Traditional rules of consideration

To What Extent Does The Decision In Williams V Roffey Bros Represent A Challenge To Traditional Rules Of Consideration?

Consideration can be defined as something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances which is enforceable by law. Lawyers often argue contracts “must be supported by consideration.” This consequently means that if a person makes a promise to another person to perform an act, with no promise made in return then this is unenforceable as there is no consideration. The promisor is losing something with no gain, whereas the promisee is gaining with no loss. Whereas if the promise is made and the promisee offers a promise in return then there is consideration and the contract is enforceable. The case of Williams v. Roffey Bros & Nicholls has been considered the most current alteration to the rules presented in Stilk v. Myrik. In many ways the case of Williams v. Roffey departs from the traditional rules of consideration, however many argue that the decision to depart from Stilk v. Myrick has not made a significant impact on the doctrine of consideration and has faced much criticism as well as approval.

The traditional rules of consideration consist of the pre-existing duty doctrine. This explains that “if A and B are bound by a contract, and B makes a promise which is no different from the one by which B is already bound, neither the making of this promise nor its performance can be put forward by B as consideration for a fresh promise by A.” Today the foundations of the pre-existing duty rule are generally connected to the case of Stilk and Myrick. This case follows the pre-existing duty rule, as eleven sailors agreed to sail to the Baltic and back, upon arrival two deserted, the captain of a ship agreed to pay the wages of two sailors who deserted to the rest of the crew, however he refused to pay. The sailors sued but were unsuccessful in their claim. It is argued that the case was decided in this way as there was no consideration for the captain's promise, as the sailors were already obliged to sail the ship home safely from their original contract. It has been seen that the decision of this case has been criticised in many ways and subsequently, avoided since the ruling occurred. Many arguments have been presented to abolish the pre- existing duty rule, but these have clearly been ignored. These traditional views were over turned when the decision for Williams v. Roffey conflicted with Stilk v. Myrik and to a certain extent created a rule of its own.

In the case of Williams and Roffey Bros, Roffey Bros sub- contracted Williams to do some carpentry work for £20,000 in a block of 27 flats that they had been contracted to refurbish, but he was unable to finish on time as the price he quoted was not enough to complete the work. Therefore Roffey bro offered to increase in the wages by £10,300 if the work was completed on time; however after Williams completed eight of the flats, Roffey Bros failed to pay the additional cost, causing Williams to bring an action for the additional payment. It is argued that Roffey Bros did not give consideration to Williams and the Case was decided in his favour. It can be argued that the reason the case was decided in this way, was due to the fact that Williams continued with the work, therefore did not breach his contract Moreover as he continued, Roffey Bros did not have to look for another sub-contract, which saved them time and money, and finally as the work was being carried out, they did not suffer a penalty for late completion of the work. The decision in Williams v. Roffey led to the introduction of the practical benefit test which previously was not considered good consideration, this is due to the fact that when Glidewell LJ made his concluding statement his focus was on whether “in practice” the promisor received benefits or not, rather than looking at whether the promisee is at a disadvantage due to his promise or that the prominsor gains “legal benefit”.Moreover the Statement also implies that the effect of this decision would be to “abolish the doctrine of consideration..” Consequently the principle of this case had to make a distinction between Stilk v. Myrick, many argue that Stilk v. Myrick is incompatible with Williams v. Roffey as it was seen as out of date in the courts. This step away from Stilk v. Myrick shows how the decision in Williams v. Roffey challenged the traditional rules of consideration, such as the pre- existing duty principle and established a new path that the rule of consideration could take. However in Glidewell LJ's statement, he made it clear that his intention was not to “contravene the principle in Stilk v. Myrick”, but to “refine, and limit the application of that principle, but they leave the principle unscathed.” This shows that even though the case of Williams v. Roffey caused much controversy concerning the rules of considerations, this however was not the intention of Glidewell LJ, it may be argued that he was attempting to modernise the rule so it relates to today's society, additionally his intentions could have been to try to bring the rules of consideration together, to prevent the constant avoidance of the Stilk v. Myrick principle. It can be seen that is some ways, the decision was successful in creating new precedent; however it has also received much criticism.

The decision in William's v. Roffey has been moderately influential throughout Britain and the Commonwealth, after the decision was announced the principle was followed without delay in England and Wales, moreover it was also approved in New Zealand by their Court of Appeal. Additionally the principles from Williams v. Roffey have been used to decide other cases; it is known that “some six months after Williams v. Roffey, in Anangel Atlas Companika Naviera SA v. Ishikawajima-Harima Heavy Industries Co Ltd (No 2) Hirst J Applied the Williams v. Roffey principle.” Therefore it can be seen that the decision in the case, has influenced and to a certain extent departed from the traditional rules of consideration.

However the decision of Williams v. Roffey is not without its flaws. It can be seen that the decision of the case conflicts with the case of Foakes v. Beer. This case shows how a person promised to not claim interest on another's dept; the contract was seen as unenforceable for “want of consideration.” This is seen as a problem, as even though they are over a hundred years apart there is an issue because Foakes v. Beer was decided by the House of Lords, whereas Williams v. Roffey was decided by the Court of Appeal. Therefore Williams v. Roffey is not considered officially binding precedent until the House of Lords has agreed. Consequently it is challenging the existing rules of consideration, and the challenge is not coming from a court which has the power to make the change. Moreover, although some courts have embraced the principles set in Williams v. Roffey, not all of the courts are as willing. Some cases have recognized Glidewell LJ's statement in Williams v. Roffey, but they do not accept it, as they feel it will “render Foakes v. Beer redundant,” this is seen in Re Selectmove Ltd which showed a company that was promised they could suspend payment to the Revenue, however the courts decided this as unenforceable, due to the conflict with Foakes v. Beer. This decision shows that some courts are not ready to enforce laws that have not been properly accepted by the House of Lords, or explained by legislation. Therefore it is argued that the decision of Williams v. Roffey does challenge the traditional rules, but not entirely successfully. It goes against the decision in Foakes v. Beer, but that does not necessarily mean that the challenges are accepted but the rest of the courts in the country. Therefore, even though it is argued that the decision was “pragmatic” it may still not be accepted entirely.

It is seen that the decision in Williams v. Roffey presents challenges to the traditional rules of consideration; however it can be argued that the challenges have not yet been viewed by the House of Lords which clearly makes them insignificant. The rules of consideration are contradictory, this is shown clearly how by the fact that two similar cases can be decided in different ways, such as Foakes v. Beer and Williams v. Roffey. Traditionally the House of Lords would argue that the principles of Foakes v. Beer should be followed, however some argue that they would actually act in favour of Williams v. Roffey. Moreover these challenges that Williams v. Roffey have presented to the traditional rules of consideration could in fact be the start of the end of consideration. In New Zealand, Williams v. Roffey has influenced the Court of Appeal to “abolish consideration and introduce a reliance based test”. This was caused by the case of Antons Trawling Co Ltd v. Smith. created new principles other than those in Williams v. Roffey, and ignore those in Stilk v. Myrick. Therefore it is clear that the challenges that Williams v. Roffey presents to the traditional rules of consideration, seem extremely important in changing the way in which the rule of consideration functions, however have not gone as far as to bring to an end the traditional rules, when the case is looked at deeply, it can be seen that the influence it has had in England and Wales has not been exceptionally significant, and have influenced few cases. None of which have made such radical decisions as that of Antons Trawling Co Ltd v. Smith.