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If A and B make a contract and then later make an alteration agreement relating to the original contract, either to pay more for the original contract or to accept less payment than is due under the original contract, is this alteration promise enforceable in the courts? Is there consideration for it?
the main contractors avoided the need to employ another sub-contractor if the original ones decided to quit.
Judgment of Glidewell LJ
His lordship held that the promise by the main contractors to pay extra to avoid a penalty and to get the work done by the original subcontractors gave them a PRACTICAL BENEFIT or avoided a DISBENEFIT to them and this was consideration so long as economic duress or fraud was absent.
Judgment of Russel LJ
Consideration there must still be but in my judgment the courts nowadays should be more ready to find its existence so as to REFLECT the INTENTION OF THE PARTIES to the contract where the bargaining powers are not unequal and where the finding of consideration reflects the true intention of the parties.
Judgment of Purchas LJ
His lordship expresses the view that the Stilk v Myrick case was in large part decided for POLICY reasons to protect masters of ships from being held to ransom by crews at sea. And he suggests that the lack of consideration argument was only really used because the duress was not available.
A promise to accept less than is due is only supported by consideration where there is:
payment in kind rather than in money, or payment in advance of the due date, or payment at a different location to the creditors advantage, or payment by a 3rd party accepted as full satisfaction, or a composition by creditors to accept less.
Promissory Estoppel
Where by words or conduct a person makes an unambiguous representation as to his future conduct, intending the representation to be RELIED on and to affect legal relations between the parties, and the representee alters his position in reliance on it, the representor will be unable to act inconsistently with the representation if by so doing the representee would be prejudiced. McKendrick
Per Dankwerts LJ
His lordship stated:
Foakes v Beer, applying the decision in Pinnels case, settled definitively the rule of law that payment of a lesser sum than the amount of a debt due cannot be a satisfaction of the debt unless there is some benefit to the creditor added so that there is accord and satisfaction.
He felt that a cheque was basically the same as cash and so it was not extra consideration that could be used to avoid Foakes v Beer. Thus, the builders could sue for the balance due.