OCR A2 Law - The Law of Contract - Consideration (6)

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  • Created by: Majid
  • Created on: 26-04-13 13:59

Consideration (6)

This principle can however lead to a fair conclusion if unfair pressure has been used.

Case: "D&C Builders v Rees" - Builders sued successfully for remaining debt - Rees took advantage by taking a lower sum.

AO2: Harsh and unfair as it allows creditors to break their promises, however, shows judges following basic rules on consideration. Due to the harshness of the Common Law, Equity has developed an approach.

5. The Law of Equity and part payment of a debt: Lord Denning in the High Trees Case developed the Doctrine of Promisory Estoppel. This allows the creditor to stick to their word and not go back on their promise ... cannot sue for remaining balance. In the "High Trees Case", a contract was made for the rent of property for £2500 a year. Many of the flats became empty due to the war and therefore the rent was reduced to £1250 a year. When the war was over the landloard increased the rent back to £2500 and his claim succeeded.

For the doctrine to apply these key ingredients need to be satisfied:

  • 1. Parties are in a contractual position
  • 2. Creditor promises to waive rights by accepting part payment
  • 3. Debtor relies on this and pays some of the debt
  • 4. Creditor knows of the reliance
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