The Extinctive Effect of

Promissory Estoppel
David Capper*

Abstract It is said that promissory estoppel has merely a suspensory

effect on a payment obligation. In the context of periodic payments this
makes sense. The payer pays less or nothing at all for a period of time or
while a set of circumstances exist and when this time or those circum-
stances end the obligation to pay in full is reinstated. In the context of
liquidated debts promissory estoppel is said to give only time to pay
because any ‘forgiveness’ of the debt would be incompatible with the
decision of the House of Lords in Foakes v Beer. In late 2007 the Court of
Appeal gave some support to the notion that a creditor’s promise to
accept part of a liquidated debt, followed by the debtor’s actual payment
of that amount, would of itself discharge the original debt. This article
argues that this goes too far but supports the Court of Appeal to the
extent that where all the elements of promissory estoppel are satisfied a
liquidated debt is extinguished and the right to receive payment not
merely suspended. Some suggestions are also made about the wider
implications of this thesis for contractual renegotiations in general.
Keywords: statutory demand, promissory estoppel, liquidated debt

I. Introduction
Where a contracting party (A) promises the other contracting party
(B) that A will not enforce in full or at all a contractual right which A
has against B, then, in certain circumstances, A will not be permitted
to enforce that contractual right. This is the doctrine of promissory
estoppel and B can avail himself or herself of it even though B has
provided no consideration for the relaxation of A’s contractual rights.
It is widely recognized that this doctrine contains five elements:1
1. A must make a clear and unequivocal promise to B that A will
not exercise a certain contractual right against B;
2. B must demonstrate some act of reliance on this promise;
3. it must be inequitable for A to go back on this promise;
4. generally speaking the estoppel only suspends the enforcement
of A’s rights so that A can reinstate them on giving B sufficient
notice;

* Reader in Law, Queen’s University Belfast; e-mail: D.Capper@qub.ac.uk.

1 See M. Chen-Wishart, Contract Law, 2nd edn (Oxford University Press: Oxford,
2008) 169–86; E. McKendrick, Contract Law: Text, Cases and Materials, 2nd edn
(Oxford University Press: Oxford, 2005) 243–7.

Common Law World Review 37 (2008) 105–116 105

DOI: 10.1350/clwr.2008.37.2.166
COMMON LAW WORLD REVIEW

5. the estoppel only operates as a defence in B’s favour and does

not create any new rights upon which B can bring an action
against A.2

This article examines the fourth of these elements, that estoppel only
has suspensory effect. It does so specifically in the context of liquid-
ated debts, particularly judgment debts, where there is no room to
dispute either the debtor’s liability for the debt or its amount. It is here
where promissory estoppel is said to come into conflict with the rule
in Foakes v Beer3 which is clear authority for the proposition that the
promise or payment of a sum less than the full amount of the debt is
insufficient consideration for the creditor’s promise to discharge the
debt. It has been argued4 that any promise by a creditor to forego part
of a debt can only provide the debtor with time to pay because other-
wise Foakes v Beer would be flouted. It is the purpose of this article to
argue that this is not the case where the debtor can establish the first
four elements listed above. The case of Collier v P & MJ Wright (Hold-
ings) Ltd,5 discussed in section II below, is one where the promissory
estoppel did extinguish the debt, although so far as this case suggests
that mere payment of part of the debt satisfies the requirements of
promissory estoppel it will be argued that it goes too far.

II. Collier v P & MJ Wright (Holdings) Ltd

The creditor (Wright) served a statutory demand on the debtor (Col-
lier) seeking the balance of a judgment debt obtained against three
partners. The debtor relied upon an alleged compromise agreement
which he had made with the creditor under which if he paid his one-
third share of the debt the creditor would not pursue him for the
remainder of this joint liability but would pursue the other partners
instead. The debtor had paid his one-third share and argued that he
had acted in reliance on the compromise agreement by not seeking
any compromise with the other joint debtors whereby they would pay
at least some of the joint debt themselves. They had now gone bank-
rupt and this along with the debtor paying his share was argued as
making it inequitable for the creditor to go back on the alleged com-
promise. As the debtor was just trying to set aside the statutory
demand, his allegations of fact had to be treated as true and the
court’s task was simply to decide if these allegations were capable of

2 To some extent accuracy has been sacrificed to succinctness in the statement of this
element. See Waltons Stores (Interstate) Ltd v Maher (1987) 164 CLR 387, High
Court of Australia; R. Halson, ‘The Offensive Limits of Promissory Estoppel’ [1999]
LMCLQ 257.
3 (1884) 9 App Cas 605, HL.
4 See e.g. J. Poole, Casebook on Contract Law, 8th edn (Oxford University Press:
Oxford, 2006) 159.
5 [2007] EWCA Civ 1329, [2007] BPIR 1452.

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raising a genuine triable issue. If they did, then the statutory demand
had to be set aside.
The debtor’s first argument that a triable issue had been established
was grounded upon the alleged compromise agreement itself. This
failed because it could not be reconciled with Foakes v Beer.6 There
can be no argument about this, not even in light of the decision of the
Court of Appeal in Williams v Roffey Bros & Nicholls (Contractors)
Ltd.7 A subsequent decision of the Court of Appeal, Re Selectmove
Ltd,8 has confirmed that the adjustment of the pre-existing duty rule
effected by that case does not extend to part payment of a debt.9
However, the debtor’s second argument, based on promissory
estoppel, succeeded. This was despite the absence of much evidence
of reliance on the part of the debtor making it inequitable for the
creditor to go back on the compromise. Arden LJ relied upon the
following dictum of Lord Denning MR in D & C Builders Ltd v Rees:
Where there has been a true accord, under which the creditor volun-
tarily agrees to accept a lesser sum in satisfaction, and the debtor acts
upon that accord by paying the lesser sum and the creditor accepts it,
then it is inequitable for the creditor afterwards to insist on the
balance.10

As her Ladyship frankly acknowledged, this dictum, which originates

in the ‘brilliant obiter dictum of Denning J, as he was, in the High
Trees11 case’, effectively achieves the recommendation of the Law
Revision Committee in 1937 that part payment or the promise of part
payment of a lesser sum should be capable of discharging the original
debt.12
Although Longmore LJ agreed that the debtor’s promissory
estoppel defence might succeed if there were a trial and that the
statutory demand should be set aside,13 he was markedly more cau-
tious about the circumstances in which promissory estoppel might be
raised in this context. First, he was doubtful whether the creditor had
made a clear representation to the effect that if the debtor paid one-
third of the joint debt the creditor would look to the other partners for

6 Ibid. at [22]–[28], per Arden LJ, [44]–[45], per Longmore LJ; [2007] BPIR 1452 at
1462–4, per Arden LJ, 1468, per Longmore LJ.
7 [1991] 1 QB 1.
8 [1995] 1 WLR 474.
9 Thus answering in the negative the question posed by Adams and Brownsword in
J. Adams and R. Brownsword, ‘Contract, Consideration and the Critical Path’
(1990) 53 MLR 536.
10 [1966] 2 QB 617 at 625. Quoted at [2007] EWCA Civ 1329 at [39].
11 Central London Property Trust Ltd v High Trees House Ltd [1947] 1 KB 130.
12 [2007] EWCA Civ 1329 at [42]; [2007] BPIR 1452 at 1468. The relevant passage from
the Law Revision Committee’s Report, Sixth Interim Report on The Statute of
Frauds and the Doctrine of Consideration, Cmd 5449 (1937) paras 33–35, is quoted
in [2007] EWCA Civ 1329 at [5]. The Committee recommended that where there is
only a promise to pay part of the debt and that promise is not kept, the original
obligation should revive.
13 [2007] EWCA Civ 1329 at [49]; [2007] BPIR 1452 at 1469.

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the remainder. It was, in his Lordship’s view, impossible to see any

benefit to the creditor or detriment to the debtor in the alleged com-
promise.14 Secondly, it was doubtful whether the debtor had relied on
the alleged compromise in any way. The compromise was made in
2001 and the debtor’s argument was that his act of reliance was not
then trying to come to some accommodation with the other joint
debtors. But they went bankrupt in 2002 and 2004 respectively and as
Longmore LJ put it, ‘[t]he only realistic inference is that if Mr Collier
had taken any action against them in 2001, they would only have
become bankrupt earlier’.15 Thirdly, if D & C Builders Ltd v Rees is
authority for the proposition that a creditor’s promise to accept part
payment followed by the debtor’s actual payment of that amount is
sufficient reliance for promissory estoppel, there must still be a genu-
ine accord. In the absence of a clear representation by the creditor
that part payment would discharge the debt, it was difficult to see how
there could be a true accord.16 If promissory estoppel is capable of
achieving the Law Revision Committee’s recommendation, then
‘agreements which are said to forego a creditor’s rights on a per-
manent basis should not be too benevolently construed’.17 This judg-
ment cannot be read as an unqualified acceptance of the proposition
advanced by Arden LJ. Neither can this proposition be treated as a
majority view, for all Mummery LJ said in his concurrence was that
there was a real prospect of success on the promissory estoppel
issue.18
Longmore LJ’s approach was more firmly grounded on traditional
promissory estoppel principles than was Arden LJ’s. Longmore LJ
was prepared to accept that promissory estoppel could result in the
extinction of a debt obligation on part payment provided that the first
three criteria listed in section I above were satisfied. He was clearly
sceptical whether they had been in this case but was content to allow
the appeal as only a triable issue had to be shown. Arden LJ, on the
other hand, was prepared to allow the extinction of a debt if there was
a mere promise by the creditor to accept a part payment and the
debtor paid that amount. No further act of reliance was required and
the going back on this promise would be automatically inequitable.
With respect, no authority supports this proposition. D & C Builders
Ltd v Rees certainly does not. The builders accepted part payment of
their debt because they were in dire financial straits and had no
choice but to ‘cave in’ to the debtor’s threats that if they did not accept
what was offered they would get nothing. There was so clearly no
accord in this case that Winn LJ and Danckwerts LJ decided the case
on Foakes v Beer grounds. Lord Denning MR’s dictum was at most a

14 Ibid. at [45], 1468.

15 Ibid. at [46], 1468–9.
16 Ibid. at [47], 1469.
17 Ibid. at [48], 1469.
18 Ibid. at [50], 1469.

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dictum in the context of his own judgment. In no way does it represent

the opinion of the court. It is also contrary to principle and policy.
Estoppel is a defence for debtors because of the acts of reliance that
are only explicable in terms of the creditor’s promise that part pay-
ment will do. The mere payment of part of a debt indisputably due to
the creditor cannot possibly be an act of reliance by itself. Something
more must be found. So promissory estoppel cannot extinguish a debt
through mere part payment. Can it if the full criteria for promissory
estoppel are satisfied?

III. The Limits of Foakes v Beer

In addressing the question whether promissory estoppel can extin-
guish a debt, one must start with the principal authority which holds
that part payment of a debt (or the promise thereof) is not good
consideration for the creditor’s promise to discharge it. To what
extent does Foakes v Beer19 actually hold that this is so? The
insightful discussion of this question by Professor Treitel is gratefully
acknowledged.20
In Foakes v Beer Dr Foakes owed Mrs Julia Beer a judgment debt of
£2,090 19s. His solicitor drafted an agreement under which Dr Foakes
made a down payment of £500 and agreed to pay instalments of £150
on 1 July and 1 January each year ‘until the whole said sum of £2,090
19s shall have been paid and satisfied . . . then the said Julia Beer
undertakes and agrees that she will not take any proceedings on the
said judgment’. By June 1882 Dr Foakes had paid the entire £2,090 19s
but Mrs Beer claimed a further £360 by way of interest. Dr Foakes’s
argument that he owed nothing more because he had paid the £2,090
19s which it was agreed that he should pay was dismissed as in-
compatible with Pinnel’s Case,21 which had held that payment of a
lesser sum on the due date or later did not discharge the debt. Since
the judgment debt carried interest at 4 per cent a year and Mrs Beer
had recovered judgment in 1875, £2,090 19s without interest clearly
represented less than her full legal entitlement. All this appears dis-
tinctly unpromising for the argument presented in this article but
there was more to Foakes v Beer than this.
As stated above, Dr Foakes’s solicitor drafted the agreement which
creditor and debtor duly signed. In addition to the words quoted
above, the agreement contained some recitals which offered some
support to Mrs Beer’s argument that the proper construction of the
agreement required Dr Foakes to pay the interest as well as the judg-
ment debt. The Earl of Selbourne LC and Lord Blackburn held that the
agreement’s plain meaning was that interest was not payable. Lords

19 (1884) 9 App Cas 605.

20 Sir Guenter Treitel, Some Landmarks of Twentieth Century Contract Law (Oxford
University Press: Oxford, 2002) 24–9.
21 (1602) Co Rep 117a.

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Watson and Fitzgerald did not agree with this but Lord Watson was
prepared to join his brethren in this construction. Only because of the
narrow majority in favour of the construction that the agreement
purported to take away Mrs Beer’s right to interest was it necessary to
rely on Pinnel’s Case. Even here Pinnel’s Case was less than enthusi-
astically welcomed. The Earl of Selbourne said it should be followed
because it had stood for some 280 years. Lord Watson said very much
the same. Lord Fitzgerald clearly regretted Pinnel’s Case and doubted
to what extent it had been followed. In the following often quoted
words Lord Blackburn explained his reasons for agreeing with his
brethren:
What principally weighs with me in thinking that Lord Coke made a
mistake of fact is my conviction that all men of business, whether mer-
chants or tradesmen, do every day recognise and act on the ground that
prompt payment of a part of their demand may be more beneficial to
them than it would be to insist on their rights and enforce payment of
the whole. Even where the debtor is perfectly solvent, and sure to pay at
last, this often is so. Where the credit of the debtor is doubtful it must be
more so. I had persuaded myself that there was no such long-continued
action on this dictum as to render it improper in this House to re-
consider the question. I had written my reasons for so thinking; but as
they were not satisfactory to the other noble and learned Lords who
heard the case, I do not now repeat them nor persist in them.22
Remember also that Dr Foakes’s solicitor had drafted the agreement
and presented it to Mrs Beer for signature. Professor Treitel explains
the importance of the consideration issue thus:
. . . though [Mrs Beer] was probably not coerced, she does appear to
have been tricked into making a promise which, on its true construction,
had an effect not intended by her. The requirement of consideration was
a useful tool for protecting her against trickery.23
Whether this is strictly true it is clear that Dr Foakes, the debtor, was
not encouraged to make a payment on the footing that he would not
have to pay interest if he did. Foakes v Beer is not a case where any
promissory estoppel could have been raised and it is far from un-
reasonable to believe that had the facts been more like those of the
debtor misled, then the ruling might have been different. It cannot be
said with certainty that had there been some clear sign of estoppel,
the House of Lords would have said Pinnel’s Case was conclusive.24

IV. Promissory Estoppel—Suspensory or Extinctive?

The argument presented above is to the effect that as there were no
circumstances in Foakes v Beer capable of supporting anything like

22 (1884) 9 App Cas 605 at 622.

23 See Treitel, above n. 20 at 26.
24 It is surely also significant that Hughes v Metropolitan Railway Co (1877) 2 App Cas
439, the inspiration for High Trees, had been decided seven years before Foakes v
Beer.

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promissory estoppel, it was open for a debtor to make the argument

that it had acted on a promise by the creditor to accept part payment
and that the creditor could not go back on this. This was not quite the
proposition which underpinned Denning J’s judgment in Central
London Property Trust Ltd v High Trees House Ltd25 but the ruling in
that case and more particularly the ‘brilliant dictum’26 of Denning J
strongly supports it. The ruling was that the landlord of a block of flats
who had told the tenant that half rent would be acceptable for the
duration of the Second World War could not recover the half rent
foregone but could reinstate the full rent once the war emergency was
over. The rent was a periodic payment obligation and the effect of the
estoppel in that case was merely to suspend the right to receive full
rent while the circumstances that prompted the landlord to promise
acceptance of half rent prevailed. This approach is easier to reconcile
with Foakes v Beer than a promise to accept part payment of a liquid-
ated amount. But in the brilliant dictum referred to above, Denning J
made no meaningful distinction between periodic payment obliga-
tions and liquidated debts. His Lordship said:
The logical consequence, no doubt, is that a promise to accept a smaller
sum in discharge of a larger sum, if acted upon, is binding notwith-
standing the absence of consideration: and if the fusion of law and
equity leads to this result, so much the better. That aspect was not
considered in Foakes v Beer (1884) 9 App Cas 605.27

The dictum is a little unclear in certain respects but this is only to be

expected in a decision apparently delivered on the same day the case
was heard.28 Too much significance should not be attached to the
fusion of law and equity, whatever that means and whether or not it
ever happened.29 What this dictum says is that circumstances giving
rise to an estoppel were not considered in Foakes v Beer and that
estoppel principles can apply to the discharge of liquidated debts
as well as to periodic payments. The tension between Foakes v Beer
and liquidated debts is tighter than that between the same case and
periodic payment obligations, but the absence of anything capable of
supporting a promissory estoppel in Foakes v Beer amply justifies
Denning J’s comment that extension to liquidated debts is a logical
consequence. Another curiosity about High Trees is that, as Professor
Treitel pointed out, the sentence ‘[T]hat aspect was not considered in
Foakes v Beer (1884) 9 App Cas 605’ only appears in the official law
reports and not in the other four reports of the decision.30 It probably

25 [1947] 1 KB 130.
26 As Arden LJ referred to it in Collier v P & MJ Wright (Holdings) Ltd [2007] EWCA
Civ 1329 at [42]; [2007] BPIR 1452 at 1468.
27 [1947] 1 KB 130 at 135.
28 See Treitel, above n. 20 at 29.
29 An illuminating study of this question may be found in A. Burrows, ‘We Do This at
Common Law But That in Equity’ (2002) 22 OJLS 1.
30 See Treitel, above n. 20 at 32.

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was included when the judgment was revised for inclusion in the Law
Reports, but this does not require the conclusion that, because only
then did Denning J see the implications of his ruling for Foakes v Beer,
the distinction between that decision and promissory estoppel in the
context of liquidated debts is fragile.
The clinching argument for promissory estoppel potentially having
extinctive effect on the original debt is that creditors should be
estopped to the extent that they promise that contractual rights will
not be enforced. The reason why Denning J in High Trees and the
House of Lords in Tool Metal Manufacturing Co Ltd v Tungsten
Electric Co Ltd31 allowed the creditors to reinstate their rights to the
periodic payments owed was not that rights can only be suspended
but that the creditors had only promised to suspend their rights to full
payment. There can be no good reason for holding that, if the creditor
promises to forgive part of a debt, the creditor must be allowed to
demand the balance after the debtor has relied upon this promise in
making the part payment. Adherence to Foakes v Beer does not justify
refusing to respect the creditor’s autonomous choice that half a loaf is
better than no bread, because for the reasons stated there is no incon-
sistency between promissory estoppel and Foakes v Beer where the
conditions for promissory estoppel are satisfied.
But can we go further and rely on High Trees to support the pro-
position that Lord Denning MR (as he had then become) advanced in
D & C Builders Ltd v Rees32 that mere payment of the part of the debt
requested is sufficient ‘acting upon’ to make the creditor’s promise
binding? It is submitted that it would not be right to go this far.
Denning J’s judgment in High Trees is better understood as meaning
that the original debt is discharged provided the conditions for prom-
issory estoppel are satisfied. True, just after the passage quoted at fn.
27 above, his Lordship did refer to the Law Revision Committee’s
Report and its recommendation that promises to accept part pay-
ments should be enforced without consideration. His conclusion on
that was expressed thus: ‘It seems to me that, to the extent I have
mentioned, that result has now been achieved by the decisions of the
courts’.33 Reading the words placed in emphasis in the context of the
judgment as a whole, the better view must surely be that to circum-
navigate Foakes v Beer the conditions for a promissory estoppel must
be satisfied. If Denning J was saying that Foakes v Beer no longer
applied in the circumstances stated by the Law Revision Committee,
he was saying that Foakes v Beer was no longer the law. Clearly a
judge sitting at first instance could not say that.
Is it possible that the doctrine of promissory estoppel as developed
by the courts over the last 60 years has reached the point where it is

31 [1955] 1 WLR 761.

32 [1966] 2 QB 617 at 625.
33 [1947] 1 KB 130 at 135 (emphasis supplied).

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 THE EXTINCTIVE EFFECT OF PROMISSORY ESTOPPEL

on all fours with the Law Revision Committee? The answer to this
must be ‘No’ because there is no support for this proposition other
than Lord Denning MR’s support for it in D & C Builders Ltd v Rees. In
fact the only significant support for promissory estoppel having an
extinctive as opposed to a suspensory effect comes from a dictum of
Lord Hodson in EA Ajayi v RT Briscoe (Nigeria) Ltd, which was in any
event a case of periodic payments (hire-purchase instalments):
The principle, which has been described as quasi estoppel and perhaps
more aptly as promissory estoppel, is that when one party to a contract
in the absence of fresh consideration agrees not to enforce his rights an
equity will be raised in favour of the other party. This equity is, however,
subject to the qualifications (1) that the other party has altered his posi-
tion, (2) that the promisor can resile from his promise on giving reason-
able notice, which need not be a formal notice, giving the promisee a
reasonable opportunity of resuming his position, (3) the promise only
becomes final and irrevocable if the promisee cannot resume his posi-
tion . . .34
So the law has not developed to reach this absolute extinctive position
since High Trees and it must be acknowledged too that there is little
judicial support for the proposition that Foakes v Beer can be avoided
where all the conditions of promissory estoppel are established. But in
principle this is the better position for the law to take. The House of
Lords must be treated as having been aware of estoppel principles
when it decided Foakes v Beer as Hughes v Metropolitan Railway Co35
had been decided seven years earlier and Lords Selbourne and Black-
burn had been members of both appellate committees. The most rea-
sonable inference to draw from the failure of the House to mention
Hughes in Foakes v Beer was the absence of any circumstances mak-
ing it relevant.

V. Reliance as the Key to Promissory Estoppel

The principal reason why a contracting party who makes a clear and
unequivocal representation to the effect that a contractual right will
not be enforced in part or at all is the unfairness to the other party if it
alters its position in reliance on this representation.36 Similar reliance
principles underlay the High Court of Australia’s ‘minimum equity’ in
allowing promissory estoppel some offensive force in Waltons Stores
(Interstate) Ltd v Maher.37 In the context of part payment of a debt the
payment by itself cannot be reliance as the debtor was obliged to
make that payment and more in any case. There must be something
more that the debtor does or does not do to count as reliance and
to make it inequitable for the creditor to go back on the promise to

34 [1964] 1 WLR 1326, PC.

35 (1877) 2 App Cas 439.
36 See Chen-Wishart, above n. 1 at 169–70.
37 (1987) 164 CLR 387.

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accept part payment. There must be genuinely alternative courses of

action that the debtor might have taken which it did not take because
the creditor promised that part payment would suffice. It must be
extremely doubtful, to say the least, whether there was any mean-
ingful act of reliance on the part of Mr Collier in Collier v P & MJ
Wright (Holdings) Ltd38 (see section II above) because, as Longmore
LJ pointed out, the other two partners were in a sufficiently bad way
financially that they both went bankrupt in the following few years.
This was probably not a meaningful act of reliance because the other
partners might just have gone bankrupt as soon as they learned that
the creditor was pursuing them. There probably is an act of reliance if
the debtor foregoes an opportunity to enter insolvency or an indi-
vidual or company voluntary arrangement immediately as a conse-
quence of trying to work things out with the creditor. The respite from
claims by all of the debtor’s creditors is what the debtor foregoes in
these circumstances and if the creditor were afterwards to seek pay-
ment of the remainder of the debt and thus push the debtor into
insolvency, the delay in obtaining this protection could be a significant
loss. It would, of course, be distasteful that the creditor could in these
circumstances recover more from the debtor than would have been
the case had the debtor entered insolvency earlier,39 but the preven-
tion of the creditor’s unjust enrichment would not be the reason for
upholding the deal already made.40 Since reliance is the justification
for promissory estoppel, Lord Denning MR’s dictum in D & C Builders
v Rees goes too far.

VI. Reliance as the Key to All Renegotiated Contracts

In an article published in 1996, Janet O’Sullivan offered a defence of
Foakes v Beer.41 Rather less needs to be said by way of refutation
of this article than its title suggests. The argument presented there is
rather more of a criticism of the reasoning of the Court of Appeal in
Williams v Roffey Bros and Nicholls (Contractors) Ltd.42 O’Sullivan’s
defence of Foakes v Beer is in a context separate from promissory
estoppel. When it comes to promissory estoppel as a way around
Foakes v Beer the argument is mildly supportive. This is because it is
suggested that a better way of approaching the pre-existing duty rule

38 [2007] EWCA Civ 1329; [2007] BPIR 1452.

39 Assuming that the earlier payment was not recovered as a preference under the
Insolvency Act 1986, ss. 239 or 240.
40 On the restitutionary aspects of the insolvency voidable transaction provisions see
A. Keay, ‘The Recovery of Voidable Preferences: Aspects of Restoration’ in F. Rose
(ed.), Restitution and Insolvency (Mansfield Press: London, 2000) 237.
41 J. O’Sullivan, ‘In Defence of Foakes v Beer’ [1996] CLJ 219.
42 [1991] 1 QB 1. For further criticism of Williams v Roffey, see B. Coote,
‘Consideration and Benefit in Fact and in Law’ (1990) 3 JCL 23; M. Chen-Wishart,
‘Consideration: Practical Benefit and the Emperor’s New Clothes’ in J. Beatson and
D. Friedmann (eds.), Good Faith and Fault in Contract Law (Oxford University
Press: Oxford, 1995).

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in the context of contractual renegotiations would be by protecting

reliance as opposed to expectation. As Mindy Chen-Wishart has
pointed out, the damages awarded in Williams v Roffey did not com-
pensate the subcontractor for his renegotiated contractual expecta-
tion. They only amounted to payment for the work he had actually
done after the renegotiation at the renegotiated contractual rate. This
is a reliance measure.43 This approach would offer one solution to the
current unsatisfactory position that the pre-existing duty rule and the
part payment rule are treated significantly differently despite the fact
that both are essentially dealing with contractual renegotiations.
Another ‘joined up’ solution comes from the decision of the New
Zealand Court of Appeal in Antons Trawling Co Ltd v Smith44 where
Baragwanath J suggested that if contracting parties sufficiently
clearly evidence their intention to renegotiate, a contract considera-
tion should not be required. This would presumably result in expecta-
tions being protected and would not require the court to enquire into
whether the promisee had committed any sufficient acts of reliance. It
has the merit of simplicity but the argument in favour of a reliance
approach is that it takes the original contract more seriously and
demands a finding of injustice before the promisee is allowed to es-
cape from its effects.

VII. Conclusion
The Collier v Wright case, which was the inspiration for this article,
cannot be supported so far as it suggests that the mere payment of
part of a liquidated debt at the creditor’s request is sufficient to raise
an estoppel against any attempt by the creditor to recover the re-
mainder. The decision can be supported so far as it suggests that
where the conditions for promissory estoppel are satisfied, this extin-
guishes the debt as opposed to suspending the creditor’s right to
recover it or giving the debtor time to pay. If the creditor tells the
debtor that nothing more need be paid, logically the estoppel must be
in terms of the representation. Reliance is the basis for promissory
estoppel. It is the debtor’s reliance which creates the unfairness of the
creditor going back on the promise to accept part payment. But there
must be a real reliance and this cannot be where the debtor merely
makes the part payment requested and does nothing more. Reliance
also suggests another way of dealing with cases on the pre-existing
duty rule and allows for this rule and the part payment rule to be dealt
with in a similar way. Abolition of the need for consideration in re-
negotiated contracts is another way of doing this but it is easier to do
this in New Zealand than in England, as Foakes v Beer does not have

43 See Chen-Wishart, above n. 1 at 152.

44 [2003] 2 NZLR 23. The case only concerned the pre-existing duty rule but there
seems no reason to doubt that it applies also to part payment of debt.

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the same precedential status in other common law systems, especially

one which no longer appeals to the Privy Council. English law can
probably continue to improvise its way through the current doctrinal
problems but it is hoped that this article will assist in identifying a
clearer approach for the future.

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