Consideration and Part Payment of Debte

Introduction

This essay concerns four issues involving consideration and part payment of debt as between Jax and Kiran and Dhani. This advises Jax whether he can enforce his claims against Kiran and Dhani.

Trip to Yosemite for additional £200: Existing contractual duty

The first issue in this problem scenario is whether Jax can enforce the promise of £200 payment by Kiran and Dhani for the full tour of Yosemite Park. The issue relates to the existing contractual duties of Jax and the issue is whether existing past contractual duties will be considered to be sufficient consideration.

The first issue raises the question of whether performance of an existing duty can be consideration. The general principle of law is that performance of an existing duty is not a good consideration. However, exception is made for cases where the person under an existing duty performs the duty by exceeding it; this principle was explained in the case of Ward v Byham, which case involved the question of whether a mother who was promised to be paid maintenance for their illegitimate child by the father of the child was entitled to enforce the contract. The Court of Appeal held in the favour of the plaintiff mother and held that by promising, in accordance with the terms of the defendant’s letter, to ‘look after the child well’ and satisfy the defendant that it was ‘happy’, and to allow the child to decide which home it preferred, the mother had exceeded the duty prescribed for her under the section 42 of the National Assistance Act 1948. Another case that reflects on this legal principle is Hartley v Ponsonby. In this case, the defendant who was captain of a ship had promised the plaintiff who was a sailor on that ship to give him higher wages to stay on the ship after many sailors deserted and the ship was left in a more dangerous condition by the reduced crew. The plaintiff sued for higher wages promised and the defendant claimed that by staying on the ship the plaintiff had merely performed his existing legal duty for which he was not entitled to be paid more. The court however held that the plaintiff was within his rights to refuse to put to sea when the voyage was made riskier by the reduced crew and by agreeing to do the work, the plaintiff supplied fresh consideration and the defendant was therefore bound to pay the higher wages as promised.

The principle of Hartley v Ponsonby, and how it is distinguished from earlier authority provided in Stilk v Myrick, is that the former case saw the plaintiff undertake work for the defendant when the latter had discharged the surviving members of the crew and the shortage of labour was so great as to make the further prosecution of the voyage exceptionally hazardous, the agreement of the plaintiff to undertake was akin to entering into a new contract. In Stilk v Myrick, the crew were merely undertaking to perform their contractual duty to meet the normal emergencies of the voyage, but there was no situation of exceeding this duty. Based upon this discussion of the authorities on existing contractual duty and consideration, it can be stated that the plaintiff who performs an existing contractual duty does not provide consideration unless the plaintiff exceeds that contractual duty. If the plaintiff exists their existing contractual duty, then the principle of Hartley v

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1. Ward v Byham [1956] 2 All ER 318, [1956] 1 WLR 496.
2. Ibid.
3. Hartley v Ponsonby [1857] 7 EL BL 872.
4. Ibid.
5. Stilk v Myrick (1809) 2 Camp 317.
6. Ibid.

Ponsonby applies, and the plaintiff can be said to have provided good consideration. Applying this principle to the current problem, the facts of the case show that the package deal by Kiran and Dhani included trips to the Grand Canyon, Las Vegas and Napa Valley however, when Kiran mentioned that she would love to visit Yosemite National Park, Jax, agreed to arrange a full tour of Yosemite for an additional £200 to which Kiran and Dhani agreed. The existing contractual duty of Jax did not include a arrange a full tour of Yosemite, therefore, this can be said to be an exceeding of the contractual duties by Jax. As the agreement for this exceeding of contractual duties was done for an additional £200 payment by Kiran and Dhani, applying the principle of Hartley v Ponsonby, Kiran and Dhani are bound to make this payment to Jax.

San Diego Zoo for £300: Past consideration

The second issue is whether the promise to pay £300 by Kiran and Dhani is enforceable by Jax. This issue relates to the law related to past consideration, which is a promise of payment after the act had already been performed.

The general rule as to past consideration is that such past consideration is not a good consideration. An exception to this principle is that where the act is performed at the request of the promisor, past consideration can be considered to be good consideration. Therefore, if the consideration is past, the promisor is not legally bound to pay unless they had specifically requested the performance of the act; this obligation to pay would arise even if at the time the promisor had not promised to pay. Therefore, what needs to be considered here are the exceptions to the rule of past consideration. There are two exceptions to past consideration, which are, acts already performed but at promisor’s request and negotiable instruments. This situation concerns the former, that is, acts already performed at promisor’s request. The case of Pao On v Lau Yiu Long can be referred to here as in this case the Privy Council has explained the situation where past consideration can be considered to be good consideration based on the request by the promisor.

There are three conditions mentioned by the Privy Council for the past consideration to be good consideration in such cases: first, that the promisee performed the original act at the request of the promisor; second, that it was clearly understood or implied that the promisee would be rewarded for the performance of the act; and third, that the actual promise made, if made before the promisee provided the consideration, would be capable of being enforced. Applying these conditions to the present situation, the act was performed at the request of Kiran and Dhani because although the San Diego Zoo was not included in their original itinerary, they asked to be taken there and Jax agreed to do this. The third condition, which is that the actual promise made, if made before the promisee provided the consideration, would be capable of being enforced, because in that case the trip to the Zoo would have been enforceable as a contract. However, it is the second condition which is not clearly established, which is that it was clearly understood or implied that Jax would be rewarded for the performance of the act because Kiran and Dhani promised to pay Jax £300 for his efforts after the trip came to an end. However, Lampleigh v Braithwaite may provide an authority on this point. In

7. Eastward v Kenyon (1840) 11 Ad & E 438 QB; Re McArdle [1951] Ch 669.
8. Lampleigh v Braithwaite (1615) Hob 105.
9. Ewan McKendrick, Contract Law: Text, Cases, and Materials (Oxford: OUP 2014)./li>
10. Pao On v Lau Yiu Long [1979] UKPC 17, [1980] AC 614.
11. Ibid.
12. Lampleigh v Braithwaite (1615) Hob 105.

this case, the promise obtained a pardon for the murder charge against promisor and the promisor subsequently promised to pay the promisee £100 after the pardon was obtained. Although this is a case of past consideration and the promisee was not told nor was it implied that he would be paid prior to the action taken by him to obtain the pardon, the court decided that if the performance was at the request of the promisor, then the performance would constitute valid consideration. Another case that may be applied here is that of Re Casey’s Patents, in which case the court held that an existing commercial relationship between the parties can lead to a presumption that the payment would eventually be promised despite it not being so at the time of performance of the contractual requirements. This can be applied to the present case between Jax and Kiran and Dhani because as their tour guide, there was an existing commercial relationship which can be used to imply that there would be a payment for the additional tour of the San Diego Zoo undertaken by him for Kiran and Dhani at their request. Therefore, there can be enforcement of this past consideration in this case.

£1000 for continuing as a tour guide: Additional consideration

The third issue is whether the payment of £1000 can be enforced against Kiran and Dhani. This relates to the performance of a duty already promised in a different contract.

The general principle is that performance of a duty that is already promised in a different contract is not valid consideration. Therefore, if Jax has already promised to complete the tour with Kiran and Dhani in an existing contract, then the promise to pay him an additional £1000 to perform this duty is not enforceable and would not constitute valid consideration, as Jax is promising the same performance as under the previous contract with Kiran and Dhani. However, there are exceptions to this rule. The exception that is relevant to this situation is the one that is provided in Williams v Roffey. In this case, the court provided a specific set of circumstances in which performance of a duty already promised in a different contract can amount to valid consideration. As per this, if the promisee has entered into contract for supply of goods or services with promisor in return for payment by the latter, they can enforce a promise for additional payment if some conditions are met with. These conditions are that promisee at some point later has reason to doubt whether they will be able to complete their side of the bargain before the performance of the contract; the promisor promises additional payment in return for promisee’s promise to perform contractual obligations on time; this also provides a benefit to the promisor; promisor’s promise is not given as a result of economic duress or fraud on the part of promisee.

In Williams v Roffey, these conditions were applied to enforce a promise made by the promisor to the promise to pay them additional payment for the completion of contract because this would lead to a benefit to the promisor. The issue is therefore of ‘practical benefit’ and whether the additional payment promised to the promise is also providing a material benefit to the promisor. In this case, Jax became aware in the third week of the holiday, that he could no longer continue as their tour guide, because he had to attend a training event in Mariposa and he offered to find Kiran and Dhani another tour guide to replace him. However, Kiran and Dhani did not want a different tour guide in

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13. Ibid.
14. Re Casey’s Patents [1892] 1 Ch 104.
15. Stilk v Myrick (1809) 2 Camp 317.
16. Williams v Roffey [1991] 1 QB 1.
17. Ibid, [6] per Glidewell LJ.
18. Ibid.

the last week of their holiday and offered to pay Jax an additional £1,000 for his services, which was agreed to by Jax. In this case, the promise to pay an additional £1,000 was not the consequence of fraud or duress on the part of Jax. There is a benefit to the promisor for making this promise and for Jax to continue as their tour guide because they do not want a different tour guide in the last week of their holiday as they are happy and comfortable with Jax. Therefore, Jax’s continuation as a tour guide has provided Kiran and Dhani with a benefit or the aversion of a non-benefit (to have a different tour guide in the last week). Consequently, applying the principle of Williams v Roffey to this case, it can be said that Jax can enforce the payment of £1,000 by Kiran and Dhani.

Full payment of debt

The fourth issue is whether the acceptance of a gift by Jax would amount to payment of debt in full. This relates to full payment of debt.

In cases of repayment of debt, the legal principle is that part payment of debt to the creditor in satisfaction of the entire debt is not good consideration; in case where the debtor pays in part or does something else to satisfy the debt in full, this would not prevent the creditor from demanding the full payment of the debt in future. Even where the debtor pays less than the full amount to the creditor and this is presented as a full and final settlement of the debt with the creditor agreeing to this, the agreement will not be binding on the creditor. However, if the debtor has agreed to do something that exceeds what is due to the creditor or provides a benefit to the creditor in exchange for satisfaction of the debt, then this may be considered to be a full payment of debt. The principle of Williams v Roffey is also applicable here if there is some practical benefit to the promisee.

However, then the practical benefit must be established to the benefit of the promise. Moreover, where the debt is sought to be satisfied with something that is other than the money promised, then this must be at the request of the creditor as per the principle in D & C Builders v Rees. In this case, this is not so because at the end of the tour, Kiran and Dhani brought Jax a gift, which was not requested by the latter and cannot be said to have satisfied the debt of £1,500 owed by them to him. Therefore, he can claim the payment of £1,500 and the gift cannot be said to have offset his claim against Kiran and Dhani. Even where part payment of a debt is with plaintiffs’ consent for part payment in full satisfaction of a debt, Lord Denning has held in D & C Builders v Rees that it is not a true accord where the payment is accepted under duress. Extending this principle to the current case, it can be said that where there is no consent to accept the gift as a satisfaction of the full debt by Jax, there is no accord between him and Kiran and Dhani that can bind him.



Conclusion

To conclude this, with regard to the first issue, the existing contractual duty of Jax did not include a arrange a full tour of Yosemite, and did exceed contractual duties. Based on the principle of Hartley v Ponsonby, Kiran and Dhani are bound to make this payment to Jax.

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19. Pinnel's Case [1602] 5 Co. Rep. 117a.
20. L Jones, Introduction to Business Law (Oxford: Oxford University Press 2019) 125.
21. Foakes v Beer [1884] UKHL 1.
22. Williams v Roffey [1991] 1 QB 1.
23. D & C Builders v Rees [1966] 2 QB 617.
24. MP Furmston, Cheshire, Fifoot, And Furmston’s Law Of Contract (Oxford University Press 2017) 398.

With regard to the second issue, Jax can enforce the payment even if it is based on past consideration because the promise was performed at the request of Kiran and Dhani and the commercial relationship between them led to the implication of reward for the performance of the act.

With regard to the third issue, Jax can enforce the payment of £1,000 for continuation as a tour guide because he has provided Kiran and Dhani with a benefit and the principle of Williams v Roffey will apply to this case.

Finally, with regard to the fourth issue, the gift given by Kiran and Dhani to Jax at the end of the tour does not satisfy the debt of £1,500 owed by them to him. This gift was not requested by Jax. Therefore, he can claim the payment of £1,500 and the gift cannot be said to have offset his claim against Kiran and Dhani.

D & C Builders v Rees [1966] 2 QB 617. Eastward v Kenyon (1840) 11 Ad & E 438 QB

Foakes v Beer [1884] UKHL 1.

Hartley v Ponsonby [1857] 7 EL BL 872.

Lampleigh v Braithwaite (1615) Hob 105.

Pao On v Lau Yiu Long [1979] UKPC 17, [1980] AC 614.

Pinnel's Case [1602] 5 Co. Rep. 117a.

Re Casey’s Patents [1892] 1 Ch 104.

Re McArdle [1951] Ch 669.

Stilk v Myrick (1809) 2 Camp 317.

Ward v Byham [1956] 2 All ER 318, [1956] 1 WLR 496.

Williams v Roffey [1991] 1 QB 1.

Books

Furmston MP, Cheshire, Fifoot, And Furmston’s Law Of Contract (Oxford University Press 2017).

Jones L, Introduction to Business Law (Oxford University Press 2019).

McKendrick E, Contract Law: Text, Cases, and Materials (Oxford: OUP 2014).