proportion of the debts owed to them in settlement of their claims against
X. This will be held binding in the courts, since if Tom, Dick and Harry
have each made an agreement with X concerning each other, it would be
a fraud on each other to go back on that and sue X. The situation is a little
like the multipartite agreement in Clarke v Dunraven (see p. 36),
although with this creditor’s agreement Tom, Dick and Harry may have
had input into exactly what is agreed regarding each other.- Where payment of a lesser amount by a third party is accepted, the
creditor cannot then sue the original debtor for the full amount.This
arose in the case of Hirachand Punamchand v Temple (1911), where the
plaintiff money lender agreed with Temple’s uncle to accept a cheque in
settlement of Temple’s debt, even though the cheque was not for the full
amount. The plaintiff was then unable to go back on his word and sue
Temple for the rest. Again, in doing so, the plaintiff would have been in
breach of the agreement with the uncle.
However it is clear from the more recent case of Inland Revenue
Commissioners v Fry (2001) that there is not a strict rule concerning part
payment by a third party. It is seen as a presumption that can be rebutted in
appropriate circumstances. In this case a husband offered £10,000 instead of
over £100,000 as a settlement of his wife’s taxation ‘in full and final
settlement’. The Inland Revenue cashed the cheque and then asked for rest of
the payment. The court allowed them to insist on the rest being paid and said
that ‘cashing a cheque gives rise to a rebuttable presumption of acceptance’.
58 Contract law
Figure 3.4