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LA243 Contract Variation Notes
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Notes derived from Christian Twigg-Flesner's lectures on Contract Variation (Contract Law). *Essential!! * Precise!! *For you!!
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Introduction and Overview This section covers the following:
1. Whether, when varying a contract, performance of an existing contractual duty is good
consideration
2. Whether, when varying a contract, part payment of a debt is good consideration
3. The origins of promissory estoppel
4. Establishing promissory estoppel
5. Requirements of promissory estoppel
6. Promissory estoppel and part payment
(1) Performance of an existing contractual duty
As a general rule, variation of an existing contract requires further consideration. This
brings us to the question of whether performing an existing contractual duty is good
consideration for a contract variation (where only one party makes an additional
promise, and the other party promises no more than the original promise).
The general rule is that it is not considered good consideration i.e. performance of
existing contractual duty owed to promisor not good consideration for additional
promise by that promisor. This is established by the old case of Stilk v Myrik. Indeed,
there must be additional consideration provided, as demonstrated by the case of
Hartley v Ponsonby.
However, the case of Williams v Roffey Bros introduced the idea of a 'practical benefit'.
This means that performing an existing contractual duty can be considered good
consideration if there is an additional 'practical benefit' supplied by the promisee to
the promisor. This case can be applied in certain circumstances, but they are limited to
specific events, and have a number of conditions attached to them.
(1.1) The general rule
The general rule is that performance of an existing contractual duty is not good
consideration. This is established by the below case.
o Stilk v Myrick [1809]
Facts:
Eleven strong crew engaged to sail a ship to
the Baltic and back to England. When the
ship had moored in Kronstadt, two members
of the crew diverted, and the crew's master
promised to divide their wages among the
rest of the crew on getting the ship back to
England.
When they returned, Stilk, one member of
the crew, tried to get his money but Myrick,
the master, refused.
Ruling/reasoning:
It was ruled that Stilk's challenge failed. The
rationale was somewhat vague, not helped
by the fact that there are two reports of the
facts and reasonings behind the decision.
The first report was the Espinasse report,
which said there was a policy reason for Stilk
not being able to collect the money, and this
was to prevent sailors from making
, unreasonable demands of the crew master
in order to secure the ship's return to port
(to prevent duress). Campbell's report
however said there was no additional
consideration by Stilk merely for performing
existing contractual duty.
The issue is that Espinasse was not
considered a reliable law reporter, so the
Campbell report has become more widely
accepted. The effect is therefore that
contract variation, as a general rule, requires
additional consideration from the promisee.
Indeed, where there is a contract variation, there should be additional consideration
provided. In the below case, it was found that there was additional consideration on
top of the performance of the existing contractual duty.
o Hartley v Ponsonby [1857]
Facts:
Similar facts to above - a ship of 36
members where half of the crew deserted.
Of the people left, only a few were able
seamen. It was therefore unsafe to continue
and the crew that remained could have
abandoned the voyage.
The master promised the remaining crew
extra money if they managed to work the
ship back home - they did so and the master
refused to pay.
Ruling/reasoning:
In this case, the courts ruled that the master
did have to pay, as supposedly the crew had
supplied additional consideration by
agreeing to take the ship back home when
they needn't have done so as it was unsafe.
(1.2) 'Practical benefit'
The below case established that, when varying a contract, in spite of not providing
additional consideration, the promisee, if they are able to show that they provided a
'practical benefit' to the promisor, then they will have provided good consideration:
o Williams v Roffey Bros. [1991]
Facts:
Roffey Bros were the main contractors
employed to renovate some flats. They had
a fixed deadline for which they had to
complete this, and if they were late, they
would incur a penalty or have to pay
liquidated damages.
Roffey bros had sub-contracted the work to
Williams for £20,000. Williams had
underestimated the job, poorly supervised
their staff and ran into financial difficulties,
, so were struggling to complete the job on
time.
Roffey Bros then voluntarily offered to pay
WIlliams an extra £575 per flat they
managed to complete - thus 8 more flats
were finished - though Williams were only
paid £1500.
Williams hence stopped working altogether
and brought an action against Roffey Bros
for payments they felt were owed. Roffey
Bros said that they had been provided no
additional consideration by Williams for the
contract variation, relying on Stilk v Myrick.
Ruling/reasoning:
The CA disagreed and said that there had
been consideration, and the promise was
thus enforceable.
The courts said consideration had been
provided through the practical benefit which
Roffey Bros had gained by Williams
completing the work on time, as they may
have not been able to without the money
that was promised.
What practical benefits did the CA
recognise?:
Williams completed their
work
Roffey Bros did not have to
find alternative contractors
However, the
fact that
Williams
continued to
work and Roffey
Bros did not
have to find
other sub-
contractors are
precisely the
reason why the
contract was
concluded in
the first place,
so it could be
said that no
additional
benefit was
provided than
what Williams
were supposed
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