RE SELECTMOVE LTD (1995) - OFFER & ACCEPTANCE: Communication of Acceptance

Imposed by offeree?

In July 1991, a company that owed the (then) Inland Revenue considerable sums in income tax and National Insurance contributions had made a proposal at a meeting with the collector of taxes that, in future, it should pay the tax as it fell due and repay the arrears in instalments (commencing in February 1992). The collector stated that he would have to seek the approval of his superiors and would advise the company if the proposal was unacceptable. The company heard nothing, but the Revenue later demanded payment of the arrears in full and eventually presented a petition for winding-up.

The company argued that the petition should be dismissed on the ground that the proposal of July 1991 had been accepted by the Revenue, or that the Revenue was estopped from relying on this debt as being due. The judge ordered compulsory winding-up on the basis that there was no such agreement and, in any event, no consideration to support it.

The judge also rejected the claim based on estoppel because there was no promise that could give rise to an estoppel. On appeal, the company argued, inter alia, that its (p. 157) promise to pay an existing debt was a good consideration because it amounted to a practical (or factual) benefit to the Revenue.

Held: There was no agreement by the Revenue to accept the company's proposal, since the official in question did not have the authority to bind the Revenue. The comments relating to the arguments based on consideration and promissory estoppel were therefore obiter.

PETER GIBSON LJ [with whose judgment Balcombe and Stuart-Smith LJJ agreed]: The judge held that the case fell within the principle of Foakes v Beer (1884) 9 App Cas 605. In that case a judgment debtor and creditor agreed that in consideration of the debtor paying part of the judgment debt and costs immediately and the remainder by instalments the creditor would not take any proceedings on the judgment. The House of Lords held that the agreement was nudum pactum, being without consideration, and did not prevent the creditor, after payment of the whole debt and costs, from proceeding to enforce payment of the interest on the…