[SOLVED] research and development

Pear Ltd is a successful start-up tech company specialising in consumer electronics. After years of
research and development, they made it possible to develop their first PC prototype called PassionFruit,
and they presented it at the Coalchester Tech Expo for the first time. Reviews for PassionFruit were
very positive because of its groundbreaking performance. This was made possible thanks to the
outstanding hardware used on PassionFruit which is produced by Earthware, a renowned computer
hardware company.
Upon receipt of these reviews, Pear decided to manufacture PassionFruit for consumer sale, and they
contracted with Earthware to supply the hardware needed by paying monthly instalments of £9,000,000.
The production of PassionFruit was smooth, but unfortunately sales did not go as well as expected,
which put Pear in financial difficulty. Pear explained their financial difficulties to Earthware. Known for its
support to companies that produce groundbreaking tech products, Earthware stated that they would
accept the payment of the two-thirds of each monthly instalment until sales would increase to help them
recover and avoid insolvency. The reduction of the payment was agreed in writing, though the duration
was not specified.
Shortly thereafter, Pear Ltd gave Earthware BRAINIAC, one of the first computers ever created.
BRAINIAC was part of Pear’s directors’ collection of valuable antique technologies. They sent
BRAINIAC to Earthware alongside with a notice saying ‘Please take BRAINIAC in consideration of your
kindness’.
Pear Ltd paid the reduced monthly instalments for 10 months. At that moment, sales fortunately
increased, but Pear Ltd still did not recover financially in full. This is because sales were increased as a
result of the rigorous marketing Pear Ltd undertook for PassionFruit in their own ‘Pear Stores’, which
required much expenditure on advertisement and personnel.
On reviewing Pear Ltd’s sales success, Earthware wanted to be paid the full amount of the monthly
instalments from that moment on. Earthware argued that they are not bound by their promise to accept
a lesser amount for the supply of Earthware’s goods as Pear had provided no consideration in return.
Two weeks later, Earthware also informed Pear that they also wanted to recover the remaining payment
outstanding from the 10-month period. Pear refused.
Earthware has brought an action against Pear Ltd for the recovery of the outstanding amount from the
10-month period.
In the High Court, Gaffe J held that Pear Ltd was not liable for the outstanding payment following the
principles of consideration established in Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1
2
QB 1. Earthware appeals to the Court of Appeal on the grounds that Gaffe J had erred in applying
Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB1 to the part-payment of a debt
situation, this being inconsistent with the principle established in Foakes v Beer (1884) 9 App Cas 605.
The appeal is upheld and Pear Ltd now appeals to the Supreme Court, with leave, on the single ground:
1) That Gaffe J had not erred in applying the principle in Williams v Roffey Bros & Nicholls (Contractors)
Ltd [1991] 1 QB 1. The benefits obtained by the part-payment of a debt should be treated the same as
those benefits obtained under a contract for the provision of goods and/or services.
ASSESSMENT CRITERIA: Please see Assessment Criteria available in Moodle
Assessment Criteria: Please see Assessment Criteria based on Moodle
Roles Allocated: Appellant (Pear Ltd), Respondent (Earthware)
Main Topic: Consideration, Part-Payment of Debt and Promissory Estoppel
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