to the fourth exception, the doctrine of promissory estoppel can prevent a promisor
from demanding payment of the remaining sum after a part-payment has been made at the request
of the creditor. The case of D & C Builders v Rees 1965 is an illustration of how the doctrine can
prevent a promisor from enforcing their legal rights.

Advantages/appraisals:
It is argued that the law should treat promises to pay money that you owe to someone else and
promises to pay for something you will earn in the future in the same manner. However, this does
not come without criticisms. Some people argue that this principle does not make sense because this
is how people do business, it is normal for people to agree on deals like this. Furthermore, if
combined with another rule of consideration that the law does not concern itself with the adequacy
of what is given/received, it may lead to unfair outcomes.

Personally, I think the principle should be reconsidered by taking into account “practical benefit” as
established in the case of Williams v Roffey Bros.