The Court of Appeal decision in Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1QB 1, in particular the notion that practical benefits can constitute good consideration has rendered PDF

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The Court of Appeal decision in Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1QB 1, in particular the notion that practical benefits can constitute good consideration has rendered the law on modification of contracts incoherent and confused. Discuss Contract Law 1790623 995 words

In the case of Williams v Roffey Bros & Nicholls (Contractors) Ltd, it was ruled that a practical benefit can constitute good consideration.1 This has arguably made the law on modification of contracts incoherent and confused as the doctrine of consideration has been widened and there has been a move away from the strict formalist rules. Subsequently, it is not clear what is classed as a practical benefit and thus what can amount to consideration. An example of this is whether or not part payment of a debt constitutes good consideration as a practical benefit – traditionally, the answer was that it did not2 and this was backed up by Re Selectmove3 however since MWB Business Exchange Centres Ltd v Rock Advertising Ltd (MWB) the answer is uncertain.4 With that said, in the case of Ward v Byham it was ruled that happiness was counted as consideration so it may be argued that such laws were already incoherent and confused. 5

In Williams v Roffey, the Court of Appeal ruled that Williams finishing his subcontracting work on time was a practical benefit to Roffey Bros as it meant they were able to avoid being subject to a penalty clause. It was ruled that such a practical benefit amounted to consideration, widening the doctrine of consideration. This has made the law on modification of contracts confusing as there is no definite rule stating what is classed as a practical benefit. This confusion is reflected in case law and how the difference between a promise to pay more (Williams v Roffey) and a promise to accept less (Pinnel’s case) is distinguished even though, according to Lady Justice Arden, both confer a practical benefit.6 The case of Re Selectmove

1 Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5, [1991] 1 QB 1 2 Pinnel’s Case [1602] 5 Co Rep 117a, 77 ER 237 3 Selectmove Ltd, Re [1993] EWCA Civ 8, [1995] 1 WLR 474 4 MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] EWCA Civ 553, [2017] QB 604 5 Ward v Byham [1956] EWCA Civ 1, [1956] 1 WLR 496 6 MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] EWCA Civ 553, [2017] QB 604 [79] (Arden LJ)

reflects this incoherent distinction as it shows that the majority of the Judges on the case were reluctant to say that part payment of a debt amounts to consideration despite there being practical benefits as it would leave the precedent set in Foakes v Beer7 without any application.8

With that said, the Supreme Court may rule in MWB that part payment of a debt, as a practical benefit, can amount to consideration. Even if they rule in this way though, Peel is correct when he argues that the phrase ‘practical benefits’ is ‘difficult to apply’9 as a practical benefit can be much more than a promise to pay more or a promise to accept less (for example it could be someone promising to move out) and that capacity breeds confusion and incoherency.

The precedent set in Williams v Roffey reflects a move away from strict formalist contract rules which undoubtedly causes confusion and incoherency. Traditionally, something would only be classed as consideration if it was of some value in the eyes of the law and if it resulted in a detriment to the promisee or aided the promisor.10 Such formalist rules provided a strict and coherent template where both Judges and Lawyers were clear on what would and what would not act as consideration. Following Williams v Roffey, the coherent template no longer exists and Adam Shaw-Mellors argues that, recently, the Courts have emphasised the importance of pragmatism in deciding what should be classed as consideration.11 Despite the fact that such approaches may reflect commercial reality, it cannot be disputed that these pragmatic and realist approaches leave the law on modification of contracts confused. With 7 Foakes v Beer [1884] UKHL 1, (1884) 9 APP CAS 605 8 Selectmove Ltd, Re [1993] EWCA Civ 8, [1995] 1 WLR 474 [481] (Gibson LJ) 9 E Peel, ‘Part Payment of Debt is No Consideration’ (1994) 110 LQR 353 10 Currie v Misa (1875), LR 10 Exch 153 [162] (Lush J) 11 Adam Shaw-Mellors, ‘Contractual variations and promises to accept less: pragmatism in the Court of Appeal’ (2016) JBL 696, 697

that said, in the case of Ward v Byham it was ruled that happiness constituted as consideration so it may be argued that the laws on the modification of contracts was not as formalist as one may think and that it was confused before Wiliams v Roffey. However, the case of Ward v Byham can be seen as an anomaly surrounded by thousands of contract cases where consideration was something given of value from the promisee to the promisor, suggesting that the discussed laws were formalist.

To conclude, the decision in Williams v Roffey ruled that a practical benefit can amount to good consideration. As it is un clear what is classed as a practical benefit, this has made the law on the modification of contracts incoherent and confused. This confusion can be shown by the ongoing legal argument as to whether a promise to pay more (as in Williams v Roffey) is the same as a promise to accept less. Even though the case of MWB may clear up the argument, the lack of clarity around practical benefits amounting to good consideration will still remain due to the scope of such a phrase. Moreover, the ruling in Williams v Roffey shows a clear move away from the strict formalist contract rules. Even though such a move aims to reflect commercial reality, it makes the law unpredictable and complicated. Notwithstanding, the case of Ward v Byham suggests that the law may have been incoherent and confused even before Williams v Roffey. Ward v Byham, however, can be seen as an anomalous case surrounded by thousands of contract cases decided using the strict formalist rules, meaning that such laws were still undoubtedly formalist at that time.

Bibliography

Table of cases Currie v Misa (1875), LR 10 Exch 153 [162] Foakes v Beer [1884] UKHL 1, (1884) 9 APP CAS 605 MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] EWCA Civ 553, [2017] QB 604 Pinnel’s Case [1602] 5 Co Rep 117a, 77 ER 237 Selectmove Ltd, Re [1993] EWCA Civ 8, [1995] 1 WLR 474 Ward v Byham [1956] EWCA Civ 1, [1956] 1 WLR 496 Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5, [1991] 1 QB Secondary sources Peel E, ‘Part Payment of Debt is No Consideration’ (1994) 110 LQR 353 Shaw-Mellors A, ‘Contractual variations and promises to accept less: pragmatism in the Court of Appeal’ (2016) JBL 696, 697...