Assent-based Niches of Promise Enforcement: Modification and Waiver

AuthorVal Ricks
Pages76-116
76
Chapter 2. Assent-Based
Niches of Promise
Enforcement:
Modification and Waiver
A. Modification
1. Modification of Judgment Liabilities
You begin studying modifications with Foakes v. Beer because this case shows the
legal issue that arises when the parties to a contract modify one parties’ (A’s) duties
but not the other’s (B’s). A doesn’t bargain for what B already has a duty to do—
remember Borelli? So promises made by A with respect to the modification (i.e.,
I’ll pay you the same, or more (even though you are doing what the contract or
some other duty already requires you to do)) are not binding. Yet in many of these
cases, such promises serve a commercial purpose, and policy or theoretical reasons
for enforcing them exist. What to do?
John Weston FOAKES V. Julia BEER (1884)
House of Lords
9 App. Cas. 605
[¶1] * * * * On the 11th of August 1875 [Beer] [obtained a] judgment against
[Foakes] for £2077 17s. 2d. for [a] debt and £13 1s. 10d. for costs. On the 21st of
December 1876 a memorandum of agreement was made and signed by [Foakes]
and [Beer in which Foakes agreed to pay Beer £500 immediately and the remainder
of the judgment principal in installments. In consideration of Foakes’s making these
payments, Beer agreed to forego interest on the judgment debt, to which she was
otherwise entitled. Foakes paid the principal in full according to the agreement, but
then Beer tried to initiate collection efforts for the interest. The trial judge refused
to allow her to proceed. The initial appellate court to hear the matter affirmed, but
the Court of Appeal reversed and entered judgment for Beer. Foakes then appealed
to the House of Lords.]
[Holl, counsel for Foakes:]
77
[¶2] * * * * [T]here is no reason in sense or law why the agreement should not
be valid, and the creditor prevented from enforcing his judgment if the agreement
be performed. It may often be much more advantageous to the creditor to obtain
immediate payment of part of his debt than to wait to enforce payment, or perhaps
by pressing his debtor to force him into bankruptcy with the result of only a small
dividend. Moreover, if a composition is accepted friends, who would not otherwise
do so, may be willing to come forward to assist the debtor. And if the creditor thinks
that the acceptance of part is for his benefit who is to say it is not? * * * * Reynolds
v. Pinhowe * * * * decided that the saving of trouble was a sufficient consideration;
“for it is a benefit unto him to have his debt without suit or charge.* * * * Pinnel’s
Case was decided on a point of pleading: the dictum that payment of a small sum
was no satisfaction of a larger, was extra-judicial, and overlooked all considerations
of mercantile convenience, such as mentioned in Reynolds v. Pinhowe * * * *. It is
every day practice for tradesmen to take less in satisfaction of a larger sum, and
give discount, where there is neither custom nor right to take credit. * * * *
Mankind have never acted on the doctrine of [Pinnel’s Case], but the contrary; nay
few are aware of it. By overruling it the House will only declare the universal
practice to be good law as well as good sense.
[¶3] [Earl of Selborne, L.C.:-Whatever may be the ultimate decision of this
appeal the House is much indebted to Mr. Holl for his exceedingly able argument.]
* * * *
[¶4] Bompas Q.C. (Gaskell with him) for [Beer]:-
[¶5] * * * * There is a strong current of authority that what the law implies as a
duty is no consideration. Therefore where a debt is due part payment is no reason
for giving up the residue. The doctrine is too well settled to be now overthrown:
see a long list of authorities [citations omitted]. * * * * It is contrary to public policy
to make the performance of a legal duty a good consideration; see the cases on
seamen’s wages: [citations omitted]. Where law and practice are so well established
this House will not now depart from them * * * *. * * * *
Earl of Selborne, L.C.:- * * * *
[¶6] * * * * The doctrine [of Pinnel’s Case] itself, as laid down by Sir Edward
Coke, may have been criticised, as questionable in principle, by some persons
whose opinions are entitled to respect, but it has never been judicially overruled;
on the contrary I think it has always, since the sixteenth century, been accepted as
law. If so, I cannot think that your Lordships would do right, if you were now to
reverse, as erroneous, a judgment of the Court of Appeal, proceeding upon a
doctrine which has been accepted as part of the law of England for 280 years.
[¶7] The doctrine, as stated in Pinnel’s Case, is “that payment of a lesser sum on
the day” (it would of course be the same after the day), “in satisfaction of a greater,
cannot be any satisfaction for the whole, because it appears to the Judges, that by
78
no possibility a lesser sum can be satisfaction to the plaintiff for a greater sum.
* * * *
[¶8] If the question be (as, in the actual state of the law, I think it is), whether
consideration is, or is not, given in a case of this kind, by the debtor who pays down
part of the debt presently due from him, for a promise by the creditor to relinquish,
after certain further payments on account, the residue of the debt, I cannot say that
I think consideration is given, in the sense in which I have always understood that
word as used in our law. It might be (and indeed I think it would be) an
improvement in our law, if a release or acquittance of the whole debt, on payment
of any sum which the creditor might be content to receive * * * * (though less than
the whole), were held to be, generally, binding, though not under seal; nor should I
be unwilling to see equal force given to a prospective agreement, like the present,
in writing though not under seal; but I think it impossible, without refinements
which practically alter the sense of the word, to treat such a release or acquittance
as supported by any new consideration proceeding from the debtor. * * * *
Lord Blackburn:- * * * *
[¶9] * * * * Lord Coke reports * * * * [in Pinnel’s Case] “that payment of a
lesser sum on the day in satisfaction of a greater cannot be any satisfaction for the
whole, because it appears to the judges that by no possibility a lesser sum can be a
satisfaction to the plaintiff for a greater sum: but the gift of a horse, hawk, or robe,
&c., in satisfaction is good, for it shall be intended that a horse, hawk, or robe, &c.,
might be more beneficial to the plaintiff than the money, in respect of some
circumstance, or otherwise the plaintiff would not have accepted of it in satisfaction.
But when the whole sum is due, by no intendment the acceptance of parcel can be
a satisfaction to the plaintiff; but in the case at bar it was resolved that the payment
and acceptance of parcel before the da y in satisfaction of the whole would be a
good satisfaction in regard of circumstance of time; for peradventure parcel of it
before the day would be more beneficial to him than the whole at the day, and the
value of the satisfaction is not material; so if I am bound in £20 to pay you £10 at
Westminster, and you request me to pay you £5 at the day at York, and you will
accept it in full satisfaction for the whole £10, it is a good satisfaction for the whole,
for the expenses to pay it at York is sufficient satisfaction.”
[¶10] * * * * What principally weighs with me in thinking that Lord Coke made
a mistake of fact [as to what the Judges in Pinnel’s Case decided] is my conviction
that all men of business, whether merchants or tradesmen, do every day recognise
and act on the ground that prompt payment of a part of their demand may be more
beneficial to them than it would be to insist on their rights and enforce payment of
the whole. Even where the debtor is perfectly solvent, and sure to pay at last, this
often is so. Where the credit of the debtor is doubtful it must be more so. I had
persuaded myself that there was no such long-continued action on this dictum as to
render it improper in this House to reconsider the question. I had written my reasons
for so thinking; but as they were not satisfactory to the other noble and learned
Lords who heard the case, I do not now repeat them nor persist in them.

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT