Impact of Roffey Bros and Nicholls versus Williams on the Doctrine of Consideration - Essay Example

Impact of Roffey Bros & Nicholls (Contractors) Ltd. 1991 vs. Impact of Williamson the doctrine of Consideration University Date of Submission Impact of Roffey Bros & Nicholls (Contractors) Ltd. 1991 vs. Williams on the doctrine of Consideration For any contract to be formed and be legally binding, consideration is a vital element that must be present. Consideration is usually something which represents in a way that the promisor is benefitted and/or some loss to the person to whom the promise is made i.e. the promise; or it can even be both. In the case of Misa vs. Curie (1875) consideration was defined as “Interest, benefit or profit taken from the first party to the party who suffers loss or detriment”1. What this effectively means is that that consideration is “some detriment to the plaintiff (now the claimant) or defendant is benefitted in some way”2. In order to critically asses the requirement of the proposition at hand, i.e. the impact of the case Roffey Bros & Nicholls (Contractors) Ltd. 1991 1 QB vs.Williams, we must first establish the premises of consideration under which this case fell, and then the outcome, and subsequently the impact of this case on the entire doctrine of consideration. The case was applied under the existing contractual duty that the promise owes to the promisor. In the latter case, half the crew of a ship had deserted it, and the other half had been promised extra money to carry on working till the ship reached its final destination, Bombay. Unlike the decision in Stilk v Myrick however, in this case the Court of Appeal had held that there was consideration in this case, mainly because the crew was so small that the remaining journey was more dangerous than when the contract had been formulated. The case of Williams v Roffey however, had an impact on consideration that was in some essence, groundbreaking. Before assessing this impact however, the facts of the case must be established and analyzed. Roffey was a building firm that had a contract to refurbish a block of flats, and had sub contracted the carpentry work to Williams, who had accepted the offer in return for £20,000. Williams was however having financial problems and it became significantly obvious that he would not be able to finish the work on the due date. Roffey’s contract with the owners of the flat included a penalty clause in it, which effectively stated that if the work was not finished on the specified date then the contract would be terminated and Roffey would not be entitled to payment. In other words, it would lose out. Roffey thus approached Williams with an extra £10,300 (and had already agreed that the original price had been far too low). It should be kept in mind, that this new agreement had also included new working agreements which now required that Williams would finish one flat at a time rather than multiple flats. When the work was finished, Roffey had refused to pay Williams the additive amount of£10,300. The Court of Appeal in this case found that Roffey’s promise to pay the extra amount was valuable consideration in return for the promise of Williams finishing the work on time, and also since it had saved Roffey the inconvenience of possibly losing their own contract, or as well as find another sub contractor to finish the carpentry work. This can be seen to be in contradiction of the previous decisions in the English Legal System for consideration, as even though Williams was only doing what he had originally contracted to do; Roffey was still receiving the extra benefit. The impact on this decision was a major one on Consideration. In light of this case, there is now a distinction that is drawn between “contractual duties to supply good or services and contractual duties to pay debts”3. Resultantly, what the law now appears to be is that if a party had promised to perform an existing contractual duty (to supply services, or goods), and said promise poses an additive benefit on the other party (that had not been bargained for and was thus not in the terms, conditions or warranties of a contract) then it will be adequate consideration that a promise which is given in return of this is binding. This is so even though they only agreed to perform and/or carry out their existing and already bargained for contractual duty. However, duress should not be involved for this to be applicable, i.e. the promise must not have been secured by duress. Thus the decision in Williams v Roffey has seen to have caused potentially major challenges to consideration in contract law. The impactof this case is still somewhat vague, as in legal terminology this case is a very recent one. This case can be said to certainly have redefined consideration by giving it a much wider scope and definition. It has created a practical benefit which will (and has) appeared to be present in the majority of agreed modifications which are now made to commercial contracts. This is so because in such situations, parties are unlikely to agree to anything that does not benefit them in some way or the other. The view of the doctrine of consideration provided by Williams v Roffey has allowed the courts far more discretion than previous definitions which were often more tighter, or rigid. They have since then been able to clearly find a practical benefit in situations in which traditional consideration was not found to be present, mainly because there was no legal benefit. Hugh Collins 4suggested that the decision in Williams v Roffey has marked a newer, and more realistic approach to consideration than was previously applicable before. The traditional concept of consideration, according to him, sees the parties interests as “diametrically opposed”, yet in real life, there may be significantly vital reasons why one party would accept what seems to be less than was promised to them. How far the decision in Williams v Roffey has extended the doctrine till today is still however, a matter of debate. In theory there seems to be no reason why a practical benefit would now be acceptable as consideration in the formation of a contract. A case in point is R v Attorney General for England and Wales (2003). The groundbreaking case has also seen to have affected the rules on waiver and the doctrine of promissory estoppels (under consideration). This is so because the party which has waived their rights can decide to withdraw the waiver later, but if it finds that there is some practical benefit to them in waiving said rights then the modification (to the commercial contract) would perhaps not be final. Even today, these situations are very much probably with no solid outcome and it remains relevant for cases to make their way up the hierarchy ladder and reach the higher courts and thus establish boundaries. It can thus be concluded from the critical analysis of the case of Williams v Roffey Bros & Nicholls (Contractors) Ltd. 1991 1 QBthat it has had a major impact on the modern doctrine of consideration. It has reestablished the boundaries of it and now an additional practical benefit in a commercial contract is considered sufficient consideration for that contract to be valid and legally binding on both parties. References Top of Form COLLINS, H. (1993). The law of contract. London, Butterworths. Bottom of Form Read More