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This case (Pinnel's Case (1602) 5 Co Rep 117 Court of Appeal) is probably the earliest to establish the principle that if one person owes money to another, then an agreement to take a lesser sum to settle the debt, even if well-attested, is not a binding obligation. The reason rests on the fact that there is no new consideration to support the new agreement.

Cole owed Pinnel £8 10s, but at Pinnel's request paid £5 2s 6d one month before the full sum was due. Cole claimed that there was an agreement that the part-payment would discharge the full debt. The court found in favour of Pinnel, because part-payment of an original debt did not make for fresh consideration. Therefore the agreement was not a contract.

Although influential, this case was actually decided on a technicality. If Cole had extracted from Pinnel an agreement that the early payment was in return for accepting part payment, then Cole would have won the case.

It could be argued, and indeed has been argued, that part-payment of a debt may be more acceptable to a creditor than the ability to recover the full amount in damages; common sense would suggest that it's better to have £100 now, than £200 after a year in litigation. However, in subsequent judgments the House of lords supported the principle of Pinnel's case and have tended to follow this ruling (see Foakes v Beer (1884) 9 App Cas 605).