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Adam, who operates an accountancy practice, charges £1,000 per year for producing business accounts for tax purposes. Unfortunately he has had some difficulty in recovering his fees from two clients as follows.
Bob, a car mechanic, told Adam that he could only raise cash to pay half of his fees but that he would service Adam's car for the coming year. Adam reluctantly agreed to this proposal.
Dawn, a not very successful musician, also told Adam that she could only pay half the money she owed him as she needed to use the other half to finance her new recording. Once again Adam agreed to accept the half payment. Dawn's recording subsequently became a major hit and she made £100,000 profit from it.
Adam himself is now in financial difficulty and needs cash to pay his own tax bill.
Required
(a) Explain whether Adam can require Bob to pay his fees in full
(b) Explain the effect of promissory estoppel on Dawn's payment to Adam
(c) Explain how Adam may be able to obtain full payment from Dawn
答案:(a) Adam agreed to accept Bob's servicing of his car as a payment in kind. He may not recover any further sum from Bob. Consideration need not be 'adequate' at law but must be sufficient so the question of whether servicing of the car is valuable enough is not relevant.
(b) Prima facie, Adam's agreement to accept only half of the debt appears to be unsupported by consideration and therefore Adam may still claim the remaining amount. However, Dawn may claim he cannot do so because of the doctrine of promissory estoppel, since she acted on the strength of his waiver by spending the remaining debt money on her recording.
(c) If Adam can show that he did not accept part payment voluntarily or that Dawn took advantage of his financial difficulty, he may be entitled to recover following D and C Builders v Rees 1966. Alternatively, it may be argued that following the success of Dawn's recording, her reliance on the waiver was not to her detriment and it would be inequitable to allow her to avoid her obligations. The circumstances are such that it may be just to allow Adam to enforce his legal rights.
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