Tutorial 2 Consideration PDF

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Law of Contract LW 1130/1131 – 2019/20 Leicester Law School

Tutorial Two: Weeks 15 & 16: Consideration and intention PREPARATION: You must do the reading below for the Tutorial, and you may wish to revisit the advice on tutorial preparation in the previous preparation sheet.  Read Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1.  R. Taylor and D. Taylor, Contract Law Directions (7th edn 2019), chapter 3 from p.62, and chapter 4 complete.  N. Jackson, What to do at Law School? Lesson 2 (on Blackboard – “Learning Materials” – “Consideration”).  E. McKendrick, Contract Law: Text, Cases and Materials (8th ed, OUP, 2018), chapter 5 (read up to p.212), chapter 7.  Student Workgroups must meet prior to the Tutorial, discuss the Tutorial questions, and work through the difficult parts of the questions.

Question 1: Basic principles a) What does “legally sufficient consideration” mean? Give examples. For a valid contract, both parties must have given consideration. “A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other”  Ex: Currie v Misa (1875) LR 10 Ex 153 per Lush J.  Chappell & Co Ltd v Nestle Co. Ltd [1960] AC 87 b) In the lectures, we covered each of the following areas of the law of consideration. Past consideration- Past consideration refers to a time before the making of a promise. Consideration only amounts to past consideration if it was performed before the return promise was made. Ex. Before the contract was formed.  Re McArdle [1951] Ch 669  Re Casey’s Patents [1892] 1 Ch 104

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Performance of existing duties; existing non contractual obligations, existing contractual obligations owed to a third party an existing contractual obligations owed to the promisor.  Collins v Goodfrey  Williams v Roffrey Part-payment of a debt - part-payment of a debt is not good consideration. Exception eg e.g. paying a smaller sum on an earlier date than was required by the contract; or giving a piece of personal property, e.g. horse, as satisfaction of the debt.  Foakes v Beer (1884) LR 9 App Cas 605) Describe the basic rule in each area and then describe how the cases have refined and developed the basic rule. As part of this exercise, make sure that you can identify which of these areas the following cases fit into, and what each case contributed to the legal developments in these areas.

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MWB v Rock Advertising [2016] EWCA Civ 553. ``practical benefit`` rule. By keeping Rock as existing tenants, even at less payment, MWB’s offices were not standing empty at a further loss to MWB - which might devalue the property as a whole. Re Casey’s Patents [1892] 1 Ch 104 Unexpressed bargain. Court upheld the bargain because it was clear from the facts that the parties always understood that Casey would pay Stewart. Casey’s later promise merely verbalised this unexpressed understanding. Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1  ``practical benefit`` rule. Finishing on time enabled Roffey to avoid the penalty clause in their contract with the client.

c) Think like a professor! There is no better way to learn something than trying to teach it to others. Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1 is a case of very complex facts. As an exercise, you will be encouraged either as part of a group, or individually (if you wish) to imagine you are teaching the facts of Williams v Roffey to a class of students hearing about it for the first time. Explain the story of the case, the concepts involved, and the legal conclusion. For example, think about how you will explain concepts such as “sub-contractor” and the different contractual relationships in the case.  A local council contracted Roffey to renovate a block of flats. This contract included a completion time and a penalty for failure to complete by this time.  Roffey sub-contracted Williams to do the carpentry work on 27 flats.  Williams showed some difficulty in being able to finish on time. This was due to their own inefficiency as well as inaccurate contract pricing.  Roffey acknowledged that the contract price of £20,000 was too low and offered Williams an extra amount per flat to finish on time.  Roffey then refused to pay this bonus. 2

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Williams was already under a duty to finish the work by the completion date. Stilk v Myrick was distinguished Roffey received a “practical benefit” over and above Williams’s original contractual obligation. Finishing on time enabled Roffey to avoid the penalty clause in their contract with the client. The Court of Appeal emphasised that it was important that promises of extra payment are not made under economic duress.

Question 2: Problem Solving Prepare answers to the following questions (at least bullet-point form): a) Lecture Case Study 1: Deborah has recently renovated an old stately manor house, for her business which is to put on national events. Deborah’s sister Janice is quite a good gardener. Over dinner one day, Deborah mentioned casually that she had a lot of work still to do on the patio and gardens of the manor house, before it could be ready for use. Janice says, “I’ll help you. I can get that lot done in no time at all!” Deborah was so pleased that she said she would give Janice £5,000 towards a new car. Janice gave up every weekend that month to help Deborah work on the patio and gardens of the manor house. However, once everything had been finished, Deborah refused to pay the £5,000 towards Janice’s new car. Advise Janice.  There is no evidence that there is an intention that is legally enforceable  It is an agreement between family members and these agreements are not legally binding.  No contract  Ex Balfour v Balfour (1919) 2 KB 571: Husband and wife b) Jason’s friend, Alison, is an expert at making curtains and agrees to make the curtains for his dance studio. However, in return she says that she does not want money. She wants Jason to feed her pet cat during the month she was on holiday. Advise Jason as to whether there is a valid contract here.  There is legally sufficient consideration  There is a contract and it is enforceable  Chappell v Nestle c) Rosemary’s sister, Michelle, is getting married. Rosemary decided to give her a bookcase as a wedding present. Rosemary asked Steve, a carpenter specialising in the restoration of antique furniture, to restore her antique bookcase for her to give to Michelle. Steve quoted a price of £800 and both parties agreed. A week later, Rosemary realised that the restoration was not progressing quickly enough for it to be completed in time for the wedding. She offered Steve an additional £150 to “make it a priority and complete the bookcase in time for the wedding.” Steve accepted the additional offer and completed the work on time. However, Rosemary is now refusing to pay any more than £800.  No legal obligation for Steve to finish on time 3

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She is not under economic duress. Williams v Roffrey

Advise Rosemary as to the contractual payment(s) she is obliged to make. (This is part of a past exam question, slightly edited here).

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