Seminar 10 - Common Law Principles PDF

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SEMINAR 10 –CONSIDERATION COMMON LAW PRINCIPLES Read the report of the case of WILLIAMS v ROFFEY BROS & NICHOLLS (CONTRACTORS) LTD [1990] 2 WLR 1153 (Court of Appeal.) After reading the report, prepare full answers to the following questions. You may be asked to present your answers to the group and have the opportunity to receive feedback from your tutor. When preparing your answers think about how you will structure your response so that you can present your arguments in a clear and logical way. Avoid irrelevant material and ensure that your response addresses the question, these are important skills when preparing a moot or any oral presentation. 1. a) Summarise the facts and decision in the case. - Defendants were building contractors, and plaintiff a carpenter. Ds were meant to refurbish flats and agreed to paying P £20,000. However, P realised he priced the contract too low, and said that he wouldn’t complete on time or at the price agreed. - Ds agreed to pay £575 per flat that was completed on time, above and beyond contract price. Ds ended up having to get another carpenter after only some of the flats were completed, and they refused to pay the additional amount promised. - Question for court = was the promise of £575 extra per flat enforceable? - Issue? = was the performance of an existing contractual duty to complete work on the flat good consideration for the promise of £575 - Generally, per Stilk v Myrick the performance of an existing duty is not good consideration for the promise of additional payment to complete that duty. However, in this case the defendants received a practical benefit amounting to fresh consideration, and therefore the promise of additional payment (£575 per flat) was enforceable

b) What practical benefits were identified by the judges as constituting valuable consideration? - What practical benefits did the defendants get that amounted to good consideration:  Williams continued his work, and didn’t breach his sub-contract  Because the flats were completed on time Roffey avoided incurring the penalty clause under the main contract  Roffey avoided the ‘trouble and expense’ of having to find a new sub-contractor/carpenter [did do it anyway]  = controversial given that all of these things should have been achieved under the initial contract  Haphazard payment method which was replaced with a formalised scheme  Directed Williams to complete one flat at a time, and therefore this means that other workers can be directed around him  = controversial because these could have been achieved without any promise of additional payment

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What six criteria were laid down by Glidewell LJ as constituting the present state of the law? Glidewell Criteria: 1. Agreement/contract for goods or services in return for payment 2. Reason to doubt whether one party will complete their side of the bargain 3. Because of this doubt the other party promises to pay an additional sum to ensure completion on time 4. Thereupon, B obtains a practical benefit or avoids a disbenefit [controversial] 5. No duress or fraud 6. Benefit is capable of being good consideration [this doesn’t involve a part-payment of a debt] (pgs. 15 and 16 of judgement)

What do you think Glidewell LJ meant when he said that his interpretation of the law in Williams v Roffey “refines and limits” the application of the principle in Stilk v Myrick but leaves the principle unscathed. Do you agree? Stilk v Myrick = promise to pay the wages of crew mates who abandoned ship, to the remaining crew mates. The Captain then refused to pay. Was that promise to pay extra for doing the work that they had initially signed up to do, enforceable? Promise was not enforceable as there was no consideration, the crew were only doing what they were already bound to do [Hartley v Ponsonby = in this case the promise was enforceable, the crew exceeded their contractual duty given the additional danger they took on] Glidewell claimed that S v M = the only reason that the promise was made by the captain was because the crew had gained by the promise by duress. In W v R there wasn’t any duress, therefore the 2 cases are compatible Russell LJ = argued that S v M was a public policy decision at the time (early 19th century) and the same policy doesn’t apply and the ‘rigid’ approach of Stilk isn’t necessary

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Barry owns a city night club and wants to hold a grand re-opening ceremony of his club on 1st October to coincide with the arrival of students returning to the city to attend University. To ensure that the event receives maximum publicity he enters into a contract with Print-it Ltd. The contract price is £3,000 and Print-it Ltd agrees to produce flyers and posters to advertise the re-opening ceremony. On 25th September it becomes clear that the opening of the club will be delayed. Barry’s electricians have yet to install the new fire alarm system required to open the club to the public. Print-it Ltd, fearing that the event will be cancelled promise the electricians an additional £500 to ensure that the installation is completed on time. The installation is completed and the re-opening ceremony takes places as planned. However, Print-it Ltd are refusing to pay the extra amount promised to the electricians . Discuss the legal position.

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Question: is the promise by Print-It of an additional £500 enforceable? Is the contractual duty owed to a 3rd party good consideration for the £500? [i.e. is the duty by the electricians owed to Barry, a 3 rd party, to complete on time good consideration for the promise by Print-It?] Law: New Zealand Shipping v Sattherwaite The completion of work owed to another party is good consideration for the promise of payment, given that the ship owners get the benefit of a directly enforceable obligation Print-It gain the benefit of a directly enforceable obligation against the electricians, and this is good consideration [Print-it, after promising the £500 to the electricians, can sue them for a failre to complete the fire alarm system on time, which is good consideration] Conclusion = the promise of £500 is enforceable, because Print-It gains the benefit of a directly enforceable obligation.

Reading: Murray, Contract Law – Fundamentals Chapter 4...