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Consequences of the Williams v Roffey Bros Case

Info: 2222 words (9 pages) Law Essay
Published: 12th Nov 2020

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INTRODUCTION

The case of Williams v Roffey Bros & Nicholls (Contractors) Ltd[1] has been controversial for a long time, as it went against the traditional rule of consideration. The decision, in this case, has been in conflict with earlier cases as well as conflicting with the ones that were decided later on. A lot of suggestions were made to reverse the decisions made in this case, since it was found to be wrongly decided. This essay will focus on the consequences of the decision made in Williams v Roffey Bros and whether it was wrongly decided or not.

CONSIDERATION

For a promise to be legally enforceable it needs to be backed up by consideration. Definition of consideration was stated by Lush J in Currie v Misa[2] “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.” This means that if a person makes a promise to another person to perform an act and gets nothing beneficial in return, then the promise will not be legally enforceable.

PERFORMANCE OF, OR PROMISE TO PERFORM AN EXISTING DUTY AS CONSIDERATION

The traditional rule derived from Stilk v Myrick[3] states that performance of, or promise to perform an existing duty is not good consideration. This is because the promisor is not gaining anything of benefit neither is the promisee in any detriment to perform a duty which he/she is legally obliged to perform. Stilk v Myrick was used as a precedent for more than a century until the Williams v Roffey Bros case arose. The traditional rule of pre-existing duty was overturned when the decisions for Williams v Roffey Bros conflicted with Stilk v Myrick. After this case, it was recognized that performance of, or a promise to perform an existing duty is a good consideration if the promisor enjoys a considerable degree of practical benefit.

 WHY WAS WILLIAMS V ROFFEY BROS & NICHOLLS (CONTRACTORS) LTD DECIDED DIFFERENTLY

The reason why this case was decided differently from Stilk v Myrick was that the court found several practical benefits enjoyed by the defendant from their agreement to pay more. These were: W continued to work and did not stop in breach of subcontract, avoiding a penalty for delay under the main contract, avoiding the trouble and expense of engaging others to complete the carpentry, and replacing the haphazard method of payment by a more formalized scheme which produced more orderly performance by W and thus enabled R&N to direct its traders to do work in the completed flats which otherwise would’ve been held up until W completed his work. 

WHETHER IT WAS DECIDED CORRECTLY OR NOT?

There have been a lot of criticisms to say that Williams v Roffey bros can be a binding precedent. Debates among academics still go on discussing whether the decision made in this case was appropriate. Many arguments have come up to defend the decision made by the court. One argument is that Stilk v Myrick adhered strictly to the doctrine of consideration and that it wasn’t relevant to the late 20th century circumstances. As Glidewell LJ states that the principle in Stilk v Myrick was just refined and that its application was just limited, but it was never intended to be contravened for the principle to be scathed[4]. Stilk v Myrick wasn’t overruled, it is still considered to be a good law. The decision made was just an attempt to modernize the rule so that it could relate to today’s society, that attempt can be viewed as being successful. During the time of Stilk v Myrick the concept of economic duress wasn’t formally developed so the doctrine of consideration was strictly adhered to protect the parties from being exploited. However, after the expansion and development of economic duress, the doctrine of consideration no longer needs to be used to protect a participant in cases on contract variations because that role has passed to the law of economic duress which provides more refined control mechanisms. Hence, the doctrine of consideration wasn't given its utmost importance in this case, since duress mainly was used to find if the defendant was under illegitimate pressure to pay more. Since duress was not found in the case the promise to may more was enforceable. The finding of practical benefit was also applied in the case of Rock Advertising Ltd v MWB Business Exchange Centres Ltd[5] Therefore, it can be concluded that based on the above reasons the decisions for Williams v Roffey Bros was correctly decided.

However, many academics have also criticized the decision in Williams v Roffey Bros, one such criticism was made by Colman J. In South Caribbean Trading Ltd v Trafigura Beheer BV[6], Colman J stated that he wouldn’t have followed the decision from Williams v Roffey Bros if it wasn’t for the fact that it was decided by the Court of Appeal, He also mentioned that Lord Glidewell shouldn’t have referred to the decision made in Pao On v Lau Yi Long[7], since that case included a tripartite relationship, whereas Williams v Roffey bros was concerned with a bipartite relationship, and that the principles of a three-party case shouldn't have been referred to in a two-party case . Lord Glidewell was also criticized for referring to the reasoning in Pao On case, since that case was concerned with a promise to perform an existing duty owed to a third party and Williams v Roffey bros was concerned with a performance of existing duty owed to the promisor, consideration is mostly found in the former case than the latter. Colman LJ also concluded that the decision made was inconsistent with the long-standing rule that consideration must move from the promisee.

Another criticism made was that the Court should've rejected Williams' claim for breach of contract since Roffey was not in breach of any existing contractual obligation when they failed to pay the additional amount.[8] Initially, the parties were in a bilateral contract, however, after the variation, they were in a unilateral contract and unilateral contracts are only valid after the entire performance is completed. For Roffey to owe additional payments, the contract needed to be valid so that Roffey could be bound by the variation contract. However, the contract wasn't valid since, Williams had not performed the entire performance, so Roffey was not yet obliged to the duty to pay the additional amount. Therefore, Roffey didn’t breach the contract by refusing to pay more and the Court shouldn’t have awarded damages to Williams because they inaccurately held that Roffey was in breach. On the grounds of these criticisms, it can be concluded that the case was wrongly decided.

PART PAYMENT OF DEBT AS CONSIDERATION TO DISCHARGE THE ENTIRE DEBT

The principle that the performance of an existing duty owed to the promisor is not good consideration is also applied to the discharge of existing duty (debt). The general rule is that part payment of a debt is not good consideration for a promise to discharge the entire debt. Another reason why Williams v Roffey is criticized is because of its conflict with Foakes v Beer[9]. The main argument that connects both the case is that if consideration can be found in a promise to pay more, consideration should also be found when there is a promise to accept less because of the findings of practical benefit. However, that wasn’t the case in Foakes v Beer and in the latter cases in which the same rulings were applied (Reselectmove). The ruling in Pinnel’s Case[10] was applied in Foakes v Beer, that the payment of a lesser sum on the day in satisfaction of a greater, cannot be any satisfaction for the whole. Hence, it was concluded that part payment of a debt wasn’t good consideration to discharge the entire debt. However, Lord Blackburn didn't side with the majority as he recognized that prompt payment of a part of the demand may be more beneficial to business people. So, he found a practical benefit in gaining a part payment of the debt rather than obtaining nothing at all. Lord Fitzgerald also agreed with Lord Blackburn’s reasoning, but he couldn’t bring himself to overturn Pinnel’s Case.

The case that determined the relationship between Williams v Roffey Bros and Foakes v Beer was Re Selectmove Ltd[11] The Court of Appeal in Re Selectmove had to determine whether or not a practical benefit was obtained in the payment of a lesser amount. Peter Gibson LJ stated that payment of money will always be of practical benefit to the credit, he, however, could not apply the rulings of Williams v Roffey Bros since he was constrained by Foakes v Beer. He also mentioned that the principle in Foakes would be left without any application and would also be undermined if Williams v Roffey were to be extended to the case of part payment of a debt. He also concluded by saying that if the extension were to be made it should be done by the Parliament after the Law Commission has considered it.

These cases were in further conflict in Rock Advertising Ltd v MWB Business Exchange Centres Ltd when the ruling of Williams v Roffey Bros case (practical benefit) was applied rather than Foakes v Beer. Although the Court of Appeal didn’t follow Foakes v Beer, it did not hold that it wasn't a good law, but it did say that the facts of this case were different from the part payment of debt cases like Foakes v Beer and Re Selectmove.

Even though the rulings in Williams v Roffey Bros and Foakes v Beer were in tension in numerous instances, they can still be reconciled by stating that these cases have their differences. The nature of the contract was different in these cases, as Williams v Roffey Bros was concerned with the provisions of goods and services and Foakes v Beer was concerned with debt payment. The former was about a promise to pay more, whereas the latter was about a promise to accept less. Thus, there is a clear distinction of facts between the two cases. Therefore, the two cases can be considered as important precedents when dealing with cases similar to it.

CONCLUSION

Although the ruling in Williams v Roffey Bros was subjected to various criticisms, it is still good law, that only deviated from the traditional rules of consideration to modernise and refine the ruling so that it could be relevant to today's society. It can also be inferred that the case wasn’t wrongly decided, because the parliament could’ve intervened and reversed the decision if it found it to be problematic and controversial. Hence, it can be concluded that Williams v Roffey Bros was decided appropriately and can be held as a binding precedent.

BIBLIOGRAPHY

  • J. Beatson, A. Burrows & J. Cartwright, Anson’s Law of Contract, 30th edition, 2016
  • Ewan Mckendrick, Contract Law Text, Cases, and Materials, 8th edition, 2018
  • Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991) 1 QB 1
  • Currie v Misa (1874) LR 10 Ex 153
  • Stilk v Myrick (1809) EWHC KB J58
  • Rock Advertising Ltd v MWB Business Exchange Centres Ltd (2018) UKSC 24
  • South Caribbean Trading Ltd v Trafigura Beheer BV (2004) EWHC 2676 (Comm), (2005) 1 Lloyd’s Rep 128
  • Pao On v Lau Yi Long (1980) AC 614
  • Andrew Hill, ‘Something for Nothing Explaining Single-Sided Variations’ (2015) (4) Oxford University Undergraduate Law Journal < https://www.law.ox.ac.uk/sites/files/oxlaw/4th_edition_ouulj.pdf> accessed 13th November 2019
  • Foakes v Beer (1884) LR 9 App Cas 605 House of Lords
  • Pinnel’s Case (1602) 5 Co Rep 117
  • Re Selectmove Ltd (1995) 1 WLR 474

[1] (1991) 1 QB 1

[2] (1874) LR 10 Ex 153

[3] (1809) EWHC KB J58

[4] Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991) 1 QB 1

[5] (2018) UKSC 24

[6] (2004) EWHC 2676 (Comm), (2005) 1 Lloyd’s Rep 128

[7] (1980) AC 614

[8] Andrew Hill, ‘Something for Nothing Explaining Single-Sided Variations’ (2015) (4) Oxford University Undergraduate Law Journal < https://www.law.ox.ac.uk/sites/files/oxlaw/4th_edition_ouulj.pdf> accessed 13th November 2019

[9] (1884) LR 9 App Cas 605 House of Lords

[10] (1602) 5 Co Rep 117

[11] (1995) 1 WLR 474

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