9 App. Cas. 605 (H.L. 1884)
In 1876 Julia Beer obtained a judgment in the High Court of Justice against John Weston Foakes for the sum of £2090 19s.1 The judgment carried interest at 4 per cent per annum under the statute 1 & 2 Vict. c. 110 s. 17, and by the time of the agreement £113 16s. 2d. in interest had already accrued.2
On 21 December 1876 the parties executed a memorandum of agreement prepared by Foakes’s solicitor.3 The recitals stated that Foakes had requested time to pay the judgment and that Beer had agreed to give time on the conditions that half-yearly instalments of £150 be paid until the principal sum was discharged.4 The operative clause provided that Beer would not take any proceedings whatever on the judgment if Foakes paid £500 down and thereafter £150 on each 1 July and 1 January until the whole sum of £2090 19s. had been fully paid and satisfied.5
The Divisional Court and the Court of Appeal construed the agreement as preserving Beer’s right to interest and held that she remained entitled to enforce it, prompting Foakes to appeal to the House of Lords.6
Whether the memorandum of agreement dated 21 December 1876 released Mrs. Beer’s statutory claim to interest on the judgment debt?7
Upon the construction of the agreement of the 21st of December 1876 both the Courts below were agreed that the operative part could not be controlled by the recitals to limit the agreement to giving time only.8
Yes. The recitals state only that Foakes requested time to pay the judgment and that Beer agreed to give time on the conditions that half-yearly instalments of £150 be paid until the principal sum was discharged.9 The operative clause then provides that Beer will not take any proceedings whatever on the judgment if Foakes pays £500 down and thereafter £150 half-yearly until the whole sum of £2090 19s. has been fully paid and satisfied.10 That language does not reserve any claim for statutory interest.11 The agreement therefore released the interest claim if the promise is legally enforceable.12
The House of Lords examined the precise wording of both the recitals and the operative part to determine whether the parties intended any abatement of the statutory right.13
On its true construction the agreement released the interest, yet the court held the release unenforceable for want of consideration.14
Whether the agreement was supported by consideration from Dr. Foakes so as to bind Mrs. Beer not to enforce the judgment for the full amount including interest?15
A promise to accept a lesser sum in satisfaction of a greater liquidated debt is not supported by consideration. The debtor is already bound to pay the whole and confers no new benefit on the creditor beyond part payment of the existing obligation.16
No. Foakes was already under an antecedent obligation to pay the full judgment debt of £2090 19s. together with the statutory interest that had accrued and would continue to accrue.17 The initial £500 and the subsequent half-yearly instalments of £150 merely discharged that pre-existing principal obligation by instalments.18 No new security, negotiable instrument, or other independent benefit was given to Beer.19 Payment at deferred dates by the creditor’s forbearance therefore supplied no consideration for the relinquishment of the interest.20
Because the only performance rendered was part payment of a sum already due, the agreement remained a nudum pactum incapable of binding Beer.21
The agreement was not supported by consideration and did not bind Mrs. Beer to forgo the interest.22
Whether an agreement to accept payment of a lesser sum in satisfaction of a greater liquidated judgment debt is enforceable at common law?23
No. The doctrine stated in Pinnel’s Case and repeated in Coke Littleton has never been judicially overruled.26 Although later cases permit distinctions when the debtor supplies a horse, hawk, robe, or negotiable paper that might be more beneficial to the creditor, the present facts involve only successive money payments of the principal sum without any additional element.27 The court therefore declined to reverse a rule of such long standing and held the agreement unenforceable.28
An agreement to accept payment of a lesser sum in satisfaction of a greater liquidated judgment debt is not enforceable at common law.29