raymond owed Daniel HK$400,000. Raymond knew Daniel was in financial difficulties and therefore offered to pay HK $ 350,000 in full settlemint of the debt. Daniel accepted this cheque, but later sued Raymond for the balance. Advise them of their legal position.
- Kenzzz_chLv 71 decade agoFavorite Answer
In Foakes v Beer, the defendant owed the plaintiff money and knew the plaintiff was in financial difficulty. Hence, the defendant offered to pay less to settle the debt. The offer was subsequently accepted by the plaintiff. However, the court ruled that a promise to receive part payment for the settlement of an existing debt is not supported by consideration. Therefore, if Foakes v Beer is followed, Raymond's acceptance of $350,000 is not supported by consideration and hence there is no valid contract. Raymond is liable to pay the remaining $50,000 to Ken.
However, there is also a case called William v Roffrey Bros which states that a promise to pay more for the completion of existing contractual duties is supported by consideration as long as there is a practical benefit to the promisor. It may be said that there is a practical benefit to Daniel since he gets paid earlier. If William v Roffrey Bros is followed, there is a valid contract to accept $350,000 only and Ken cannot recover the $50,000.
However, William v Roffrey Bros is a Court of Appeal case while Foakes v Beer is a House of Lords case. Foakes v Beer is also more aligned to the given facts. Therefore, Foakes v Beer ought to be followed and Raymond is probably liable to pay the remaining $50,000 to Daniel.