Ratio Decidendi
Payment of a lesser sum on the day it is due cannot be satisfaction for the whole debt, because payment of a lesser sum is no consideration for a promise to accept it in full settlement. However, payment of a lesser sum before the due date, at a different place, or with the addition of something else (e.g., a horse) can be good consideration.
Facts
Pinnel sued Cole for a debt of £8 10s. Cole argued he had paid £5 2s 2d before the due date at Pinnel's request, and this was accepted in full satisfaction.
Judgment Summary
The court held that payment of a lesser sum on the day cannot satisfy the whole debt. However, because the payment was made early (at Pinnel's request), there was good consideration for the promise to accept less. The rule was affirmed in Foakes v Beer [1884] and remains good law, subject to the doctrine of promissory estoppel (High Trees [1947]).
Key Quotes
"Payment of a lesser sum on the day in satisfaction of a greater, cannot be any satisfaction for the whole, because it appears to be no consideration."
— Sir Edward Coke
Subsequent Treatment
Affirmed in Foakes v Beer [1884]. The harshness of the rule is mitigated by the doctrine of promissory estoppel (Central London Property Trust v High Trees House [1947]).