New rule for new type of situation

(1) Find Hartley v Ponsonby 119 E.R 1471 and Stilk v Myrick 170 E.R 1168, (2) explain how the judgment in Hartley v Ponsonby builds on the Stilk v Myrick case by making a new rule for a new type of situation, and (3) also describe why the case is important in the development of contract law.

Introduction

The obvious rule is that there is no consideration if all the claimant does is to perform, or to promise the performance of, an obligation already imposed upon by him by a previous contract between him/her and the defendant. This brief explains explain how the judgment in Hartley v Ponsonby builds on the Stilk v Myrick case by making a new rule for a new type of situation. It also describes why the case is important in the development of contract law.

Stilk v Myrick

The question whether promise of more for the same is enforceable is translated into the legal question of whether the promisee’s reciprocal promise of the same for more is valid consideration. The traditional answer given in Stilk v Myrick is no. A seaman sued the master for wages alleged to have been earned on the course of a voyage from London to the Baltic and home. In the course of the voyage, two sailors have deserted, and, as the captain could not find any substitutes, he promised the rest of the crew extra wages if they would work the ship home short-hand. Lord Ellenborough held that the action would not lie due to lack of consideration. The crew were already bound by their contract to meet the normal emergencies of the voyage and were doing no more than their duty in working the ship home.

However, two reports give different reasons. In Campbell’s report, the seaman’s claim failed because he provided no consideration for the master’s promise. He was already contractually bound to sail the ship home. In Espinasse’s report, the seaman’s claim failed on the narrower ground of policy: namely the concern to present the possibility of sailors on the high seas making extortionate demands upon their masters as the price of performing their contractual duty to bring the ship safely back to the home port. On this rationale, the absence of consideration does not necessarily bar claims to enforce promises of mere of the same.

Hartley v Ponsonby and its impact on Stilk v Myrick

The fact in Hartley v Ponsonby were similar to those in Stilk v Myrick. However, the claimant was successfully in his claim. The court found that so many crews had deserted the ship in this case that the nature of the voyage had changed. The ship had become so short-handed that it had now become hazardous to proceed. The remaining crew had not contracted for such a voyage, and, therefore, they were held to be discharged from their existing contractual duties and free to make a new contract.

Stilk v Myrick is a classical authority that it is not good consideration to do or promise to do what you have already contractually bound to the other contracting party to do. However, the judgment in Hartley v Ponsonby builds on the Stilk v Myrick case by creating an exception to the traditional rule. A promise to pay more is enforceable if there is consideration in the form of legal value (Chen-Shart, 2008:149). This is satisfied where the promise gives something more than s/he was obliged to under the original contract. Hartley v Ponsonby suggests that a certain level of discretion may in fact give rise to a situation falling outside the normal hazards of the voyage. It is implicit in Stilk v Myrick if the crew had gone beyond their existing duty, they would have provided good consideration (Stone, 2008:119).

The importance of the case in the development of contract law

On the facts of Hartley v Ponsonby the original contract might today be said to have been frustrated. The parties will therefore be free to negotiate when circumstances are so changed as to discharge the original contract (Grubb and Furmston, 2010:329). However, it is clear that the courts will have considerable degree of freedom to decide the scope of the original obligation or whether a change of circumstances on a breach of contract is sufficiently serious to discharge the original obligation. In Williams v Roffey Bros & Nicholls (Contractor) Ltd [1991] 1 QB 1, the Court of Appeal took a different approach to that of Stilk v Myrick. Despite of Williams promising only to do what he was already obliged to do, Roffey Bros, it was said, obtained a practical benefit they avoided a penalty clause in their own contract with their client and a more favourable scheme was put in place so that Williams was only paid per completed flat. The Court of Appeal thought that a practical benefit was sufficient consideration for a promise to pay extra so long as there was no economic duress or fraud.

Therefore, the essence of Williams v Reffey Bros is authority for two propositions. Firstly, consideration, in the traditional bargain sense, is still necessary to enforce promises of more for the same. But contrary to Stilk v Myrick, consideration needs not comprise of any additional or legal benefits or detriments over and above those contained in the existing contracts. Secondly, any concerns we may have about the promise applying improper pressure to induce the promisor’s agreements to pay more should be dealt with by the emerging doctrine of economic duress (Chen-Wishart, 2008:149). However, Williams v Roffey Bros did not overrule Stilk v Myrick, but only “refined and limit" it. Although Williams v Roffey Bros explains the outcomes in Stilk v Myrick in terms of dures, this does not explain the different outcome in Williams v Roffey Bros since it contained no less evidence of pressure inducing the promise.

Stilk v Myrick requires legal benefit and Williams v Roffey Bros says practical benefit will do (O’Sullivan, Hilliard and Padfield, 2008:107). Coleman J openly recognises this in South Caribbean Trading Ltd v Trafigura Beheer BV [2004] EWHC 2676. Whilst he recognises that Williams v Roffey Bros appears to have introduced some amelioration to the rigidity of the rule in Stilk v Myrick, he made clear that he would not have followed Williams v Roffey Bros but for being binding on him.

Conclusion

The judgment in Hartley v Ponsonby builds on the Stilk v Myrick by providing an exception to the traditional rule for fresh consideration to enforce an additional promise. In turn, Hartley v Ponsonby has provided the courts with a considerable degree of freedom to decide the scope of the original obligation or whether a change of circumstances on a breach of contract is sufficiently serious to discharge the original obligation. Thus, in substance, Williams v Roffey Bros affirms Stilk v Myrick on the need for fresh consideration to enforce and additional promise. However, Williams v Roffey has overruled Stilk v Myrick as to what counts as fresh consideration. Whilst Stilk v Myrick requires legal benefit, Williams v Roffey Bros says practical benefit will do.