D and C Builders v Rees [1966] 2 QB 617

Court of Appeal

Basic Facts: B (D and C Builders) completed work valued at £480 for R (Rees), who offered only £300 due to B's financial difficulties and threatened to pay nothing otherwise. B reluctantly accepted the lower payment and later sued for the remaining balance.

Issue for the Court: When can promises not to enforce strict rights be set aside?

Held : The court found that promises to accept a lesser sum in discharge of a greater amount can be set aside if made under coercion or bad faith.

• Lord Denning MR stated that estoppel applies where a creditor agrees to accept less than owed if the debtor relies on that promise. However, if the promise was obtained through intimidation or bad faith, it is not binding.

• Danckwerts LJ noted that R's intimidation and exploitation of B’s financial difficulties made the settlement invalid.

💡Leveluplaw : This case reinforced the principle that promises obtained through coercion or bad faith can be challenged, emphasizing the need for fairness in such agreements.