Foakes v Beer [1884] is the seminal House of Lords authority establishing that part payment of a debt is not sufficient consideration to support a promise to discharge the remaining balance. The ruling reaffirms the strict common-law requirement for a bargain in contractual variations, distinguishing “practical benefits” from legal benefits in the context of liquidated debts.

Facts of the Case

Mrs Beer (the respondent) obtained a court judgment against Dr Foakes (the appellant) for the sum of £2,090 19s. Under the law, Mrs Beer was entitled to interest at 4 per cent on this judgment debt until it was fully paid. Dr Foakes requested more time to pay, leading to a written agreement in 1876: Dr Foakes would pay £500 immediately and the remainder in biannual instalments, in exchange for Mrs Beer promising not to take any proceedings on the judgment.

Dr Foakes eventually paid the entire principal sum of the debt by instalments. However, Mrs Beer then brought an action to recover the accumulated interest. Dr Foakes argued that the 1876 agreement barred her from claiming the interest.

Legal Issues

The primary issue was whether the 1876 agreement was a legally enforceable contract that prevented Mrs Beer from claiming interest. Specifically, the court had to decide if part payment of an undisputed debt (the principal) could serve as sufficient consideration for a promise to forgo the rest of the legal obligation (the interest), given that the debtor was already under a pre-existing legal duty to pay the full amount.

Judgement

The House of Lords ruled in favour of Mrs Beer, holding that the agreement was unenforceable for lack of consideration.

  • Pinnel’s Case (1602): the court affirmed the ancient rule that “payment of a lesser sum on the day… in satisfaction of a greater, cannot be any satisfaction for the whole”. The Earl of Selborne LC noted that this doctrine had been accepted as part of the law of England for 280 years and should not be reversed.
  • Lack of new benefit: because Dr Foakes was already under an antecedent obligation to pay the entire debt, performance of that duty by instalments provided no new consideration to Mrs Beer.
  • Blackburn’s dissent on fact: Lord Blackburn famously doubted the logic of the rule, observing that “men of business” recognise that prompt part payment is often more beneficial to a creditor than insisting on full rights against a potentially insolvent debtor. Nevertheless, he assented to the majority judgment out of respect for precedent.

Authority and Significance

  • “Downward” variations: this case remains the leading authority for the rule that promises to accept less (“decreasing pacts”) require fresh consideration to be binding — unlike the “upward” variations (promises to pay more) seen in Williams v Roffey.
  • Constraint on practical benefit: the Court of Appeal in Re Selectmove confirmed that the “practical benefit” rule from Williams v Roffey cannot be extended to part payment of debts, as it would leave the rule in Foakes v Beer without any application.
  • Common-law exceptions: a debtor can only bypass this rule by providing something different to the creditor — such as a “horse, hawk or robe” — or by paying the lesser sum earlier than the due date.
  • Protective function: the rule serves a public-policy function by protecting creditors from unscrupulous debtors who might use financial distress to force an unfair settlement, as illustrated in D & C Builders v Rees.
  • Equitable mitigation: the harshness of this common-law rule led to the development of promissory estoppel in Central London Property Trust v High Trees House, which allows a promise to be enforced without consideration as a shield where it would be inequitable for the creditor to go back on their word.