Enforceability Of Promises In Contract Law And Circumstances That May Waive Pinnel’s Rule

1. (i): Advising Josie on her Agreement with Sam

There are various requirements that the English law requires for an enforceable agreement. Among others, an agreement would need an offer and acceptance, legal consideration and an intention to create a legal bond. Sometimes both intention to create a legal bond and consideration conflict. Some contracts would require both to be present, while the law might fill the gaps where an agreement lacks consideration, but there is an intention to create legal bound. This paper would be looking at some of those situations. In particular, it will consider a case between Josie and Sam, and examination of the circumstances that waive the application of Pinnel’s rules

Before all else, this paper would look at the promise to keep the painting until 21st February. Expressly, this paper would examine whether such promises are enforceable in the law of contract. Similarly, the paper would look to see whether leaving the message in a faulty machine, and the fact that Sam didn’t get the message from his faulty machine would substantiate his claim that Josie didn’t notify him on the revocation of the offer.

The law of contract keeps it that the offeror has the right to create or revoke the offer. However, the law also limits these rights particularly if the offeror has already accepted or has started the procedure of accepting the contract. When it comes to promises to keep the offer open, this promise is similar to any other agreement, and it should carry the essential components of an agreement, which are an offer and acceptance, consideration, and an intention to create a legal bond.

According to the situation given, offer and acceptance are present. Also, an intention to create legal relation is present because the law presumes that there is always this intention in any business context. However, the promise to keep the offer doesn’t tell what Josie would be getting in return for holding the offer for those days.

There was a similar issue an agreement between Grant and Routledge stated that Routledge would keep the house for the purchase of a lease for the next six. Grant withdrew from the lease offer and Routledge sort to enforce it. The court held that the promise was not binding because it didn’t have the consideration. Similarly, Josie and Sam’s case didn’t have a consideration unless Sam pledged $2 in return for the holding.

The next point is the issue of communication of a revocation through technology means. The decision of Lindley J provides applicable principles for this. On October 1st, the defendants offered the claimant some tin plates by mail, but revoked it on 8th, The claimant received the offer on 11th and sent acceptance on 15th. The revocation email arrived on 20th. The court quashed the revocation.

These principles provide the general rules of communication of acceptance of an offer which are also the same to apply to the communication of revocation of an offer. Additionally, Lord Denning demonstrated this link between communication of acceptance and communication of revocation by providing two different scenarios. The first scenario was where there was a failed communication of acceptance from the offeree to the offeror where the fault arose on the offeror’s end. The second scenario was a failed communication of acceptance from the offeree to the offeror due to low ink in the printer. In both situations, Lord Denning said that the offeror should put more effort to receive the communication. He also stated a paramount comment that if the offeree tries to communicate the acceptance to the offeror, and then there was a failed connection due to offeror’s fault, if the offeree thinks that the offeror received the acceptance, then the offeror would not be allowed to refuse the existence of a contract.

1. (ii) Breach of Contract and Remedy

It should be taken that Lord Denning was trying to say that no party should benefit from the faults of its equipment. Also, the offeree’s faults should release the offeror’s liabilities for a communication of a revocation. Plus, Lord Denning rules even if were material, they should be modified to issue liabilities of defective communication to the party which was responsible for the faulty connections. This rationale was practically adopted in contract between Tenax and Brimnes. Tenax hired the ship from Brimes but Brimnes followed the lease with a revocation telex that Tenax didn’t read until the following day. The court held the revocation effective since it was Tenax responsibilities to read the message in time. By applying these principles to the case of Josie and Sam, it would then be held that Sam received revocation in time.

In this part, this paper assumes that there was a finalized contract to sell the painting for $800 to Sam on 21st. This assumption would have required the parties to execute their obligations as agreed. If Josie had met with Wendy and then call Sam to communicate revocation, that would have translated to an anticipatory breach of repudiation. This breach is created when one party informs the other that it would dismiss its obligation sometimes before the performance. If this breach occurred, Josie would be left with to choose whether to wait for Josie to perform the actual breach after the call, or dismiss the contract and claim the damages.

In anticipatory breaches, a claim for damages would recover lost benefits. For example, the defendant offered the claimant a courier job that was to start on 1st June. Later the defendant changed his mind and canceled the contract through a letter he sent to the claimant on 11th May. The claimant brought a suit which succeeded even though the defendant maintained that actual breach had not started. The claimant was able to recover the lost benefits. Also, the defendant was to marry the claimant after the death father’s death. The defendant revoked the marriage agreement before the father’s death. Since marriage promises were legally enforceable in 1882, the claimant brought a case that succeeded. Similarly, Sam would recover the lost benefits if Josie performed an anticipatory breach. These benefits would be the extra amount above $800 in case Sam purchased the painting somewhere else, plus any other benefit they court may deem fit.

The Pinnel’s case was the case that set the rules that dismiss agreements that don’t have consideration. In particular, this case was a dispute where Cole owed Pinnel a sum of £8 10s. Pinnel admitted suspending the entire debt if he was to be paid £5 2s 6d on the debt deadline. Later on, Pinnel brought a claim on Cole to be paid the remaining debt despite that there was an agreement which Pinnel called herself. When this claim went to court, the court held that paying a lesser sum didn’t necessary mean that the creditor had no right to claim for the remaining debt.

The same rationale followed with the debt of Dr. and Mrs. Beer. This case arose after a judgment where Dr. Foakes was to pay Mrs. Beer £2,000. Dr. Foakes requested to be allowed to pay £500 instantly, and then be allowed to pay the remaining amount of £1,500 by installments. Mrs. Beer accepted the request and also accepted that she would not enforce the payment on condition that Dr. Foakes kept his promises of paying the installments. The parties didn’t talk anything about the interest to be earned on installments. Dr. Foakes finished paying all the installments as required, but Mrs. Beer decided to follow Dr. Foakes so that he could pay the interest. When the case came to court, the court said that Dr. Foakes had an obligation to pay the interest. This was through the application of the Pinnel’s principles that the court will not hold a promise enforceable if that promise would not have the support of consideration.

Despite that these rules were set as a requirement for any enforceable agreement, there are also other circumstances the courts find that enforcement of these principles would deny justice to one of the parties. These situations are where the parties agree to bring in a new consideration when the parties change the time or place of payment. Also, the rule would not apply in cases where the debtor gets the consent of the creditors to pay a lesser amount. Lastly, the rule would not apply where there is an application of the doctrine of promissory estoppel.

A new consideration will waive the pinnel’s rule. For example, a promise to dismiss the entire debt would work where C owes P £8 10s, and then P agrees to take £5 2s 6d plus a ‘spoon.’ A ‘spoon’ in this case would be a new consideration to waive the pinnel’s rule. For example, the claimant was working as a Seaman under a contract. While at Voyage, two men abandoned the duty. The captain promised the claimant that he would increase the payments if the claimants finished the abandoned duties. However, the defendant refused to pay. The court didn’t enforce the claimant’s payment of the extra amount since he was performing the same duties as agreed in the contract. In other words, there was no fresh consideration since the claimant performed the same duties even though the agreement sounded varied.

A change on the date of payment or the place of payment will have the effects of dismissing the pinnels rules. For instance, a promise from P to take £5 2s 6d rather £8 10s would work in a situation where P lives in town A, C lives in town B. P agrees to take the lesser amount if C would bring the money home saving P the cost of the transport. For example, Vanbergen owed St. Edmunds $208 which arose from the costs entered under judgment. St Edmunds agreed to stop serving Vanbergen with bankruptcy notice provided the debt was cleared by 7th July 1932. Vanbergen asked St Edmunds to be allowed to pay the money at Eastbourne on 8th which the defendant agreed. Later on, St Edmunds continued to pursue Vanbergen with bankruptcy notice, but Vanbergen argued that he complied as agreed. The court found no substantial consideration as the creditor was not getting anything in return.

If a third party provides the part payment, the agreement would be valid, and the creditor would be estopped from coming back. For instance, in case, the claimant conducted a money lending business in India where they issued some money to the defendant. The defendant was a Lieutenant Temple serving as a military officer in India. Because the claimant could not get in touch with the defendant, they decided to contact the defendant’s father. The claimant negotiated the debt with the father and the father agreed to pay some amount in settlement of the whole debt. Even though the amount wasn’t in full, it was substantial for the debt. The father paid the part-payment, but the claimant came back claiming the rest of the payment from the son despite the agreement with the father. In the judgment, the court held that payment that the father paid was enough to waiver the rest of the debt from the son.

A member of a group of creditors cannot follow the debtor for the remaining debt if they had agreed to forgo the entire debt if the creditor pays a smaller amount. The court would not allow them to come back later. However, for this rule to work, there should be more than one creditor. For example, all the company’s directors accepted to forget the debts that they were claiming from Coleridge in an oral agreement. Afterward, the parties through the company decided to follow the remaining debt, but the court dismissed the claim. The court stated that the company was also a party to the agreement.

The doctrine of promissory estoppel will significantly mitigate the strict rules of pinnel’s case. The doctrine comes in cases where one party makes a promise to the other inducing that party to rely on the given promises. If the promised party changes its position by relying on the given promises, the court will not allow the promising party to suspend the promises.One example of the application of this doctrine was held by Denning J. In the times of world war two, High Trees rented the CPP’s part of flats for a lease that they were charged £2,500/year. The wars went worse and on frustrating the house rent business. The parties agreed to cut the rent by half, but the forgot to mention the time that the rent would resume to normal payments. Finally, the wars ended and the houses became full with clients. CLP moved to court to raise the rent. The court held that the original rent would be resumed, but CLP would be estopped to go back to claim the extra price that was waived during the war.

Conclusion

Any contract without a consideration would be hard to enforce. However, sometimes the law will regard such a contract if dismissing it would make one of the parties to suffer the injustice of the other. However, it’s always necessary for the parties to ensure that their agreements contain all the elements to save the agreement from lying in the probabilities of enforcement.

Andrews, Neil, Contract Law (Cambridge University Press, 2nd ed, 2015)

Beatson, Jack et al, Anson’s Law Of Contract (OUP Oxford, 30th ed, 2016)

Chandler, Adrian and Ian Brown, Law Of Contract (Oxford University Press, 9th ed, 2013)

Helewitz, Jeffrey A, Basic Contract Law For Paralegals (Wolters Kluwer Law & Business/Aspen Publishers, 6th ed, 2013)

Jones, Lucy, Introduction To Business Law (Oxford University Press, 4th ed, 2017)

Miller, Roger LeRoy and Gaylord A Jentz, Business Law Today (South-Western/Cengage Learning, 8th ed, 2008)

Parris, John, Commercial Law (Elsevier Science, 2nd ed, 2016)

Poole, Jill, Textbook On Contract Law (Oxford University Press, 13th ed, 2016)

Russell, Carron-Ann, Opinion Writing And Drafting In Contract Law (Routledge, 2nd ed, 2012)

S. S. Gulshan, G. K. Kapoor, Business Law (Excel Books, 1st ed, 2009)

Stone, Richard, The Modern Law Of Contract (Routledge, 11th ed, 2015)

Turner, Chris, Contract Law (Taylor and Francis, 2nd ed, 2014)