Consideration – Part 2

In our last Contract Law blog (Consideration – Part 1) we looked at estoppel and how it relates to the general rule of consideration. We ended by saying that it was not applicable to the case of Williams v Roffey [1991].

In that case, Mr Williams had been promised extra money to complete work. He was under an existing obligation to complete that work. From the case of Stilk v Myrick (1809) we know that the performance of an existing contractual obligation to a party is not good consideration for a promise, from that party, to pay extra. In line with the principle of Foakes v Beer (1884) only if there is some extra work/benefit undertaken or given can the promise to pay more be enforceable, as in Hartley v Ponsonby [1857]. So far this accords with the same principles of Foakes v Beer and Pinnel’s Case (1602)

SContract1tudents may know that in the case of Stilk v Myrick there were two law reports. One report from Campbell, who went on to be Lord Chancellor. The other from Mr Espinasse, who was notoriously poor at law reporting. Mr Campbell provided the reasoning of the case based on a failure of consideration, which is the interpretation we accept. Mr Espinasse based the case on economic duress, a question of policy. Given his bad reputation for getting it wrong we may doubt this, however Mr Espinasse was junior counsel in the case so it may be more reliable than other reports he drafted.

Any good law student given the facts of Williams v Roffey Bros would have made a reasonable conclusion that the claim by Mr Williams was doomed to failure. However, not for Glidewell LJ ( a lesson never to give a 100% conclusive answer to a problem). Perhaps echoing Lord Blackburn’s view in Foakes v Beer sometimes there is a practical benefit derived from a promise. Foakes v Beer was not referred to in this case (Re Selectmove [1995]) and the criteria is limited to certain types of contracts so as to leave intact the principle of that case.

Glidewell LJ set out that if:

  1. There is a contract for goods or services between A and B (so note it does not cover part payment of debts)
  2. And A cannot perform as promised
  3. And B agrees to pay more for the performance
  4. From which B obtains a benefit, or obviates a disbenefit
  5. And there is no evidence of fraud or duress by A to obtain the promise from B
  6. Then this can amount to consideration for that promise from B

This is a step by step process and many students fail to deal with the stages and leap to the most contentious elements. This will mean the mark potential is reduced by not showing how the conclusion has been reached. Some students see a practical benefit from a promise, even one to take a lesser sum in settlement of a debt and leap to this being Williams v Roffey.

The first three elements need to be applied to any problem question, this will ensure it is a case to which Williams v Roffey applies. Then deal, with clear application to the facts whether there has been a ‘practical’ benefit to B, or avoidance of a disbenefit. Many students fail to apply the legal test to the facts and just assert, ‘there is a practical benefit’ without pointing out what it is. This will reduce the marks potential.

Then, and only then, deal with the issue of fraud or duress. This means you really should revise economic duress with this topic. It is very closely connected. You need to be able to apply the test to find economic duress, reference to cases such as Pao On v Lau Yiu Long (1980) or Atlas Express v Kafco [1989]. You may find it useful to see the discussion on this issue in R v. Attorney-General for England and Wales[2003]. This will also require good application to the facts to establish if there has been duress.

It seems that if there has been duress then there is no consideration, and the contract is therefore void for no consideration. It may alternatively been seen that the first four elements of the test establish that there could be consideration and a contract but that this contract is voidable for duress, as is the normal result of a finding of duress. This is a point that is unlikely to alter your conclusion but is an interesting point to make which may show an examiner that you have thought more deeply about the nature of the case.

It is an interesting issue and one which sometimes confuses students. I hope this summary, when read with the earlier blog on consideration, will go some way to remove any confusion.

This blog post was written by Anne Street, Law Lecturer at SOAS, University of London. Anne regularly teaches on the Laws Programme’s Regional Revision courses.

13 comments

  1. It could be construed the William’s original consideration was “potential consideration”, that may or may not lead to full performance of contractual obligation. The consideration of not abandoning obligation was “secondary consideration”. This leads to a new concept of primary and secondary consideration ., comments welcomed

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    1. But could there be a contract if there was no actual considertion. Once he had started to perform then the consideration on his part was satisfied. The obligations in a contract are to perform as promised or pay compensation. To not abandon (to perform) is not considertion but the obligation under the first, I would suggest

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      1. Thank you. I would posit that parties entering a contract without full commitment or resources and that is accepted as consideration is potential or provisional consideration. Theoretically, we could classify it as misrepresentation, but as the contract has been accepted and continues to be acted on it is not full consideration. The failure of full performance, as in Williams v Roffey, would when the party in default promises to complete performance subject to further payment, result in the fulfilment of secondary or full consideration.

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      2. The misrepresentation in this example being misrepresentation by conduct, as in Spice Girls v Aprilia World Service. The consideration , as evidenced by commencement of contractual obligations, lacked the intent necessary of true consideration.

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      3. You are mixing up your concepts. There is no misrepresentation here.

        If there was no intention then the burden, as a business transaction, would be to prove no such presumption, this is not an issue.

        The issue is consideration and the validity of performing an existing obligation as being sufficient for that.
        Good to see you thinking about the issues but try to be more focussed on the issues at hand to help structure an answer.

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      4. There is no concept of ‘potential’ consideration. He promised to perform that is consideration.

        He had not misrepresented his ability, at the time statements made they were not false – he honestly believed he could do the work.

        The performance as promised, for the extra amount, was consideration as Glidewell explained.

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      5. Thank you. However, I am not mixing or confusing concepts, just doubting Williams and Roffey reasoning, which I beleve mistook William’s intention to perform as agreed at time of signing the contract, hence my new concept of ‘potential consideration’. If we do not find new hypotheses for legal acts then the law remains static

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  2. Thankyou for a wonderful piece of writing. It has made the concepts easier to understand.

    Can you please put more light on the comparison of william v roffey and stilk v myrick. As the textbook itself notes that it is still unclear why william v roffey case is not aligned with stilk v myrick case.

    If we try to apply test step by step on stilk v myrick as it is suggested in your post we can conclude that despite of the existing obligation some extra benefit was given (having work of missing seamen been divided on remaing crew). Can the reasoning of Mr. Campbell be challanged ?

    Your feedback is very precious.

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    1. I think the reasoning of Campbell can be challenged. Had the report by Espinasse been given greater weight then the principle of economic duress would have developed much earlier.
      However, as this principle was not accepted until the 20th Century then Stilk v Myrick as reported by Campbell has been accepted.

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  3. Thank you very much for these. I’ve been struggling with the ambiguities of these cases, but your blogs and revision lectures provide by far the clearest explanations, and make the material much easier to understand. I’m looking forward to more blog topics.

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