Adam, who operates an accountancy practice, charges £1,000 per year for producing business accounts for tax purposes. Unfortunately he has had some difficulty in recovering his fees from two clients as follows.
Bob, a car mechanic, told Adam that he could only raise cash to pay half of his fees but that he would service Adam's car for the coming year. Adam reluctantly agreed to this proposal.
Dawn, a not very successful musician, also told Adam that she could only pay half the money she owed him as she needed to use the other half to finance her new recording. Once again Adam agreed to accept the half payment. Dawn's recording subsequently became a major hit and she made £100,000 profit from it.
Adam himself is now in financial difficulty and needs cash to pay his own tax bill.
(a) Explain whether Adam can require Bob to pay his fees in full (2 marks)
(b) Explain the effect of promissory estoppel on Dawn's payment to Adam (2 marks)
(c) Explain how Adam may be able to obtain full payment from Dawn (2 marks)
(Total = 6 marks)