Pre-existing contractual obligations / Consideration and variation
-For a contractual variation to be binding it must be agreed by both parties, and have
consideration
Upward variation:
-Stilk v myrick (1809) master of a ship promised reminain seamen (after some deserted) extra
payment on top of their normal wages to continue the voyage which he afterwards then refused
to pay upon completion of the voyage. Decision was that the crew had given no consideration
and so not binding. Rule: -Continued performance of an already contracted duty/performance of
an obligation is not good consideration
-Harris v Watson(1791) ‘If this action was to be supported, it would materially affect the
navigation of this kingdom.... for if sailors were in all events to have their wages, and in times
of danger entitled to insist on an extra charge on such a promise as this, they would in many
cases suffer a ship to sink, unless the captain would pay an extravagant demand they might
think proper to make.’ -per Lord Ellenborough (comment on stilk type scenario, if performance of
their normal duty was consideration they could hold the captain to ransom)
-Hartley v posonby (1857), Same situation except for vastly more desertions leaving the ship
dangerously under-crewed. Decision was that because of the danger and larger workload
(going above their normal duty) the captain did have to pay the money, there was consideration.
Rule: if something extra is given, go beyond the contracted obligation or duty then this is good
consideration
-Williams v roffey bros & nicholls (1990), a building firm contracted a carpenter, and halfway
through he could not complete because of financial problems, the builders promised him extra
money but upon further work the builders did not pay this extra amount and he left before full
completion. Carpenter sued for the extra and it was upheld saying there was consideration for
the additional promise. Judgment was that the additional promise was a more formalised
scheme of agreed payment for completion of each flat.
the practical benefit derived by the promisor from performance of the promisees obligations is
good consideration (avoiding the liability under a compensation clause) - Glidewell LJ
-Roffey can be distinguished from stilk in that silk may well have been duress, as there was no
practical alternative for the ship captain
-Effectively renegotiations are legally binding halfway through an already existing contract if
both parties agree (without duress) and if there is a real practical benefit to the promisor
-Potential problems with the decision in roffey
-The builders still had to engage replacement subcontractors so what practical benefit
did they actually gain?
-Glidewell Lj’s explanation is puzzling, its clear that performance of a promise is good
consideration but is a repeated promise to do that performance good consideration as
this could just be infinitely repeated.
-Could sometimes be duress to stop part way through performance and ask for more
money, however in roffey the builders had the idea, but this is still not straightforward
, -Why would any contractor estimate their price accurately if they know that not
performing their obligations is sufficient reason for enforcing a subsequent promise -
O’Sullivan (1996)
-Upward variation summary
-Stilk v myrick 1809, continued performance of an existing contractual duty/performance
of an obligation is not good consideration
-Hartley v posonby (1857) if something extra is given, that goes beyond the contracted
obligation or duty then this is good consideration
-Williams v roffery bros & nicholls (1990) renegotiations are legally binding halfway
through an already existing contract if both parties agree (without duress) and if there is
a real practical benefit to the promisor. This cannot apply in cases of duress
Part payment of a debt - is it consideration etc
Downward variation
-Where a debtor owes money to a creditor, consideration is required if the debtors obligations to
repay the debt are varied in any way. E.g if a debtor agrees to pay early and creditor agrees to
reduce the total amount owed then this is good consideration and is binding, the variation is
binding if there has been ‘accord and satisfaction’
-Common law rule: Pinnels case (1602) - general rule that payment of a smaller sum in
satisfaction of a larger debt is not good consideration and does not discharge the debtors
obligation to pay back the balance of the debt backed
-Exceptions to the common law rule/ Pinnel’s case, The main exception is that if something
other than part payment of the debt is offered then this is sufficient for the discharge of the debt
to be binding such as providing a phone, or strawberry. Or early payment of a lesser sum is also
consideration and satisfaction for the whole
-Applied by HoL in Foakes v Beer (1884), foakes agreed to pay beer a sum already owed in
instalments with interest, in return beer promised not to take any proceedings against foakes.
Foakes repaid the debt but not the interest, beer sued for the interest contrary to the promise.
Decision was that there was no consideration for the promise not to initiate proceedings
because foakes was just doing what he was already obliged to do in repaying the debt.
-This decision is at odds with the roffey situation as repaying part of a debt can be of practical
benefit , But the courts have refused to extend roffey reasoning to this type of problem.
-In Re selectmove Ltd (1995) court was bound to apply foakes v beer but did (obiter) say this
‘When a creditor and a debtor who are at arm’s length reach agreement on the payment of the
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