Impact Of Williams V Roffey Bros & Nicholls (Contractors) Ltd Case On The Doctrine Of Consideration

Decision

Discuss about the Essay for Evaluates and Analysis the Law?

The present essay evaluates and analysis the law that was established in Williams v Roffey Bros & Nicholls (Contractors) Ltd[1] and is impact on the doctrine of consideration. Williams’s v Roffey Bros & Nicholls (Contractors) Ltd is an English case[2]. The main issue that was catered in the present case was whether Roffey is liable to compensate William on the basis that no consideration was given by William to him?[3] The present essay evaluates the issue and analysis the decision that was laid down by Court of First Instance and Court of Appeal.

 The present essay analysis the decision of Williams case on the doctrine of consideration. The same is done by evaluating the meaning that is attributed to the term consideration. After the evaluation of the term the impact of the decision is understood by analysing two leading decision, that is Williams v. Roffey Bros & Nicholls, & Stilk v. Myrik and Williams v. Roffey Bros & Nicholls, & Foakes v. Beer.

The decision lay down in William case makes a distinction from the decision laid down in Stilk v. Myrick case. The decisions of Williams have evaluated a new path to the doctrine of consideration and have redefined the law that is applied in Stilk v. Myrick keeping the principle unmoved and intact. But, the decision in Roffey Bros case brings down the flaws that were present in the Williams case.

The comparison of cases brings down the impact of the William case on the doctrine of consideration. The assignment is concluded in the end followed by reference list.

The court of first instance decided in favour of William and granted him damages of £3,500. An appeal was made by Roffey. However, the appeal of Roffey was dismissed.  It was submitted by the court that though the consideration is required for the establishment of contract (if considered in orthodox sense) but, when there is presence of promises then consideration comprises of practical benefits.  Thus, based on the following facts, it was analysed in the leading case that when a contract is a varying contract, then in such situations, the court is very fast and swift in defining the consideration especially when there are factual benefits and which are provided by one party to another party[4].

Now, after evaluating the brief facts and the decision of the court it is now important to evaluate the impact of Williams case[5]  on the doctrine of consideration.

Consideration

It is first important to evaluate the basic meaning that is attributed to the term Consideration. Consideration is something which is of value and which is provided by both the parties to the contract and which lures and induces the parties to form an agreement amid them. There is exchange of mutual promises amid the parties in exchange of ‘something valuable’ and such mutual promises are enforceable in law[6]. In Currie v. Misa[7], Lush J defined consideration as “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.”[8]

Consideration is one of the main elements in establishing a contract apart from offer, acceptance, intention and capacity. Thus, every contact must be supported by consideration. Absence of consideration will render the contract void, that is, if one person makes a promise to another person to undertake an act or omission, however, if there is no promise that is made in return, then there is lack of consideration and such kinds of contracts are not enforceable in law because of lack of consideration[9]. This is mainly because the promisor is not gaining anything; rather, there is loss without anything in return. On the other hand, there is benefit that is accruing by the promise without any loss. But, if the promisee in exchange of the promise made by the promisor, made a promise in return, then there is consideration that is generated against the promise of the promisor, thereby making the contract enforceable in law[10].

After evaluating the meaning that is attributed to the term Consideration, it is now important to evaluate the impact of Williams case[11]  on the doctrine of consideration.

It is submit that the law established by Williams case is considered to be very important as it makes a departure from the traditional and ancient rules that are followed regarding consideration. The case is also relevant because it brings changes in the rules that are established in the leading case of Stilk v. Myrik[12].

In Williams case, the ancient doctrine of consideration was evaluated. It was analysed that the traditional doctrine of consideration comprises of pre-existing obligation of duty. That is, if suppose, there are two persons A and B and both are part of a contract, then, if A makes a promises and requires consideration from B in exchange of such promise, then, if B undertakes a promise which is something which is he is already bound to perform, then in such scenario, anything promised by B regarding such performance or its actual performance cannot be in any scenario be regarded as the consideration in exchange of the promise that is made by A[13].

Impact of Williams v Roffey Bros on the Doctrine of Consideration

This rule of pre-existing obligation of duty was referred in the leading case of Stilk and Myrick. As per the facts of the said case, there are eleven sailors who affirm to sail to the Baltic and return back. However, when all the eleven sailors reached the Baltic, two of them abandoned. The captain of the ship then agreed that the wages of the two sailors who has abandoned the ship will be distributed to the rest of the sailors; however, later on the captain of the ship refused to honour his promise and refused to pay the wages to the rest of the crew. The aggrieved sailors sued the captain of the ship[14].

However, the sailors were not successful in their claims. The main reason attributed for the denial of the claim was that there was no consideration that is made in return of the promise that is made by the captain of the ship. This is because the acts of the remaining sailors were not in exchange of the promise of the captain , rather, they were already obligated to return from the Baltic and their actions cannot be treated as a consideration in exchange of the promise. But, the decision was criticised severely and there were many arguments that were laid in order to abolish the doctrine of pre-existing duty[15].

It was in Williams, that a new approach was laid down to the pre-existing duty doctrine and made a divergence to the law laid down in Stilk v. Myrik.

As already submitted the court of first instance decided in favour of William and granted him damages of £3,500. The main argument was that no consideration was given by Roffey Bros to Williams which was the main basis which decided the case in favour of Williams[16].

It is submitted that the main reason which can be attributed  and which decided the case in favour of William was mainly because of the fact that William did not stop the work and continued with the same even when  Roffey Bros neglected in payment and thus there was no violation of contract terms on the part of William. Also, since there was no delay on the part of William, this did not bother Roffey Bros to look for another substitute contractor to complete the work. This has saved the money and time of Roffey Bros and thus completed the work on time and thereby protected him from the penalty clause for late completion of the work[17].

This outlook of the decision in Williams has resulted in the introduction of a new test, called, “Practical Benefit Test”. The test was not previously considered as a good consideration. This is mainly because when Glidewell LJ made is final statements, the main emphasis of his was on whether in reality the promisor has acquired any benefit or not. He was not considering whether the promissee is at loss because of the benefits (legal benefits) that is attained by the proimisor or because of the promise made by him. The statements made by the Judge were to abolish the rule of consideration[18].

Mainly the decision of the Williams makes a distinction from the decision laid down in Stilk v. Myrick and questioned the ancient old doctrine of pre-existing duty principle. The decisions of Williams have evaluated a new path to the doctrine of consideration and which must be applied in future cases to come. Glidewell LJ while deciding the case has clearly established that his main motive was not to disobey with the decision that was laid down in Stilk v. Myrick, but his main intention was to redefine and curtail the law that is applied in Stilk v. Myrick keeping the principle unmoved and intact. The main attempt that was laid down by Glidewell LJ was to modernise the rule laid down in Stilk v. Myrick in order to fit the same in the modern society. He also attempts to bring all the rules of consideration under one roof so as to avoid the application of the principle laid down in Stilk v. Myrick  in future cases to come[19].

It is thus submitted that the decision of William's was very important as it has laid down a very important precedent and was very influential in United Kingdom and the Commonwealth countries. As soon as the decision was laid down, the same was applicable instantaneously throughout England and Wales and New Zealand.

The principle was later applied in several cases such as in Anangel Atlas Companika Naviera SA v. Ishikawajima-Harima Heavy Industries Co Ltd (No 2) (within six months of the decision of the case). In the said case Hirst J relied on the decision laid down in William's v. Roffey. The application of the principle has established that judges were taking the new approach that was adopted in William's v. Roffey and are taking the new approach by letting go the traditional doctrine of pre existing duty obligation principle[20].

But, it cannot be said that the decision that was laid down in William's v. Roffey was perfect without any flaws. It was observed that the decision of William's v. Roffey was contrary to the decision that was laid down in Foakes v. Beer[21]. In Foakes case, a person promised not to raise any claim or interest on the debt of another person. However, it was held that the said contract was not enforceable in the court of law because the contract lacks consideration[22].

But the major issue arises because of the fact that the decision laid down in Foakes v. Beer was by the House of Lords and the decision in Williams was by the Court of Appeal. Though the time gap between the two decisions was of hundreds of years but still there is a difference in the authorities of the decision makers. Because of the difference in the degree of authority the decision laid down in Williams cannot supersede the decision of Foakes and thus cannot consider as a precedent. The same can only become the precedent provided the same is approved by the House of Lords. Thus, though the old age doctrine of pre-existing rules of consideration was under scanner but the same was arosed by the court which does not have a superseding authority over the House of Lords[23].

Another problem that was raised by the decision of Williams was that not all the court is willing to follow the principle laid down by the decision. The main argument was that if the decision of Williams was followed then it will disregard the decision laid down in Foakes. This was righty established in Re Selectmove Ltd[24] and it was analysed that the court are only willing to follow the rulings of the House of the Lords or the law laid down by the legislature and not any authority inferior to the same[25].

Conclusion

It is thus submitted that the decision lay down in Williams though challenges the age old doctrine of pre-existing duty of consideration but the impact is not universally applicable and thus is not totally successful. It is against the ruling laid down in Foakes, thus, though the decision is realistic but still cannot be fully accepted.

Mainly, the decision of Williams v. Roffey, raises a significant challenge to the traditional rule of consideration. But since these challenges are not approved by the House of Lords, thus, the challenges are still not of much significance.

It can be submitted that two similar cases, that is, Foakes v. Beer and Williams v. Roffey has resulted in two different rulings, thus, it is correct to state that there is contradiction in the rules of consideration. If the traditional approach is followed, then, the House of Lords will submit that the rules laid down in Foakes must be followed. But, the challenges that are raised by the decision of Williams will submit that in reality the traditional rules of consideration are nothing but the initiation of the end of consideration. In Antons Trawling Co Ltd v. Smith (New Zeaand), the decision laid down in Williams has significantly made an impact upon the Court of Appeal and which desire to the introduction of the reliance based test against the doctrine of consideration.

Thus, it is rightful in submitting that the challenges that are raised by Williams v. Roffey are very significant as it helped in varying the manner in which the doctrine of consideration functions. But, the challenges have not gone that far so as to clearly terminating the traditional rules. It is submitted that the decision of Williams has influenced the courts but not to much larger extend and the only significant decision that is influenced by the Williams v. Roffey decision can be analysed in the decisions of Antons Trawling Co Ltd v. Smith.

Reference List

Books/Journals/Articles

Chen-Wishart M, Consideration: Practical Benefits and the Emperor’s New Clothes (ISBN-13: 9780198265, 1997).

Inn G, THE MODERN LAW OF CONTRACT (Fifth Edition, 2002).

Roach L, Card & James' Business Law for Business, Accounting, & Finance Students (OUP Oxford, 2012).

Cases

Currie v. Misa (1875).

Foakes v Beer (1883-84) LR 9 App Cas 605.

Re Selectmove Ltd [1993] EWCA Civ 8

Stilk v Myrick [1809] EWHC KB J58.

Williams v Roffey Bros & Nicholls (Contractors) Ltd (1989) EWCA Civ 5

Online Material

B Hough, ‘THE DOCTRINE OF CONSIDERATION: DEAD OR ALIVE IN ENGLISH EMPLOYMENT CONTRACTS?’ (2016) < https://eprints.bournemouth.ac.uk/2898/1/78.pdf>. Accessed on 16^th January 2016.

Case brief, “Foakes v Beer, [1884] UKHL 1” < https://casebrief.me/casebriefs/foakes-v-beer/>. Accessed on 16^th March 2016.

Dr Robert N Moles, “Consideration - in Acceptance of Contract” (2016) <https://netk.net.au/Contract/04Consideration.asp>.

ELawresourceUK, “Stilk v Myrick [1809] EWHC KB J58” (2016) < https://www.e-lawresources.co.uk/Stilk-v-Myrick.php>. Accessed on 16^th January 2016.

Emily M. Weitzenböck , “English Law of Contract: Consideration” (2012) < https://www.uio.no/studier/emner/jus/jus/JUS5260/v12/undervisningsmateriale/Consideration.pdf>. Accessed on 16^th March 2016.

Francis Dawson, “CONTRACT AS ASSUMPTION AND CONSIDERATION THEORY: A REASSESSMENT OF WILLIAMS V ROFFEY BROS” (2011) 42 VUWLR < https://www.nzlii.org/nz/journals/VUWLawRw/2011/9.pdf>. Accessed on 16^th March 2016.

MacMillan & Stone, “Elements of the law of contract” (2012) https://www.londoninternational.ac.uk/sites/default/files/programme_resources/laws/ug_subject_guides/elements_law_contract-subjectguide4chapters.pdf. Accessed on 16^th March 2016.

Swarb, “Contract” (2015) < https://swarb.co.uk/williams-v-roffey-brothers-nicholls-contractors-ltd-ca-23-nov-1989/>. Accessed on 16^th March 2016.

The Law Teacher, “Traditional Rules of Consideration” (2016) https://www.lawteacher.net/free-law-essays/consideration-law/traditional-rules-of-consideration.php Accessed on 16th March 2016.

The Law Teacher, “The principle of Williams v. Roffey” (2016) < https://www.lawteacher.net/free-law-essays/contract-law/the-principle-of-williams-v-roffey-contract-law-essay.php>. Accessed on 16th March 2016.

Westlaw, “Williams v. Roffey Bros. & Nicholls (Contractors) Ltd. [1990] 2 W.L.R. 1153”  (2004) < https://legal.thomsonreuters.com.au/product/au/files/720502512/williams_v_roffey_bros_and_nicholls.pdf>. Accessed on 16^th March 2016.

[1] Williams v Roffey Bros & Nicholls (Contractors) Ltd (1989) EWCA Civ 5.

[2] Westlaw, ‘Williams v. Roffey Bros. & Nicholls (Contractors) Ltd. [1990] 2 W.L.R. 1153’  (2004) < https://legal.thomsonreuters.com.au/product/au/files/720502512/williams_v_roffey_bros_and_nicholls.pdf>. Accessed 16^th March 2016.

[3] Mindy Chen-Wishart, Consideration: Practical Benefits and the Emperor’s New Clothes (ISBN-13: 9780198265, 1997).

[4] Swarb, ‘Contract’ (2015) < https://swarb.co.uk/williams-v-roffey-brothers-nicholls-contractors-ltd-ca-23-nov-1989/>. Accessed 16^th March 2016.

[5] Williams v Roffey Bros & Nicholls (Contractors) Ltd (1989) EWCA Civ 5

[6] Emily M. Weitzenböck , ‘English Law of Contract: Consideration’ (2012) < https://www.uio.no/studier/emner/jus/jus/JUS5260/v12/undervisningsmateriale/Consideration.pdf>. Accessed 16^th March 2016.

[7] Currie v. Misa (1875).

[8]  Lee Roach, Card & James' Business Law for Business, Accounting, & Finance Students (OUP Oxford, 2012).

[9] MacMillan & Stone, ‘Elements of the law of contract’ (2012) https://www.londoninternational.ac.uk/sites/default/files/programme_resources/laws/ug_subject_guides/elements_law_contract-subjectguide4chapters.pdf. Accessed 16^th March 2016.

[10] Dr Robert N Moles,‘Consideration - in Acceptance of Contract’ (2016) <https://netk.net.au/Contract/04Consideration.asp> Accessed 16^th March 2016. 

[11] Williams v Roffey Bros & Nicholls (Contractors) Ltd (1989) EWCA Civ 5.

[12] Stilk v Myrick [1809] EWHC KB J58.

[13] B Hough, ‘THE DOCTRINE OF CONSIDERATION: DEAD OR ALIVE IN ENGLISH EMPLOYMENT CONTRACTS?’ (2016) < https://eprints.bournemouth.ac.uk/2898/1/78.pdf>. Accessed 16^th January 2016.

[14] ELawresourceUK, ‘Stilk v Myrick [1809] EWHC KB J58’ (2016) < https://www.e-lawresources.co.uk/Stilk-v-Myrick.php>. Accessed 16^th January 2016.

[15] The Law Teacher, ‘Traditional Rules of Consideration’ (2016) https://www.lawteacher.net/free-law-essays/consideration-law/traditional-rules-of-consideration.php Accessed 16th March 2016.

[16] Swarb, n4.  

[17] Francis Dawson, ‘CONTRACT AS ASSUMPTION AND CONSIDERATION THEORY: A REASSESSMENT OF WILLIAMS V ROFFEY BROS’ (2011) 42 VUWLR < https://www.nzlii.org/nz/journals/VUWLawRw/2011/9.pdf>. Accessed 16^th March 2016.

[18] Ibid.

[19] The Law Teacher, ‘Traditional Rules of Consideration’ (2016) https://www.lawteacher.net/free-law-essays/consideration-law/traditional-rules-of-consideration.php Accessed 16th March 2016.

[20] Gray’s Inn, THE MODERN LAW OF CONTRACT (Fifth Edition, 2002).

[21] Foakes v Beer (1883-84) LR 9 App Cas 605.

[22] Case brief, ‘Foakes v Beer, [1884] UKHL 1’ < https://casebrief.me/casebriefs/foakes-v-beer/>. Accessed 16^th March 2016.

[23] The Law Teacher, n19.

[24]Re Selectmove Ltd [1993] EWCA Civ 8

[25] The Law Teacher, ‘The principle of Williams v. Roffey’ (2016) < https://www.lawteacher.net/free-law-essays/contract-law/the-principle-of-williams-v-roffey-contract-law-essay.php>. Accessed 16th March 2016.