Why would binding someone abolish an exception to the rule that bargains bind?

Question

I don't fathom the emboldening.

1. Who is he and him? The creditor or debtor?

2. Pls see title.

Paul Davies. JC Smith's The Law of Contract (2018 2 ed). p 89.

      MWB has now been [appealed to] [decided by] the Supreme Court. Perhaps the most unsatisfactory outcome would be for the Supreme Court to seek to reconcile the two lines of case law. It is suggested that the Supreme Court has a clear choice to make: it can either depart from Foakes v Beer and endorse the ‘practical benefit’ approach in Williams v Roffey Bros, or it can uphold the principle in Foakes v Beer and overrule Williams v Roffey Bros. Overruling Foakes v Beer was recommended by the Law Revision Committee in 1937 but was not acted on by Parliament. Indeed, departing from Foakes v Beer might be thought to undermine the doctrine of consideration. But this is not necessarily so. It may be that a distinction could evolve where consideration is required for the formation of contracts, but not for their variation.68 In any event, the essence of the doctrine of consideration would remain intact. A person who agrees to pay an increased price in order to induce another to fulfil his contractual duty, or to take a lesser sum in full satisfaction in order to induce his debtor to pay something, is making a bargain. He asks for something in return for his promise to pay more—or not to sue for the balance, as the case may be—and gets what he asks for. It might even be thought that to hold him bound, far from impairing the basic rule that bargains are binding, would be to abolish an exception to that rule. Lord Blackburn recognised this in Foakes v Beer but was dissuaded by his brethren from dissenting on that ground. However, the actual result in Foakes v Beer may be unaffected because there was probably no bargain and no intention to release any existing rights. And even in situations where there is a bargain, that would not always be enforceable, since the outcome would depend on whether the party surrendering his contractual rights did so under economic duress.69

Answer 1

"He" in this case refers to the creditor.

Let's see if I remember my contract law. In Foakes v Beer, the debtor (Dr Foakes) was in financial difficulty, so offered to pay the creditor some of the full debt right now, and the rest of it later on, and also asked not to be charged interest for paying later.

The creditor (Mrs Beer agreed to this arrangement. However, later she changes her mind, and asks for interest too. The debtor says no, and the creditor sues for the interest.

The court decided that even though the creditor initially agreed to the new arrangement (therefore making a bargain, which is supposed to bind him), he wasn't bound by that agreement, because to change a contract, you require consideration, and the court held that agreeing to a lesser amount is not consideration (since there is no benefit to getting paid less, there is no consideration). Therefore this is an exception to the general rule that he should be bound by his bargain.

Subsequent courts have thought about changing this rule, since it makes sense that agreeing to get a lesser amount RIGHT NOW in exchange for not suing for the original amount seems like valid consideration, but they decided not to abolish this exception.

Answer 2

Who is he and him? The creditor or debtor?

It means the creditor or, accordingly, the party who seeks to expand his entitlement(s) or to secure at least some part thereof.

Notice that a previous sentence in that excerpt has as head of the subject a "person", the one who seeks "to induce another to fulfill his contractual duty" or "to induce his debtor to pay something". The predicate of that sentence consists of "is making a bargain".

Why would binding someone abolish an exception to the rule that bargains bind?

It seems to me that the author's expression is a tautology. Adding the following brackets makes the tautology more redundant but also more evident:

to hold him bound [as to the bargain], far from impairing the basic rule that bargains are binding, would be to abolish an exception to the rule [that bargains are binding].

The referred case of MWB conveys that bargains satisfy the element of consideration, this element being a prerequisite for the formation — or variation — of a contract. It is just not clear why the author had to interject the notion of "exception" (exception based on what?) and the possibility of "abolishing" it.

Answer 3

“He” is the person who provides consideration or the variation, as opposed to the one who doesn’t.

The doctrine of consideration at stake is that a variation to a contract requires consideration from both parties. (Unless the contract allows for its own variation. Or the variation is executed as a deed. Or issues of estoppel arise. Or it’s under New Zealand law. Or ... look, it’s complicated, OK?)

It has long been a rule that a pre-existing legal obligation, such as one under a contract, is not good consideration. So variations where only one side provides consideration, like accepting a lower amount (consideration by the contractor/creditor) has no matching consideration from the principal/debtor or paying a higher amount (consideration by the principal/debtor) in order to finish by a previously agreed date has no consideration from the contractor/creditor, are not enforceable. MWB upheld that consideration is required - subject to a myriad of exceptions (see above).

That said, token consideration is valid consideration and courts can find it in the most unlikely places. Agreeing to a payment plan might be supported by the benefit of avoiding debt collection costs, for example.