1. Inthis case summary I will be outlining the key details of the Williams v. RoffeyBros. & Nicholls LTD. 1991 1 Q.
B. 1 case which was held in the court ofappeal. This case was initially held in the high court. Williams had approachedthe high court in the first instance and had won the case before the companyappealed, leading to the present decision. The defendants (Roffey Bros. &Nicholls), appealed on the grounds that an agreement between the partiesreached on 9 April 1986 whereby they agreed to pay the plaintiff an additional£10,300 over and above the contract price originally agreed of £20,000 wasenforceable by the plaintiff and did not fail for lack of consideration. Thedefendants argued that traditionally, performance of an existing contractualduty cannot be consideration for a further promise from the party to whom theexisting duty is owed since there was no additional legal benefit or detriment.
FACTS 2. Theplaintiff entered a subcontract with the defendants, who held the main buildingcontract, to carry out carpentry work in 27 flats for £20,000. The plaintiffrealised that the agreed price was too low for him to operate satisfactorilyand at a profit. The main contract contained a time penalty clause so thedefendants, who were concerned about the work not being completed on time, madean oral agreement to pay the plaintiff an additional sum of £10,300 on whichthe carpentry work had to be completed. Seven weeks later, when plaintiff hadsubstantially completed eight more flats, the defendants made only one furtherpayment of £1500. The plaintiff then sued the defendants for the additional sumpromised.
ISSUES 3. i) Whethersubstantial completion entitled the plaintiff to payment: particularly A)whether, on the true construction of contract, entire performance was acondition precedent to payment; and B) Whether the official referee was wrongin law in applying the principle of H. Dakin & Co.Ltd.
v Lee 1916 1 K.B.566 and rejecting the defendant’s submissions that the plaintiff had failed toperform a condition on the fulfilment of which his right to sue depended. ii) Whetherthe agreement was enforceableiii) Whetherthere was sufficient consideration iv) Whetherthe consideration moved from the promisee DECISION – 4. Thejudge held that the agreement for payment of the additional sum was enforceableand did not fail for lack of consideration. REASONING FOR DECISION – 5. i) A) Lorddenning stated that if the balance could be regarded as retention money thenthe contractor should have done all of the work correctly, without defects oromissions, in order to be entitled to the balance.
Since retention money isusually only 10 or 15 per cent, whereas this balance was more than 50 per cent,he believed that the balance should not be regarded as retention money, but asan ordinary lump sum contract. He went on to say that it was substantially performed,and the contractor was entitled, therefore, to the contract price, less adeduction for the defects.B) Lord Romer stated that hebelieved the referee was right in applying the principle because when a manfully performs his contractual duties and supplies all that he agreed to supplybut what he supplies is subject to minor defects that he can be said to havesubstantially performed his promise, it is, far more quittable to apply the H.
Dakin & Co. Ltd. V Lee principle than to deprive him wholly of hiscontractual rightsii) Theagreement was enforceable because the promise that was made by the defendantsto pay the plaintiff the additional sum of £10,300, in return for thecompletion of his existing contractual obligations on time, resulted in acommercial advantage to the defendants. The defendants were able to gainpractical benefits because of the completion of the block of flats and alsomanaged to prevent dis-benefits by avoiding liability under the time penaltyclause. In addition to this, the defendants did not have to go through the struggleof finding new subcontractors. There was no detriment to the plaintiff but regardlessof this, it is not necessary for there to be both benefit and detriment.iii) Therewas sufficient consideration found because it was said that a main contractorwho agrees too low a price with a subcontractor is acting contrary to his owninterests. The agreement is in the interests of both parties and due to this itdoes not fail for consideration.
iv) Thedefendants argued that the consideration did not move from the promisee basedon the principle illustrated in Tweedle v Atkinson 1861 1 B. & S. 393.The judge said that his understanding of “consideration must move from thepromise is that “such consideration must be provided by the promisee or ariseout of his contractual relationship with the promisor.
It is considerationprovided by somebody else, not a party to the contract, which does not “movefrom the promise.” This was the situation in Tweedle v Atkinson 1861 1 B.& S. 393 but it was not the situation in this case because the benefits tothe defendants arose out of their agreement with the plaintiff, who was the promisee.The judge implemented a passage from Chittyon Contracts, 26th ed. (1989), p.
126, para. 183 which said, “Therequirement that consideration must move from the promisee is most generallysatisfied where some detriment is suffered by him. But the requirement mayequally well be satisfied where the promisee confers a benefit on the promisorwithout in fact suffering any detriment.” Due to this, the judge ruled thatthere was valid consideration and the appeal was dismissed. RATIO DECIDENDI – 6. On page23, Russel LJ said; “Where there were benefits derived by each party to acontract of variation even though one party did not suffer a detriment thiswould not be fatal to the establishing of sufficient consideration to supportthe agreement.
If both parties benefit from an agreement it is not necessary,that each also suffers a detriment” PARTB (i) Is this casestill current law? 7. The green case signal on the Westlaw database indicatesand verifies that Williams v. Roffey Bros. & Nicholls LTD.
1991 1 Q.B. 1 is still current law. Therefore, elucidating the impressionthat the ratio decidendi in this case has not been overruled and the decisionin the case has not been reversed on appeal. All of this indicates that it hasreceived positive judicial treatment for the reason that it has been applied invarious subsequent cases such as StevensdrakeLtd (t/a Stevensdrake Solicitors) v Hunt 2016 EWHC 1111(Ch). (ii) What caseshave followed this decision? 8.
One case that followed this decision is Stevensdrake Ltd (t/a StevensdrakeSolicitors) v Hunt 2016 EWHC 1111(Ch). According to theWestlaw database, in this case, the defendant had been the liquidator of acompany and the solicitors had acted for him in relation to misfeasance claimsagainst the company’s former administrators (S and P). The claim was settledfor £125,000, £39,100 of which was paid to counsel and the solicitors and thedefendants each received £35,200. The solicitors argued that the agreement asto the apportionment of the settlement monies was no more than a temporary cash-flowarrangement and that they did not insist on allocation to themselves of thetotal amount at the time because it was expected that full recovery would beobtained from P. The court had to decide whether a distribution of moniesbetween the claimant solicitors and the defendant could be reopenedand it was held that an objectivereview of the facts did not leave any real scope for a finding other than thatthe “split” was agreed to and implemented on the basis that it was infurtherance not only of the liquidation but also of the established workingrelationship between the defendant and the solicitor handling the case. Thatmeant that the agreement as to the division of the monies did not fail for wantof consideration, which is why the case of Williams v.Roffey Bros.
& Nicholls LTD. 1991 1 Q.B.
1 was applied. In addition tothis, promissory estoppel was engaged. It operated to make it inequitable forthe solicitors to pursue the defendant for the whole or any part of the relevantmonies (iii) Name 2cases that have distinguished thisdecision and outline the grounds for this distinguishment. 9. During court hearings, various cases can bementioned as a form of judicial precedent in order to support any points theydeem to be relevant to the case at hand.
However, if a certain precedent was mentionedthat is not quite similar to the case being heard in court, it can be avoidedby distinguishing the case. 10.The first case that distinguished the decisionin Williams v. Roffey Bros. & Nicholls LTD. 19911 Q.
B. 1 is Corbern v Whatmusic Holdings Ltd 2003 EWHHC 2134 (Ch). In thiscase, the claimant had resigned as director after the defendants (a company)applied to strike out and restrain the advertisement of a petition presented bythe claimant based on the alleged non-payment of wages. The claimant attemptedto recover the money through correspondence and then issued a statutory demand.
The defendant agreed that the claimant was entitled to the £2,200 but arguedthat the claimant agreed to go without payment until the company had enoughfunds to meet its obligations. The company further argued that there had beenconsideration for the claimants promise in the form of the benefits he wouldgain from its continued existence as a company. The claimant denied that therehad been such an agreement.
11.The case of Williams v.Roffey Bros. & Nicholls LTD. 1991 1 Q.B. 1 was raised as precedent forthe case stated above.
However, the judge refused to follow it. The judge said “Itwas suggested that Williams v. Roffey Bros. &Nicholls LTD. 1991 1 Q.
B. 1 allows him to find consideration for Corbern’s allegedpromise in the benefits he would have gained from the continuation of the company.But based on the reasoning given by the Court of Appeal in Reselect Group Ltd1994 BCC 349 at 353 and 354, such an attempted extension would sterilise Foakes v.
Beer, 9 App.Cas. 605″12.there was littledocumentary evidence that the alleged agreement ever existed, and it appearedthat there had been no consideration for the promise allegedly made by theclaimant. Moreover, the benefits the claimant allegedly gained from the company’scontinued existence was not sufficient to establish consideration. In otherwords, in Williamsv. Roffey Bros.
& Nicholls LTD. 1991 1Q.B, the facts showed that there were benefits that derived because, forexample, the defendant avoided the facing the consequences that came with thetime penalty clause that existed in the main contract. Due to this, it was sufficientenough to constitute consideration. Whereas in this case, the facts differ asthey show that the benefits that allegedly derived from the company’s existencewas not enough to be classed as a benefit and could not, as a result, constituteconsideration therefore highlighting the lack of similarity between both cases.13.A second distinguished case is Selectmove Ltd,Re 1995 1 W.L.
R. 474. In this case, The Inland Revenue petitioned for the winding-upof the company, Selectmove, on the basis of arrears of tax under the PAYEsystem. The winding-up order was made and Selectmove appealed on the groundthat at a meeting with Revenue, it was agreed that due to Selectmove’s cash flowproblems the tax due would be paid in arrears.
Consequently, Selectmove arguedthat the petition debt was disputed, and the order should be set aside. 14.The issues were:i. Whether the tax collector was entitled toaccept the instalment proposalii. Whether there was consideration for the agreementiii.
Whether, if there was no agreement, estoppelprevented the Revenue from claiming debt15.The plaintiff had pointed out that the companydid in fact pay its further PAYE and NIC liabilities and £7,000 of its arrears.He relied on the decision in Williams v. Roffey Bros.& Nicholls LTD.
1991 1 Q.B. 1 whereby a promise to perform an existing obligationcan amount to good consideration provided that there are practical benefits16.
Selectmove’s appeal was dismissed. The case of Williamsv. Roffey Bros. & Nicholls LTD. 1991 1Q.B was distinguished by the judge. The judge’s reasoning was “If theprinciple of Williams v Roffey Bros. & Nicholls (Contractors) Ltd.
1991 1Q.B. 1 is to be extended to an obligation to make payment, it would in effectleave the principle in Foakes v. Beer, 9 App.Cas. 605 without any application.
When a creditor and a debtor who are atarm’s length reach agreement on the payment of the debt by instalments toaccommodate the debtor, the creditor will no doubt always see a practicalbenefit to himself in so doing. In the absence of authority there would be muchto be said for the enforceability of such a contract. But that was a matter expresslyconsidered in Foakes v. Beer yet held not to constitute good consideration inlaw. Foakes v. Beer was not even referred to in Williams v.Roffey Bros. & Nicholls LTD.
1991 1 Q.B. 1, and it is in my judgment impossible, consistently with thedoctrine of precedent, for this court to extend the principle of Williams’scase to any circumstances governed by the principle of Foakes v. Beer, 9App.Cas. 605″ 17. In other words,the Williamsv Roffey Bros.
& Nicholls (Contractors) Ltd. 1991 1 Q.B. 1 could not beapplied here because the facts in this case were more similar to the Foakes v.
Beer, 9 App.Cas. 605, whereby the absence of authority to enforce such acontract was held not to constitute good consideration.
As the case factsrelate more to the Foakes v. Beer, 9App.Cas.
605 case than the Williams v Roffey Bros. & Nicholls(Contractors) Ltd. 1991 1 Q.B.
1 case, it would not have been appropriate tofollow the Williams case. The judge could not have extended the Williams caseto an obligation to make payment either due to parliamentary sovereignty. If anextension were to be made it would have to be made by Parliament, the supremelaw-making body.
