Full & Final Payment

[vinyamar777]

A builder came to retile. Perhaps unavoidably (or carelessness or intent) tiles came down en mass puncturing the bath. He verbally only asked for 1/2 towards purchasing a new bog standard suite - the bath colour is no longer easily available.

He did the job, then claimed for extra labour.

I wrote offering an amount "in full & final payment", and the enclosed C/Q also had this clearly written on the front. He cashed it, and is taking me to court for the difference.

I thought that the law was clear about "full & final payment" ending all further claim, and if it does, where can I find this law?

[claire78]

OK, if you put 'in full and final settlement' on the letter, then this is a good start.

 

Now the law states that 'part payment of debt is no consideration', however it sounds like this guy may not be owed any money anyway.

 

If you paid him the amount agreed before he broke the bath, then he is trying to claim extra money for work rectifying his own negligence.

 

I would say that you should be fine on this, make sure you have all your paperwork to hand if you discuss it with anyone.

 

Good Luck

[vinyamar777]

Claire78

Thanks, that’s encouraging.

I have been looking at some other threads on this F&F idea, including talk of peppercorns – had I known, a peppercorn to strengthen my case would not have been sneezed at!

There is talk about “consideration” (you also have used it) going with the F&F offer. My letter said that as an alternative to the enclosed C/Q as F&F payment, I would be prepared to consider arbitration. Would this offer mean that I had offered ‘consideration’ and that therefore by accepting the C/Q the matter should clearly in law be settled in my favour?

[chesham]

If you offered it, and it was clearly marked and he accepted, then it's job done.You have paid FULL STOP!

 

Although part payment of debt does not legally discharge you from it, the doctrine of promissory estoppel does legally prevent anyone from accepting part payment in settlement of a debt and pursuing you from the remainder (see Central Property London Trust vs High Trees House Ltd (1947))

 

It's the first case and maxim they teach you in law school regarding contracts and it sticks with any law student for the rest of their life!

 

There was a case a couple of years back where a customer banked a cheque in payment of a loan for something like £50 and marked on the back of the cheque "in full and final settlement" and they took it - the loan (which was quite a lot of money) was held to have been settled, although it's the only one I have heard of - jammy git!

[buzby]

It's either a bluff - or he's being really stupid. Before you do anything, make sure you get a copy of the cashed cheque from the bank (in case the becomes 'lost'). In the unlikeley event of you receiving a summons, you advise that the matter will be defended. Take your copy cheque to court and submit it as evidence, and the matter will end there, and you can possibly ask the Judge to award costs in your favour in view of the pursuers vindictiveness.

 

If you are required to submit your defences beforehand, only provide copies - keep the original in your posession at all times.

[cariad mo brwydrwr]

There was a case a couple of years back where a customer banked a cheque in payment of a loan for something like £50 and marked on the back of the cheque "in full and final settlement" and they took it - the loan (which was quite a lot of money) was held to have been settled, although it's the only one I have heard of - jammy git!

 

I thought that was something of an urban legend? There's an article here about it: Urban Legends Reference Pages: Business (Paid in Full)

[chesham]

It did happen once upon a time - before certain bits of legislation in.

 

This is also subject to the test of reasonableness. If you were to pay £20 for a debt of £1000 then it could be argued that the debtor was not intending for it to be legally binding, but if it was £750 for £1000, then that's different. The circumstances do dictate some of the time when it would be acceptable, as although a term of a valid contract is that the 'consideration' needs not to be of a true value, another term is that both parties intend the contract to be legally binding - hence the above.

[blazing-badger]

I thought that was something of an urban legend? There's an article here about it: Urban Legends Reference Pages: Business (Paid in Full)

 

This is a link to advice about law in the United States, users should not be misled by it. English law was laid down by the House of Lords in the case cited above. The general principle means that you cannot accept an offer of full and final settlement and then renege on the deal.

[cariad mo brwydrwr]

This is a link to advice about law in the United States, users should not be misled by it.

 

Its not advice about law, its advice about 'urban legends' ie rumours that get spread around about things that aren't really so. A lot of things like this get circulated on the internet and are therefore global rumours, so imho the site is still helpful in the UK and worldwide.

[vinyamar777]

Well, I feel more confident for this particular case – thanks all for comments made. I got a copy from the bank some time back, just in case this firm might otherwise deny that I had written it on – indeed I had written it on the front. And it was about 54% of the amount claimed – quote (£400), offered (£540), claimed (£1000) which I hope will pass, if required, the test of reasonableness.

On a human front, whereas my testosterone inclines me to battle for principle, my wife’s an unhappy bunny whenever the post rakes this up. A hearing is due mid‑Jan., and win or lose she’ll be glad to see the end of it – and so say all of us.

[buzby]

It's a genetic thing, but one based not on reason, but avoiding confrontation. Unfortunately, if you don;t want to be a doormat, that's the only option you can use!

[vinyamar777]

Having had another letter, let me recap a bit.

I offered “final & full” payment which was accepted yet the builders seek s/c court action for their revised invoice which I have never accepted. They cite the Pinnel case (1602), reinforced by Foakes v Beer (1884), and recently “Re C (a Debtor) (1996)”. Is this simply saying that a principle exists of accepting an offered F&F payment yet pursuing more?

I have been told about promissory estoppel legally preventing anyone from accepting part payment in settlement of a debt and pursuing for the remainder (see Central Property London Trust vs High Trees House Ltd (1947)).

In short they caused damage, unavoidable they claimed. To be helpful I verbally agreed to half payment on the parts; they have claimed for labour. I sent a C/Q marked on the front “Full & Final Payment” – I have a Bank Photocopy – and likewise stated this in my accompanying letter. They cashed the C/Q, then continued to claim more.

Putting the two together, are they simply saying that in some situations they might be entitled to pursue more, while I have justification to argue that in this case Pinnel et al does not preclude promissory estoppel?

PS, how does one begin a new thread?

[buzby]

Your Full and Final Payment was made on that basis, and that basis alone. If they choose to raise an action againt you, your stated defence is the F&F payment, of which you have evidence of encashment. You then call on the judge to dismiss the action as incompetent, as the claimant is abusing due process.

 

(To begin a new thread, go to the main forum index, to the appropriate sub-formum index, and at the bottom click on the New Thread button.)

[chesham]

Pinnels case is as follows:

The Rule in “Pinnel’s Case (1602)”:

If I owe you say, £100 and then, subsequently come to you and say that I am unable to repay you, but I could raise £75 if you were prepared to accept that sum in full settlement of the debt, and you agree, I would still, nevertheless, be responsible for the remaining £25 and you could sue me for it. This is known as the Rule in Pinnel’s Case:-

Pinnel’s Case (1602): Pinnel sued Cole in debt for £8.10s.0d., which fell due for payment on a Bond on 11th November 1600. Cole, in defence, said that at Pinnel’s request, he had repaid the sum of £5.2s.6d., which had been accepted in full settlement of the debt. It was held that Pinnel’s action was successful in that the payment of a lesser sum on or after the day that it fell due could not be taken as satisfaction for the whole sum as there was no consideration supporting such an agreement - the debtor was already contractually bound to pay the whole sum.

 

BUT

 

There are exceptions.

As strict application of the rule in Pinnel’s Case (1602) could cause hardship to a person who relies on a promise that a debt will not be enforced in full, equitable estoppel mitigates this harshness. The Doctrine of Equitable Promissory Estoppel may be expressed as follows:

If X, a party to a legal relationship, promises Y, the other party, that he (‘X’) will not insist on his full rights under that relationship, and this promise is intended to be acted upon by Y, and is in fact acted upon, then X is estopped (stopped because of his own previous conduct) from bringing an action against Y which is inconsistent with his promise, even if Y gives no consideration. ie Y can use the principle of equitable estoppel as a defence against X should X attempt to enforce his original rights.

The Doctrine came into being as a result of a judgment by Lord Denning in Central London Property Trust -v- High Trees House Ltd (1947)

[chesham]

Foakes vs Beer - this showed that promissory estoppel does NOT apply unless payment was offered at an earlier date than the original agreed date. The rule in Pinnel's case showed this, and Foakes vs Beer affirmed it.

[meagain]

As I understand it (and I am no expert), estoppel is an equitable remedy, which means that the principle of "clean hands" applies - put simply, the naughty children don't get it. The builder screwed up, you gave him part payment for his troubles. You're now being asked to pay for his screw-up. You've done nothing wrong. There was no consideration, so the "full and final" bit isn't binding, but if this got to court, the judge would probably say that the builder isn't owed anything for a job he couldn't complete to a satisfactory standard.

[Movingon]

It can easily be argued that by cashng the cheque, in the knowledge that it was offered in full and final settlement, they are implicitly "accepting that they may not enforce their contractural rights in the future under the agreement." i.e. because they cashed the cheque, then even if they don't say so, they have effectively waived their right to any further payment. I believe that Estoppel very firmly applies in this case; but only a Judge can tell us if it does.

[vinyamar777]

Well, it’s over, for better or worse, & today I lost. In summary, the s/c judge decided (I hope I have it right) that the original quote was verbally accompanied by indication that the job might be larger, that the accident happened even though the claimant acted reasonably, and that even though my letter & C/Q were clearly marked F&F consequent work was agreed – though I had assumed there would & could not be any extra. He made a point that consideration was not relevant in this case. We are allowed 14 days to pay the outstanding.

I feel miffed that a quote does not cover extra remedial work the consumer may expect & the builder may claim, and that F&F can be accepted in £££ but not preclude legal action.

 

It was an interesting experience. At first I thought the defendant was being lined up against the wall, so to speak, did badly when it was my turn – and both failure to itemise a paragraph of snagging problems along with failure to produce photographs, procedures I though either couldn’t be done – work I had put right before any thought of court action, and a light switch which in the final weeks I suspected was the original switch, and so faulty, when in fact it was determined that it was the new switch that simply broke down the same way as the original. And I spoke rather fumbly to boot – maybe if I handled it by discussion forum! In ended in me being the one shot!

 

This is said for the interest of those who helped out: my case was better but insufficient but thanks for input.

[buzby]

That's a real shame. I can see that the 'subsequent work' element could be valid, however I would have thought this would have to have been agreed with you and the costs for this discussed, rather than you appearing to have unlimited liability for a raft of work you had not agreed to. Still what doesn't kill you makes you stronger, so hopefully you'll never be put in a similar situation.....

[nickyp99]

Sorry to hear you lost, harsh...

 

I posted something very similar to this on the landlord and tenant section yesterday... it didnt receive much attention. Anyway, I would be grateful if the posters above could give me their thoughts on this f&f payment question:

 

I left rented property. Landlord is retaining chuck of huge deposit. We have exchanged heated phone calls and letters. The most recent I received was for 1/2 the amount I feel is due. It states that cashing the cheque will be deemed as accepting full and final payment. I want to take him to court for the rest, but I am scared that if I dont cash the cheque I have now, I may go a bit bankrupt before it goes to court.

 

The first cheque he issued me was posted dated by 2 months (with no explanation), not signed, and later stopped. All this happened before I even complained about the pitiful amount.

 

Do I have ground to cash it and then try to sue him, on the basis that he has conceded that amount is owed... the rest we can fight for

[nickyp99]

anyone? Please....