Pinnel’s Case (1602) 5 Co Rep 117

Whether part payment of a debt can be good consideration.

Facts:

Defendant Cole owned plaintiff Pinnel a sum of money. Pinnel sued Cole for recovery of debt. Defendant only paid plaintiff partially before due date on the agreement between them as a full settlement of the whole debt.
Later on plaintiff retrieved his promise and chased Cole for entire debt by agruing that there was no fresh consideration was given by Cole to his promise.

Issues:

The defendant argued that the plaintiff had accepted partial payment of the debt as satisfaction of the whole. However, it was a general rule that payment of a lesser sum than that which was owed in satisfaction of a debt could not discharge the obligation to repay the whole amount.

Held:

The court held that under the general rule, partial payment of a debt cannot be satisfaction for the whole. However, in this case becuase the payment had been made early than the agreed due date. Such Early Settlement was sufficient as a fresh consideration to discharge defendant’s obligation of remainding debt.

Lord Coke said (at 1117a):
‘Payment of a lesser sum on the day in satisfaction of a greater sum cannot be any satisfaction of the whole… but the gift of a horse, hawk, or robe etc. in satisfaction is good. For it shall be intended that a hawk, horse, or robe, etc. might be more beneficial to the plaintiff than the money’

The rule in Pinnel’s Case was affirmed by The House of Lords in later case Foakes v Beer (1883)