Contract Law

Foakes v Beer [1884] UKHL 1

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Facts

  • Beer loaned Foakes a sum of £2090.
  • Foakes did not repay the amount, and Beer brought an action against Foakes.
  • They then entered into a repayment scheme where Beer agreed not to sue Foakes “in consideration” of an initial amount of £500 and then payments of £250 thereafter.
  • At the end of the agreement, the principal was repaid however interest was not so Beer sued Foakes. Foakes argued this was a breach of the agreement.

Issue

  • Was the agreement valid so as to preclude Beer from suing Foakes?

Held

  • The House of Lords upheld the old rule in Pinnel’s case which stated that part payment of a debt could not satisfy the whole debt.
  • The key reason was that there was no valid consideration in that Foakes was only “giving” what he was already contractually obliged to give.
  • There needed to be some new benefit, not just the promise to pay something that was already owed.
  • Selborne J explained that had it been a deed under seal, it would have been valid – but as it was not, it failed for lack of consideration.
  • (Note that this judgement pre-dated estoppel, and may have been decided differently today.)

Entire case


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