Release - Building Contract - page 356

it would be inequitable to do so. This was well illustrated during the last war. Tenants went
away to escape the bombs and left their houses unoccupied. The landlords accepted a reduced
rent for the time they were empty. It was held that the landlords could not afterwards turn
round and sue for the balance: see Central London Property Trust Ltd v. High Trees House Ltd
(1947). This caused at the time some eyebrows to be raised in high places. But they have been
lowered since. The solution was so obviously just that no one could well gainsay it.
In applying this principle, however, we must note the qualification: The creditor is only
barred from his legal rights when it would be inequitable for him to insist upon them. Where
there has been a true accord, under which the creditor voluntarily agrees to accept a lesser
sum in satisfaction, and the debtor acts upon that accord by paying the lesser sum and the
creditor accepts it, then it is inequitable for the creditor afterwards to insist on the balance.
But he is not bound unless there has been truly an accord between them.
In the present case, on the facts as found by the judge, it seems to me that there was no
true accord. The debtor's wife held the creditor to ransom. The creditor was in need of money
to meet his own commitments, and she knew it. When the creditor asked for payment of the
£480 due to him, she said to him in effect: 'We cannot pay you the £480. But we will pay you
£300 if you will accept it in settlement. If you do not accept it on those terms, you will get
nothing. £300 is better than nothing.' She had no right to say any such thing. She could prop-
erly have said: 'We cannot pay you more than £300. Please accept it on account.' But she had
no right to insist on his taking it in settlement. When she said: 'We will pay you nothing unless
you accept £300 in settlement,' she was putting undue pressure on the creditor. She was making
a threat to break the contract (by paying nothing) and she was doing it so as to compel the
creditor to do what he was unwilling to do (to accept £300 in settlement): and she succeeded.
He complied with her demand. That was on recent authority a case of intimidation: see Rookes
v. Barnard (1964) and J.T. Stratford & Son Ltd v. Lindley (1964). In these circumstances there
was no true accord so as to found a defence of accord and satisfaction: see Day v. McLea (1889).
There is also no equity in the defendant to warrant any departure from the due course of law.
No person can insist on a settlement procured by intimidation.
In my opinion there is no reason in law or equity why the creditor should not enforce the
full amount of the debt due to him. I would, therefore, dismiss this appeal.
WINN LJ: In my judgment it is an essential element of a valid accord and satisfaction that the
agreement which constitutes the accord should itself be binding in law, and I do not think
that any such agreement can be so binding unless it is either made under seal or supported
by consideration. Satisfaction, viz. performance, of an agreement of accord, does not provide
retroactive validity to the accord, but depends for its effect upon the legal validity of the accord
as a binding contract at the time when it is made: this I think is apparent when it is remem-
bered that, albeit rarely, existing obligations of debt may be replaced effectively by a contractu-
ally binding substitution of a new obligation.
The previous law was probably substantially modified by the next case although the Court of
Appeal did not explicitly recognise that they were changing the law. In practice they stretched
the traditional doctrine of consideration so far that an employer who agrees to pay a contrac-
tor (or a contractor a sub-contractor as in this case) more for completing the works will nearly
always be liable to pay unless the party receiving extra payments has been guilty of economic
duress.