It is interesting that the argument in this case is only really viable if the
consideration is executory. The mere performance of the act of delivering
the coal may not alone have been sufficient consideration, because the
defendant was obliged to do this anyway, but the promise of doing it to two
parties imposed on him the possibility of being sued for breach of contract
by two parties, and this was good consideration.
This argument was approved in the Privy Council case of New Zealand
Shipping Co v Satterthwaite (1975), also known as The Eurymedon (another
three-sided agreement involving stevedores), and was also accepted in
principle in Pao On v Lau Yiu Long (1980).
Part-payment of a debt
It is clear then that consideration must normally be something beyond any
existing obligation to the promisor, whether it be a duty owed under the law
of the land or by a contractual arrangement. An extension of this is to say that
paying part of a debt owed to someone, when it is due, is not satisfaction for
the whole payment. This has become known as the rule in Pinnel’s Case.
The original rule was adopted and confirmed by the House of Lords case of
Foakes v Beer (1884) where after a debt was paid following judgment, the
56 Contract law
Scotson agreed to deliver a quantity of coal to a person, X, or to anyone
nominated by X, in exchange for payment. X asked for the coal to be
delivered to Pegg. Scotson then contacted Pegg and agreed to deliver
the same quantity of coal, if Pegg could unload it. Pegg agreed, but
when the coal was delivered he did not unload it. Scotson sued for this,
and it was argued that his agreement with Pegg was not valid because
he was offering exactly the same thing as consideration that he was
obliged to do already under his contract with X. However, the court
held that it was in order to offer the same consideration to two different
parties, since if Scotson had not delivered the coal at all he would have
run the risk of being sued twice, by Pegg and by X.Pinnel’s Case (1602)
A man called Cole owed Pinnel some money, and at request of Pinnel
had paid him a lesser sum over one month early. Pinnel had at first said
that this would end the debt, but then tried to sue for the rest. It was
held that although in general a lesser sum did not satisfy the whole
debt, earlier payment, at the request of the creditor, would do so, as
would payment in a different place or in a different form.