D & C Builders v Rees [1966]

In July 1964, the defendant owed the claimant builders £482. In November, the defendant still had not paid. The claimant was in desperate financial straits and it was alleged that the defendant's wife knew this when she offered to pay the claimant £300 in full settlement, indicating that if this were not accepted the claimant would get nothing. The claimant said that it had no choice but to accept and received a cheque for £300 'in completion of the account'. The claimant then claimed the balance.

Held: There was no binding settlement. Danckwerts and Winn LJJ concentrated on rejecting the argument that consideration had been provided because the payment of a smaller amount had been made by cheque (and a cheque was different from payment in cash). Lord Denning examined promissory estoppel, but held that it could not operate on these facts because, since the promise was not freely given, it was not inequitable for the claimant to go back on its promise.

LORD DENNING MR: [The] doctrine of the common law [relating to part payment of debts] has come under heavy fire. It was ridiculed by Sir George Jessel in Couldery v Bartram [(1881) 19 Ch D 394, 399]. It was said to be mistaken by Lord Blackburn in Foakes v Beer. It was condemned by the Law Revision Committee (1945 Cmd 5449), paras 20 and 21. But a remedy has been found. The harshness of the common law has been relieved. Equity has stretched out a merciful hand to help the debtor.…