Explain the rule known as "The Rule in Pinnel's Case" and how it impacted upon the doctrine of consideration

2256 Words Apr 22nd, 2006 10 Pages
Synopsis: This essay examines the rule knows as The Rule in Pinnel's Case and how it impacted upon the doctrine of consideration. It also examines the problems arising from the Rule in Pinnel's Case, the subsequent exceptions that were developed to circumvent the rule and in detail the most important exception of them; Promissory estoppel and how it solved the problem's arising from the Rule. The distinction between traditional estoppel and this new type of estoppel 'Promissory Estoppel' are also examined and how Promissory estoppel has been accepted in Australia.

A contract is an agreement that the law will enforce, a promise (or set of promises) that the courts will enforce, a legally enforceable contract . Many problems arise that
…show more content…
(Vermeesch, RB & Lindgren, KE 2005)

The Rule in Pinnel's case, although much criticised by judges, since it enable the creditor to go back on his promise to discharge the debt and still claim the balance. This unpopularity gave way to a number of exceptions to the rule being developed and were allowed as exceptions by the courts. These were as stated by Latimer, P (2004):

Where the creditor agrees to accept a smaller sum together with something different in kind (a chattel), the debt is discharged.

Payment of a smaller amount before the debt is due gives the debtor a legally enforceable discharge, provided it is at the creditor's request.

Payment of a smaller sum at a different place or in different currency can operate as a legally enforceable discharge if at the request of the creditor.

Any other act that the debtor is not bound by the contract to perform may result in a legally enforceable discharge.

If there would be fraud on a third party.

The defence of promissory estoppel.

A deed of release can release a debtor.

Composition with creditors (Bankruptcy act), or settlement of a bona fide legal claim.

Traditional estoppel, applied only to representation of existing fact, and did not extend to representations of future intentions. (Parker, D & Box, G 2005) If party A said to party B, that "party C is my agent", that would be a representation of existing fact, and
Open Document