Hirachand Punamchand v Temple
Court of Appeal
Citations:  2 KB 330.
A debtor’s father wrote to the creditor and offered a lesser amount to discharge the full amount of the outstanding debt. The letter enclosed a cheque for that amount, which the creditor cashed. The creditor then sued the debtor for the remaining amount of the debt. The debtor argued that the money provided by his father was consideration for the creditor’s implicit promise to discharge the debt.
- Did the father’s offer to pay part of the debt amount to consideration for the promise to discharge the debt?
The Court held in favour of the debtor. The creditor was not entitle to cash the money unless he was implicitly agreeing to discharge the debt. The father’s money was sufficient consideration for this agreement.
This Case is Authority For…
Normally, an offer to pay less is not good consideration for a promise to discharge the full debt. However, an agreement that a third-party will pay the lesser amount is good consideration.
Vaughan Williams LJ justified the result in this case on the grounds that it would be a fraud on the father if the creditor could accept the money and then sue for the full amount.