Foakes v. Beer

Facts

• Mrs Beer obtained a judgment against Dr Foakes for £2,090 19s (principal + costs)
• The parties entered a written agreement: Foakes would pay £500 immediately and £150 every half year until the full £2,090 19s was paid; in return, Beer agreed not to take "any proceedings whatever" on the judgment
• Foakes paid all the principal instalments in full
• However, he paid no interest on the judgment debt (statutory interest of £360 had accrued)
• Beer sued to recover the interest
• Foakes argued the agreement barred all further proceedings (including for interest)

Issue

1. Whether Mrs Beer's promise not to take proceedings on the judgment was supported by consideration from Dr Foakes, given that he merely paid what he already owed (without interest)?

Held

• The House of Lords held for Mrs Beer: she could recover the interest
• Payment of the principal sum which Foakes already owed did not constitute fresh consideration for Beer's promise to forgo further proceedings
• The rule in Pinnel's Case was affirmed: payment of a lesser sum on the due date is not satisfaction for the greater sum
• Foakes provided no new consideration: he merely did what he was already legally obliged to do (pay the judgment debt)
• Beer's promise to forego interest was a bare promise (nudum pactum) unsupported by consideration

Ratio Decidendi

A promise to accept part payment of an existing debt as full satisfaction is not binding because the debtor provides no fresh consideration for the creditor's promise to forgo the balance. Paying what one already owes cannot constitute consideration for a new promise. This applies even where the creditor expressly agrees to accept less: the agreement lacks consideration and is unenforceable at common law.