D & C Builders Ltd. v. Rees

"D & C Builders Ltd. v. Rees", [1965] 2 QB 617 is a leading English decision of the equitable accord and satisfaction.

Background

D & C Builders Ltd. was hired to do work for Rees. Once the job was complete Rees had an outstanding debt of £432. Initially, Rees did not pay. Eventually they reached an agreement where Rees' wife agreed to pay £300 in satisfaction of the entire debt. D & C Builders was desperate and nearing bankruptcy, so they accepted the money. Rees' wife was aware of the company's difficult position and threatened to break the contract unless they provide a receipt stating that payment was "in completion of the account." The company later sued for the outstanding balance.

Decision of the Court of Appeal

Lord Denning, writing for the Court, found in favour of D & C Builders Ltd. Denning considered "Pinnel's case" which stated that settlement for less than full amount would not eliminate the full claim. However, he noted, the case had been criticized in "Couldery v Bartum". Instead, Denning relied upon equity which precluded a creditor from enforcing a legal right where there has been an accord. The accord cannot be made under pressure, as it was in the circumstances, at the insistence of Rees' wife. The tactics used by Rees' wife meant equity could not be relied upon.

Difficulty only arose in this case as at the time it was decided, the doctrine of economic duress was not firmly established in the law of England.

In addition "D & C Builders v Rees" overturned the dicta of "Pinnel's case" where it was presumed that payment of a lesser amount by promissory note instead of in cash would extinguish the debt. Lord Denning rejected this.