Williams v Roffey Bros & Nicholls [1991] 1 QB 1

Key point

  • A promise to pay more for the performance of existing contractual obligations is binding if such a promise confers a “practical benefit”

Facts

  • Roffey Bros (D) was contracted to refurbish a block of flats
  • Under the terms of the contract, D faced a penalty if work was not done on time
  • D subcontracted the carpentry work to Williams (C), who later ran into financial difficulties due to the low contract price and delayed payments by D
  • D promised to pay more to C to ensure that the work was completed on time to avoid triggering the penalty clause
  • D later refused to make the additional payment when C completed its work

Held (Court of Appeal)

  • D was liable to make the additional payment to C
  • D had derived a practical benefit from its promise to pay more to C

Glidewell LJ

  • A promise to perform one’s existing contractual duty to the promisor is good consideration for a promise of additional payment if the promisor obtains some “practical benefit” or obviates a disbenefit
  • The existing principle in Stilk v Myrick is still preserved in situations where no such practical benefit has been conferred, the decision was taken so as to avoid the possibility of economic duress
  • In the present case, the practical benefit was the greater likelihood of the work being completed on time and avoidance of the penalty clause
  • Furthermore, there was no fraud or duress

Russell LJ

  • Courts must be more ready to find the existence of consideration to reflect the intention of parties to contract

Purchas LJ

  • At the time of Stilk v Myrick, there were strong public policy grounds  to protect the master and ownership of the ship from being held ransom by disaffected crews
  • Today the defence of duress can be relied on rather than the doctrine of consideration
  • In the present case there is no duress

Commentary

  • Practical benefit is to be distinguished from legal benefit, which is the promise to perform something not obligated under the existing contract
  • Mindy argued in her article ‘A Bird in Hand’ that in cases like Williams v Roffey there is a new unilateral contract made on top of the original bilateral contract, and the consideration for the unilateral contract is the performance of the existing duty, not the promise to perform (which is consideration for the original contract)
  • Under the United States Uniform Commercial Code § 1-302, consideration is not needed for contractual variation by agreement