Court of Appeal considers rule in Pinnel s case and finds triable issue of promissory estoppel

The Court of Appeal has held that an alleged agreement between a debtor and creditor was not strictly a binding agreement in law, as there was no good consideration. However, the court also held that the statutory demand served on the debtor should be set aside on the basis that there was a triable issue of promissory estoppel. Where there is a compromise agreement, the doctrine of promissory estoppel means that an agreement is binding in equity if it would be inequitable for the creditor to enforce his strict legal rights. The decision highlights the importance of the promissory estoppel doctrine in alleviating the effects of the rule in Pinnel's case, namely that payment of a lesser sum in satisfaction of a greater sum cannot be satisfaction of the greater sum.

Case: Collier v P & M J Wright (Holdings) Limited [2007] EWCA Civ 1329.