Foakes v Beer (1884) App Cas 605

Facts

• Dr. John Foakes owed Julia Beer £2,090 19s as a result of a court judgment.
• Beer agreed that if Foakes paid £500 immediately and the remainder by installments, she would not pursue further action to recover the debt, including statutory interest.
• Foakes paid the principal sum in accordance with this agreement.
• Beer subsequently claimed the statutory interest not mentioned in the new payment arrangement.
• Foakes argued Beer was bound by her promise to waive the interest.

Issues

1. Whether Beer's promise to forgo the statutory interest was enforceable despite Foakes not providing new consideration.
2. Whether part payment of a debt could constitute valid consideration for discharging the whole debt.
3. If the existing legal obligation to pay the debt prevented Foakes from giving fresh consideration for Beer's promise.
4. Whether alternative doctrines, such as promissory estoppel, could make Beer's promise binding.

Decision

• The House of Lords ruled in favor of Beer, holding Foakes had not provided consideration for the promise to forgo interest.
• The payment of a lesser sum on the due date was not valid satisfaction of a larger debt under the rule from Pinnel's Case.
• The promise to pay in installments did not constitute new consideration, as Foakes was already legally obliged to pay.
• The court adhered strictly to the principle that existing obligations do not constitute consideration.

Legal Principles

• Consideration must be a new benefit or detriment, not the mere fulfillment of an existing contractual duty.
• Part payment of a debt is not good consideration for a creditor’s promise to forgo the remainder.
• The rule in Pinnel’s Case was reaffirmed, establishing that a lesser sum cannot satisfy a greater debt.
• Lord Blackburn acknowledged, but did not dissent from, the strictness of the doctrine due to precedent.
• Promissory estoppel, as later established in High Trees and Collier v Wright, can sometimes prevent a creditor from reneging on such promises, but was not considered in this case.
• The court distinguished between enforceable promises to pay more (if a practical benefit is conferred) and unenforceable promises to accept less, maintaining the rigidity of the pre-existing duty rule.

Conclusion

Foakes v Beer entrenched the requirement that part payment of a debt does not amount to valid consideration for a promise to forgo the remainder, reaffirming the pre-existing duty rule, and prompting ongoing debate over its fairness and practical relevance, with later developments in equitable doctrines offering limited flexibility.