Foakes v Beer

Foakes v Beer ( 1884) 9 App Cas 605 is a decision of the House of Lords to the English Contract Law. The House of Lords went into the decision of the question whether the promise of a creditor not to make a residual amount claimed, or whether it is effective for want of consideration is void and the full amount may be required in spite of the promise. The House of Lords decided under approval of the Rule of Pinnel 's Case, that such a promise is ineffective and the balance may be required.

• Earl of Selborne LC 2.1
• 2.2 Lord Blackburn

• 3.1 Pinnel 's case as binding precedent?
• 3.2 Actus contrarius Theory
• 3.3 Substantive Legal protection purpose
• 3.4 Value Theoretical Aspects
• 3.5 continued validity and reform by statute law

Facts and courts

Facts

Dr John Weston Foakes owed ​​Beer Julia the sum of £ 2,090 19s. Mrs Beer complained a sum before the Exchequer Division and received on August 11, 1875 judgment for payment against Dr Foakes. 16 months later Dr Foakes had hardly paid. Out of court, both signed on 21 December 1876 agreement solicitor created by Dr Foakes that Mrs. Beer legal action and more I do if the Dr Foakes her after a deposit of £ 500 for 1 January and as of December 21, 1876 1 July of each year would pay £ 150 to the £ 2,090 19s would be paid off:

" Whereas, the Said John Weston Foakes is indebted to the Said Julia Beer, and she has Obtained a judgment in Her Majesty's High Court of Justice, Exchequer Division, for the sum of £ 2,090. 19s. And Whereas the Said John Weston Foakes Has requested the Said Julia Beer to give him time in Which to pay seeking judgment, Which she has Agreed to do on the Following conditions: Now this agreement witnesseth, 'that' in consideration of the Said John Weston Foakes paying to the Said Julia Beer, on the signing of this agreement, the sum of £ 500. , the receipt whereof she doth hereby acknowledge, in part satisfaction of the debt Said judgment of £ 2,090. 19s., And on condition of his paying to her or her executors, administrators, assigns or nominee the sum of £ 150. , On the 1st day of July and the 1st day of January, or within one calendar month after each of the Said days respectively in every year, until the whole of the Said sum of £ 2,090. 198s. Shall have been fully paid and satisfied; the first of seeking payments to be made ​​on the 1st day of July next, then she, the Said Julia Beer, hereby under takes and Agrees did she, her executors, administrators or assigns will not take any proceedings whatever on the Said judgment. "

Mrs Beer did not consider it that you entitled under Article 17 of the Judgments Act 1838 also 4 % interest. 1882 demanded Mrs Beer by Dr Foakes after paying off the sum still interest in the amount of £ 360

Decisions of the courts

Queen's Bench Division: Watkin Williams J

On June 1, 1882 Mrs Beer requested after the order 42, Rule 19 RSC 1883 to be able to enforce the judgment. The competent master ordered after the hearing that a judge should decide whether Dr Mrs Foakes owed ​​Beer a balance. On February 22, 1883 came in Middlesex during the Hilary sittings for hearing before Cave J and a common jury with Dr Foakes as plaintiff and as defendant Mrs Beer. At the hearing was Mr. Mackreth, Mrs. Beers solicitor, heard as a witness; as evidence he submitted a certified copy of the judgment of the Court of Exchequer from August 11, 1875, as well as an invoice, from which the balance resulted eingeklagte. Moreover, the agreement of 21 December 1876 and presented to Mrs Beer admitted that all the installments have been paid (except for the alleged interest). Cave J advised the jury that all installments were paid and to require the agreement, regardless of the judgment of the Court of Exchequer, Mrs Beer prevented them from further payments. The verdict of the jury therefore was in favor of Dr Foakes.

On March 2, 1883 Mrs Beer gained through her ​​lawyer, a rule nisi, so it came to trial before the Queen's Bench Division. The court issued an order to show cause, first, to Dr Foakes to comment why no renegotiation is necessary because of misdirection.

Dr Foakes then took by his barrister William Haworth Holl QC position: There was no specific case of misdirection by Cave J before. A contract was governed by English law effective when consideration vorliege. Through numerous precedents is recognized as right that consideration exists in every legal advantage or the possibility of a legal Vantage. Not to enforce the agreement would therefore effectively: Mrs Beers promise to part of the sum to renounce ( interest rates ), whether through the consideration Dr Foakes ' to pay ever met. The statement of the jury by Cave J was therefore have been correct. ABP Gaskell, who appeared as a barrister for Mrs Beer, gave the answer that the court was bound by Cumber v Wane: It is recognized that in exceptional view only if no consideration when a partial amount to satisfy the full amount should be paid:

" A man june give in satisfaction of a debt of £ 100, a horse of the value of £ 5, but not £ 5 Again, if the time or place of payment be different, even the one 'may be a satisfaction for the other. Let us, then, apply to the present case synthesis principles. If for money you give a negotiable security, you pay it in a different way. The security 'may be worth more or less: it is of uncertain value. That is a case within the rule of law Following I have referred by to "

After the agreement of December 21, 1876 Dr Foakes should pay the amount without interest to satisfy the full amount, including interest; for want of consideration this agreement is invalid.

Watkin Williams J, whose judgment Matthew J joined briefly refused to renegotiate because of misdirection: Lack of consideration was not raised during the proceedings before Cave J. Even if this argument does not penetrate through because Cumber v Wane is in principle bound to differ in the given case, however. Consequently, the rule nisi was repealed ( Foakes v Beer 11 QBD 221).

Court of Appeal: William Brett MR

Mrs Berry then lodged appeal to the Court of Appeal, where it came to trial before Sir Baliol Brett MR, Lindley and Fry LJJ on 23 June 1883. Mrs Beer was again A.B.P. Barrister Gaskell, represented by Dr Foakes W. H. Holl QC and Winch. Both presented their interpretation of the law again dar.

Brett LJ gave the appeal of Mrs. Beer instead of in a short sentence; Lindley and Fry LJJ joined him. By the judgment of the Court of Exchequer Dr Foakes was required for immediate payment. He had asked for time for payment by the agreement. Mrs Beer had granted him this, was not under an obligation. Contrary to the opinion of the High Court, he saw the contract not covered by consideration: Dr Foakes have only committed themselves to something to which he was already legally obligated ( Foakes v Beer 11 QBD 224).

Decision of the House of Lords

On March 31 and April 1, 1884 it came to the hearing before the House of Lords after Dr Foakes appeal had been lodged against the judgment of the Court of Appeal. Dr Foakes was again by W. H. Holl QC represented, which Winch joined. Holl again emphasized in his presentation that the contract for the deferral is effective. Consideration is given, as it was a great advantage to the creditor often, to obtain a partial sum immediately, instead of having to get involved in the lengthy process of foreclosure to drive in danger the debtor into insolvency. Precisely because of this advantage of the creditors would indeed conclude the contract. He then elaborated on the binding effect of Cumber v Wane; the Court is not therefore bound, as its ratio decidendi was hollowed out by the court already by numerous exceptions and - as with reference to John William Smith's The Law of Contract - recognized in legal theory as misguided. Make you the Dokrin of Cumber v Wane to an end, this does not lead to the fact that payment by check or change is effective, by cash. Cumber v Wane contradict the generally accepted daily practice of merchants to accept partial amounts as repayment of the entire debt. He concluded:

" By overruling it [ Cumber v Wane ] the House will only declare the universal practice to be good law as well as good sense. "

Henry Mason Bompas, QC, the ABP Gaskell joined, led the process for Mrs. Beer and explained that in his legal opinion in the contract, to the adoption of the interest was never mentioned. But even if that were the case, the contract was void for want of consideration. It was a long time in the law of England recognized that there could be no consideration what the law already imposes a duty ( such as Stilk v Myrick ). The Holl, Q.C. put forward the supposed cavities did not exist: In these cases, the ratio was not provided by Cumber v Wane in question, but the cases have been distinguished by their facts.

The House of Lords asked for after the trial period of consideration. On May 16, 1884 dismissed the appeal by Dr Foakes and confirmed the judgment of the Court of Appeal. Lord Selborne justified this by saying that the court felt bound by Pinnel 's Case (1602 ).

Earl of Selborne LC

The Earl of Selborne, the then Lord Chancellor, discussed in its judgment first, the question whether the agreement Mrs Beer was a right to payment of interest. Because of that but to take a certain amount, namely £ 2,090 19s, named without reference to interest, must be assumed that only the agreed amount was to be paid without interest. Under the law of England, a contract could only unfold effects without consideration if it will either be closed under seal as a deed or whether by the type accord and satisfaction. This is excluded here.

Consideration may be given in the agreement of Mrs Beer by forgo legal action to be taken. Dr Foakes, however, commit yourself to anything, to which he was not obliged to do anyway. The question that had to face the House now is whether in this case, an exception should be created, in turning away from the traditional view of how the law of England was:

" It might be ( and indeed I think it would be) to improvement to our law, if a release [ ... ] were held to be, gene rally, binding"

The Lord Chancellor refers in his judgment, however, on an obiter dictum of Sir Edward Coke in Pinnel 's Case of 1602, in which the classical doctrine was first handed down:

"Payment of a lesser sum on the day in satisfaction of a Greater, can not be of satisfaction for the whole, Because it Appears to the Judges, did by no Possibility a lesser sum can be a satisfaction to the plaintiff for a sum Greater. "

Notwithstanding the existing criticism of this decision, this was but never asked by the courts as binding precedent in question. The same applies to the decision in Cumber v Wane by 1718. Consequently Dr Foakes is obliged to pay interest and to confirm the judgment of the Court of Appeal.

Lord Blackburn

Lord Blackburn initially wanted to make a dissenting opinion, but ultimately joined in the majority opinion. Nevertheless, his judgment clear and oft-cited criticism is influenced in the decision:

"All men of business [ ... ] do every day Recognise and act on the ground did 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 on the whole. "

Reception

The judgment is one of the most controversial of the entire common law. The vast majority rejects its ratio decidendi.

Pinnel 's case as binding precedent?

Ames keeps his peculiar ratio ultimately the result of over a great respect for the superior authority of Lord Coke, it was - especially at Lord Blackburn - been like against their own conviction. Particularly absurd mute moreover that Ames ' view, according to Lord Coke actually Bagge v Slade, 3 Bulst. 162, which had represented contrary view:

" And if a man be bound to another by a bill in 1000 pounds and her pays unto him £ 500 in discharge of this bill, the Which he accepts of accordingly, and doth upon this assume and promise to deliver up unto him the Said bill of £ 1000, £ 500 this is no satisfaction of the £ 1000, but yet this is good and sufficient to make a good promise and upon a good consideration, Because He hath paid money, sc 500 pounds and he hath no remedy for this again. "

Thus, a distinction must be carefully whether the partial payment consideration should be for the entire obligation or promise not to ask for the rest: The creditor could thus indeed proceed under the original contract against the debtor and demand full payment, however, acquire the debtor of the original contract in return by a claim for breach of promise, leading to settlement by cross action. In Foakes v Beer, the House would thus, led by alleged adherence to the dictum Lord Coke, just to its replacement. The decision is ultimately caused by the fact that the Dr Foakes has not invoked Bagge v Slade. Others point out that there had been in Pinnel 's case to an action of debt for which consideration is no prerequisite.

Actus contrarius Theory

The justification for the decision, it was argued that it had extended the recognized actus contrarius theory only to cases of renunciation. According to this theory, the same conditions as for the reasons necessary for the performance-enhancing modification of an obligation. The basis for this fancy of Roman law sentence: " eisdem modis dissolvitur obligatio, quae nascitur ex contractu vel quasi, quibus contrahitur. " This actually intended for formal requirements condition was only logically extends to the consideration requirement for waiver.

Serious objections were against this view in the literature, however, raised: was already historically consideration only the justification of obligations intended. Furthermore, the formal point of view the consideration many situations will not do justice, it must be understood as a material according to requirement for protection against haste. However, this was Übereilungsschutz the waiver is not necessary: the "sense of present deprivation " (, feeling, give something up ') is the waiver Übereilungsschutz enough, especially as this - is limited to existing assets - as opposed to creating obligations.

Substantive Legal protection purpose

The decision is generally regarded as a manifestation of the pre-existing duty rule. The rule stems from the decision Stilk v Byrick (1809 ) and states that can not be a consideration, to which the debtor is obliged to do anyway. An important exception to the rule learned in Williams v Roffey Bros & Nicholls ( Contractors) Ltd ( 1991): In this case, the defendant contracted to a third party under a construction agreement a penalty. The defendant transferred individual works to the plaintiff. When he ran into financial difficulties and threatened to stop the work promised the defendant for each completed section to pay an extra sum. However, as the plaintiff had completed the work he was given only a partial amount of the agreed bonus. The plaintiff brought an action; the defendant relied on the fact that the special payments without consideration were promised and therefore could not be sued: The plaintiff had only promised the completion of the addition to rent, but he was committed after the original contract, which according to the pre-existing duty rule no consideration is given. The defendant won the case. The Court of Appeal held that there had been consideration here: Avoiding the penalty and timely completion of building the house by the special payment was a "practical benefit or avoidance of disbenefit ", which would be sufficient for consideration. Stilk v Myrick was reinterpreted as a case of economic duress.

In a consistent application of this rule, would also be present for the constellation in Foakes v Beer consideration: whether the promise for it is to pay more or less can make no difference to accept. The Court of Appeal was submitted in re Select Move ( 1995) this argument. He refused because of the doctrine of binding precedent:

" Foakes v. Beer which not even referred by to in [ Roffey ], and it is in my judgment impossible, Consistently with the doctrine of precedent, for this court to extend the principle of [ Roffey ] to any circumstance governed by the principle of Foakes v Beer. If did extension is to be made ​​, it must be the House of Lords or, Perhaps even more Appropriately, by Parliament after consideration by the Law Commission. "

Janet O'Sullivan represents that Roffey and Foakes could very well be reconciled with each other. The crucial difference is that the possibility is in Foakes to the repayment of a loan, in Roffey, however, an ordinary contract for work. In the latter case, there is a duty to mitigate damages for breach of contract to the creditor of the claim for damages. But there is an additional requirement, so this will be avoided by the special payment and was therefore consideration for the promise of the bonus given. Upon repayment of loans, however, this rule is obviously pointless. Another aspect is that according to the rule Hadley v Baxendale (1854 ) You are then not replaced if they are not predictable ( "too remote" ) are. Also, it is apparent that contract and damages are not equivalent and thus accrue a benefit from the contract. However, even this rule is not relevant in loan repayments. Due to these differences, the different treatment of cash-back and other exchange contracts can be explained and justified.

Value Theoretical Aspects

For the sharpest criticism of the ratio of Foakes counts the simple fact that the creditor has agreed to the waiver and it most likely deserves to assess the equivalence ratio. If the contract was not to his advantage, it was not to close to him him. It is hard to deny that it was to get the money for him far more difficult if, for example, the debtor becomes insolvent.

Janet O'Sullivan asserts, that the debtor's insolvency being contested payment by s 239 and s 340 of the Insolvency Act 1986 enables the preferences of the creditors and consequently still go out empty. If the debtor is not going bankrupt, there is no advantage to the creditor, as he could get his money in this case. Heavy Weigh In addition, the value- theoretical consideration that money is different from normal goods. Money is a universal measure of value for all other goods. It follows that the value of money is objective and constant. Had £ 1000 £ 1000 so not always this led to an undermining of the entire market system. In the law of restitution money is recognized as incontrovertible benefit, ie of recipients of money can never claim that this was for him without value; any depreciation of the payments received by a subjective scale will thus excluded. This objective scale must consequently continue to apply in contract law. An appeal to the creditor that he accepted £ 800 as a fulfillment for £ 1000, but implicitly contain the irrational claim that money is not worth anything to me. ' This could not accept the right reasons mentioned. Only in this way could also explain why, conversely, the fulfillment by a different product than money, " the gift of a horse, hawk, or robe", is possible: For these commodities, the objective measure of money does not apply and subjective preferences were taken into account.

Continued validity and reform by statute law

:; (Now s 16 of the Mercantile Law Amendment Act Ont Stats. 1885, c 13. ) Statuiert in Ontario was in response to the verdict in s 6 of the Administration of Justice Act 1885

"Part performance of an obligation Either before or after a breach thereof Expressly When accepted by the creditor in satisfaction or rendered in pursuance of an agreement for did purpose, though without any new consideration, Shall be held to extinguish the obligation. "

In the United States the rule has been adopted by most courts and has been found in the § § 73, 273 of the Restatement ( Second) of Contracts input:

"Performance of a legal duty owed ​​to a promisor Which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it Differs from what what required by the duty in a way Which Reflects more than a pretense of bargain. "