Introduction

• performing existing duties generally does not suffice as consideration, but may depending on circumstances

Existing legal or public duty

• general rule: existence of a legal duty may not be consideration

  Collins v Godefroy (1831) 1 B & Ad 950

  Facts:

  • defendant (D) promised plaintiff (P) six guineas to testify in court
  • P was subpoenaed & obliged by law to attend court so D refused to pay

  Issue:

  • can performing a legal duty be sufficient consideration?

  Held:

  • clearly a public policy issue but agreement was unenforceable as there was no consideration
• case law regarding performance of public duty is unclear

  England v Davidson (1840) 11 Ad & E 856

  Facts:

  • D offered £50 reward for information leading to conviction of offenders who broke into his house
  • P, a police officer, gave such information but D refused to pay

  Issue:

  • was performance of a public duty sufficient consideration?

  Held:

  • contract was enforceable and reward should be paid
  • Lord Denman LJ: .. I think there may be services which the constable is not bound to render and which he may therefore make the ground of a contract. We should not hold a contract to be against the policy of the law, unless the grounds for so deciding were very clear...

  Gray v Martino (1918) 91 NJ Law 462

  Facts:

  • American case so not binding in UK
  • D offered P, a police officer,$500 reward if he provided her with details of thieves who stole her jewels
  • P sued for the reward

  Issue:

  • was performance of a public duty sufficient consideration?

  Held:

  • Supreme Court of New Jersey found P's actions were his public duty, therefore he was not entitled to the reward

  Glasbrook Bros v Glamorgan CC [1925] AC 270

  Facts:

  • Ds, owned a coal mine and requested police presence during a strike
  • Ps, the police, offered a visiting patrol (which they believed would be adequate) but Ds were concerned and wanted an onsite presence so agreed to pay for this service
  • Ds later refused to pay on basis police were performing their duty to keep the peace

  Issue:

  • was performance of a public duty sufficient consideration?

  Held:

  • Ps had gone beyond their existing duties therefore Ds should pay
• some cases involve a person exceeding their legal obligations

  Ward v Byham [1956] 1 WLR 496

  Facts:

  • P, the mother of an illegitimate child, agreed to look after the child and let her decide who she wished to live with
  • D, the father, promised to pay maintenance in return but he ceased to make payments

  Issue:

  • was there sufficient consideration?

  Held:

  • Court of Appeal (majority) decided P had gone beyond her legal duty (by allowing child to decide who she lived with), that was sufficient consideration
  • Denning LJ (dissenting) argued that the factual benefit to the father was sufficient consideration: .. I have always thought that a promise to perform an existing duty, or the performance of it, should be regarded as good consideration because it is a benefit to the person to whom it is given...
  • decision seems to conflict with White v Bluett, where parental natural love and affection was insufficient consideration, presumably distinguished on public policy (father keeping a promise to maintain his child)

  Williams v Williams [1957] 1 WLR 14

  Facts:

  • P left her husband (D), he agreed to pay her £1 10s per week in return P agreed not to pledge her husband's credit and to indemnify him against any debts she incurred
  • D refused to pay arrears arguing that P provided no consideration, because after leaving him she was not entitled to be maintained by him or to pledge his credit

  Issue:

  • was there sufficient consideration?

  Held:

  • P's promise was good consideration because she had only suspended her right to be maintained by D, as she could return at any time
  • Denning LJ: .. a promise to perform an existing duty is, I think, sufficient consideration to support a promise, so long as there is nothing in the transaction which is contrary to the public interest...

Existing contractual duty owed to a third party

• performing an existing contractual duty can be good consideration for a contract with another

  Scotson v Pegg (1861) 6 H & N 295

  Facts:

  • D promised to unload coal if P delivered it to him
  • P was already obliged to deliver the coal under a contract with a third party
  • P sued D for delay in unloading the coal

  Issue:

  • was there good consideration in light of P's contract with a third party?

  Held:

  • there was sufficient consideration

  Shadwell v Shadwell (1860) 9 CB (NS) 159

  Facts:

  • P was engaged to be married (in 1860 this was a binding contract)
  • D, P's uncle wrote: .. I am glad to hear of your intended marriage with Ellen Nicholl, and, as I promised to assist you at starting, I am happy to tell you that I will pay to you £150 yearly during my life and until your annual income derived from your profession of a Chancery barrister shall amount to 600 guineas...
  • P claimed arrears from D's estate on the basis that marrying Ellen Nicholl was good consideration

  Issue:

  • was the marriage good consideration, despite P having a contract with a third party (Ellen Nicholl) to do so?

  Held:

  • majority found marrying Ellen Nicholl was good consideration
  • Erle CJ: ... I am aware that a man's marriage with the woman of his choice is in one sense a boon, and in that sense the reverse of a loss: yet, as between the plaintiff and the party promising to supply an income to support the marriage, it may well be also a loss. The plaintiff may have made a most material change in his position, and induced the object of his affection to do the same, and may have incurred pecuniary liabilities resulting in embarrassments which would be in every sense a loss if the income which had been promised should be withheld... The marriage primarily affects the parties thereto; but in a secondary degree it may be an object of interest to a near relative, and in that sense a benefit to him...
  • Byles J (dissenting) interpreted the promise as being linked to the P's career, also as the marriage was not requested by D so no benefit to D and could not form good consideration

Existing contractual duty owed to the other party

• general rule: performance of an existing duty owed to the same promisor may not be good consideration

  Stilk v Myrick (1809) 2 Camp 317

  Facts:

  • P, a ship crew, had a contract, with D to be paid £5 per month for working a voyage
  • during the voyage 2 crew members deserted and D promised the remaining crew an equal share of the deserters' wages if they completed the voyage

  Issue:

  • was there good consideration for the additional payment?

  Held:

  • Lord Ellenborough: .. The agreement is void for want of consideration. There was no consideration for the ulterior pay promised to the mariners who remained with the ship. Before they sailed from London, they had undertaken to do all they could under all the emergencies of the voyage... the desertion of part of the crew is to be considered an emergency of the voyage as much as their death; and those who remain are bound by the terms of their original contract to exert themselves to the utmost to bring the ship in safety to her destined port...

  Harris v Watson (1791) Peake 102

  Facts:

  • D offered P, a ship crew member, 5 guineas extra if he continued to navigate the ship successfully after it faced danger, but failed to pay

  Issue:

  • did the danger cause problems in navigation which could amount to good consideration for additional payment?

  Held:

  • not sufficient consideration for public policy reasons in an emergency sailors should not be able to demand extra wages
  • Lord Kenyon CJ: ..they would in many cases cause a ship to sink, unless the captain would pay an extravagant demand...
  • courts now recognise economic pressure may be duress which makes agreement unenforceable
• the principle has been modified

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

  Facts:

  • Ds had a contract to refurbish 27 flats, with a penalty clause for late completion
  • Ds subcontracted P to carry out the carpentry for £20 000
  • P only completed 9 flats beofre getting into financial difficulties, partly due to underestimating cost of the work & not managing it efficiently
  • Ds offered P an extra £10 300 (£575 per completed flat), P completed * more but D only paid £1 500 so P sued Ds

  Issue:

  • was there good consideration for the additional payment?

  Held:

  • P only carried out work he was already contractually obliged to do but there was good consideration
  • D gained practical benefit from promise of additional payment (not find replacement carpenters & avoided liability under penalty clause) Glidewell LJ:.. obtains in practice a benefit, or obviates a disbenefit...
  • P suffered no detriment, Purchas LJ: this would not be fatal to the establishing of sufficient consideration...
  • Court of Appeal stated decision does not overrule or contravene Stilk v Myrick (1809): limits the principle to situations where a promisor secures no additional benefit
  • arguably D in Stilk v Myrick gained practical benefit (not replace crew & incur delays) so to reconcile cases seems important there was no question of extortion or public policy issues in the later case
  • seen as a practical decision which reflects need for modifying agreements in modern business, in the public interest for parties to renegotiate if no economic duress
  • consideration not key factor in these agreements because businesses are unlikely to promise additional payment unless they believe beneficial, main issue is whether there is any economic duress
• exceeding obligations may be good consideration

  Hartley v Ponsonby (1857) 7 El & Bl 872

  Facts:

  • P, a sailor, had contract with D to work a voyage
  • during voyage half crew deserted & D promised extra money to remaining crew to complete voyage

  Issue:

  • was there sufficient consideration for the extra payment?

  Held:

  • P entitled to extra payment as he exceeded his existing contractual obligations, crew was so reduced it was dangerous to sail

Part payment of debts

• general principle: part payment of a debt is not good consideration for a promise by the creditor to forgo the balance
• debtor is already bound to pay the full amount & performance of an existing contractual duty owed to the other is not usually good consideration

  Pinnel's Case (1602) 5 Co Rep 117

  Facts:

  • D owed P £8 10s & paid £5 2s 6d, before debt was due
  • P accepted payment in satisfaction for the debt but later sued for the balance

  Issue:

  • could early part payment be consideration and satisfy the debt?

  Held:

  • D provided consideration by paying early, therefore part payment was acceptable
  • obiter Court of Appeal noted if a fixed sum is owed then payment of a lesser sum can never be satisfaction for the full amount owed if no consideration has been provided
  • Lord Coke: .. by no possibility, a lesser sum can be a satisfaction to the plaintiff for a greater sum: but the gift of a horse, hawk, or robe, etc. in satisfaction is good for it shall be intended that a horse, hawk or robe etc, might be more beneficial to the plaintiff than the money... or otherwise, the plaintiff would not have accepted it in satisfaction...

  Foakes v Beer (1884) 9 App Cas 605

  Facts:

  • P had a court judgment for payment of a debt of £2090 19s against D
  • P agreed if D paid off the debt, by a £500 lump sum payment followed by six monthly instalments of £150, she would not take any proceedings whatever on the said judgment
  • D complied, however, P then sued for interest which had accrued under the judgment

  Issue:

  • was the agreement made for part payment of the debt, excluding the interest, enforceable?

  Held:

  • P had agreed not to sue on the judgement at all, even for interest but that this was not enforceable as D did not provide good consideration
  • House of Lords were not bound by Pinnel's Case (1602), as the rule was obiter however court did feel constrained to apply it & confirmed the principle
  • Earl of Selborne LC: .. I cannot think that your Lordships would do right, if you were now to reverse, as erroneous, a judgment of the Court of Appeal, proceeding upon a doctrine which has been accepted as part of the Law of England for 280 years...
• arguably principles relating to part payment of debts are not reconciled with principles relating to performance of an exsiting duty owed to the other

  Re Selectmove [1995] 1 WLR 474

  Facts:

  • D owed tax to Inland Revenue, D was in financial difficulties & offered to pay £1000 arrears per month
  • D made several payments by instalment, then Inland Revenue demanded the full arrears immediately
  • D argued principle in Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] should apply

  Issue:

  • if part payment of a debt confers a practical benefit and is freely accepted without duress or fraud can the practical benefit be consideration?

  Held:

  • there was no consideration for payment by installment
  • CoA felt constrained by HoL decision in Foakes v Beer (1884)
  • Gibson LJ: .. I see the force of the argument, but the difficulty.. is that if the principle.. is to be extended.. it would in effect leave the principle in Foakes v Beer without any application. When a creditor and a debtor who are at arm's length reach agreement on the payment of a debt by instalments to accommodate the debtor, the creditor will no doubt always see a practical benefit to himself in so doing.. it is in my judgment impossible, consistently with the doctrine of precedent for this court to extend the principle of Williams' case to any circumstances governed by the principle of Foakes v Beer...