Re Selectmove Ltd [1993]
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Re Selectmove Ltd [1993] EWCA Civ 8 is a significant English contract law case that revolves around the doctrine of consideration and part payments of debt.
Selectmove Ltd had substantial outstanding tax and national insurance debts to the Inland Revenue. The managing director, Mr ffooks, met with Mr Polland from the Inland Revenue and proposed to pay future tax as it fell due and clear the arrears at £1,000 a month. Mr Polland needed to confirm the proposal but failed to contact the managing director. Subsequently, Selectmove Ltd received a notice demanding £25,650 and a threat of a wind-up petition. Mr ffooks claimed that the Revenue had agreed to a lower repayment amount, but the High Court found that Mr Polland had not bound the Revenue, and there was no valid consideration for the varied agreement.
The judgment, delivered by Peter Gibson LJ with Stuart-Smith and Balcombe LJJ concurring, emphasised the principle of consideration in contract law. The court observed that the precedent set by Foakes v Beer [1884] precluded the variation of a debt repayment agreement without good consideration, despite the recent decision in Williams v Roffey Bros Ltd [1989].
Peter Gibson LJ pointed out that the practical benefit seen in Williams v Roffey Bros Ltd did not qualify as good consideration when it came to the obligation to make payment. The court stated that the extension of the principle in Williams's case to circumstances governed by Foakes v Beer was not acceptable. Foakes v Beer, a precedent that had not been referenced in Williams v Roffey Bros Ltd, expressly considered and rejected the idea that a practical benefit could constitute good consideration.
The judgment concluded by asserting that any extension of the principle in Williams's case to situations governed by Foakes v Beer should be made by the House of Lords or, possibly more appropriately, by Parliament after consideration by the Law Commission.
In Re Selectmove Ltd reaffirms the importance of consideration in contract law, particularly in the context of varying repayment agreements for debts. It clarifies that the practical benefit recognised in some contexts may not qualify as good consideration in the specific circumstances governed by established precedents like Foakes v Beer. The judgment underscores the need for careful consideration and adherence to legal principles when determining the validity of contract variations.
Selectmove Ltd had substantial outstanding tax and national insurance debts to the Inland Revenue. The managing director, Mr ffooks, met with Mr Polland from the Inland Revenue and proposed to pay future tax as it fell due and clear the arrears at £1,000 a month. Mr Polland needed to confirm the proposal but failed to contact the managing director. Subsequently, Selectmove Ltd received a notice demanding £25,650 and a threat of a wind-up petition. Mr ffooks claimed that the Revenue had agreed to a lower repayment amount, but the High Court found that Mr Polland had not bound the Revenue, and there was no valid consideration for the varied agreement.
The judgment, delivered by Peter Gibson LJ with Stuart-Smith and Balcombe LJJ concurring, emphasised the principle of consideration in contract law. The court observed that the precedent set by Foakes v Beer [1884] precluded the variation of a debt repayment agreement without good consideration, despite the recent decision in Williams v Roffey Bros Ltd [1989].
Peter Gibson LJ pointed out that the practical benefit seen in Williams v Roffey Bros Ltd did not qualify as good consideration when it came to the obligation to make payment. The court stated that the extension of the principle in Williams's case to circumstances governed by Foakes v Beer was not acceptable. Foakes v Beer, a precedent that had not been referenced in Williams v Roffey Bros Ltd, expressly considered and rejected the idea that a practical benefit could constitute good consideration.
The judgment concluded by asserting that any extension of the principle in Williams's case to situations governed by Foakes v Beer should be made by the House of Lords or, possibly more appropriately, by Parliament after consideration by the Law Commission.
In Re Selectmove Ltd reaffirms the importance of consideration in contract law, particularly in the context of varying repayment agreements for debts. It clarifies that the practical benefit recognised in some contexts may not qualify as good consideration in the specific circumstances governed by established precedents like Foakes v Beer. The judgment underscores the need for careful consideration and adherence to legal principles when determining the validity of contract variations.