Introduction
In English contract law, consideration is a fundamental element required for a simple contract to be legally enforceable. It is often defined as a benefit to the person making the promise or a detriment to the person to whom the promise is made. A key rule that has developed within this doctrine is that the performance of, or a promise to perform, an existing contractual duty owed to the same party is not valid consideration for a new promise. This essay will discuss this traditional rule, demonstrating how it was established in early case law. It will then analyse how the principle has been significantly modified by modern judicial decisions, leading to a position where the original statement is no longer a fully accurate reflection of the law.
The Traditional Rule in Stilk v Myrick
The classic authority for the principle that performing an existing contractual duty is not good consideration is the case of Stilk v Myrick (1809). In this case, two sailors out of a crew of eleven deserted a ship during a voyage. The captain promised the remaining nine sailors that he would divide the wages of the two deserters among them if they worked the ship back to London. Upon their return, the captain refused to pay the extra money. The court held that the sailors were not entitled to the additional payment because they had not provided any new consideration for the captain’s promise. They were already contractually obliged to work the ship home and to cover for minor emergencies, such as a small number of desertions. In performing their existing duty, they had not suffered any new detriment, nor had the captain gained any new benefit, beyond what was already agreed.
The rule in Stilk is based on the idea of preventing contractual blackmail or extortion, where one party might threaten to breach their contract unless they are paid more. The principle was distinguished in the later case of Hartley v Ponsonby (1857). Here, so many sailors deserted (17 out of 36) that the voyage became significantly more dangerous. The court found that the original contract had been frustrated by the mass desertion, and the remaining crew were no longer bound by it. Their subsequent promise to continue the voyage was, therefore, fresh consideration for the captain's promise of extra wages, making it enforceable. This shows that if a party goes above and beyond their original duty, this can amount to good consideration.
The Modern Approach: Practical Benefit in Williams v Roffey
The strict rule from Stilk v Myrick was substantially reconsidered by the Court of Appeal in Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991). Roffey Bros were main contractors refurbishing a block of flats and had a contract with a housing association which included a penalty clause for late completion. They subcontracted the carpentry work to Williams for £20,000. Williams ran into financial difficulty after completing a portion of the work, partly because the agreed price was too low. Roffey Bros became concerned that Williams would not finish on time, which would trigger the penalty clause. To avoid this, Roffey Bros promised to pay Williams an additional £10,300. Williams continued work but Roffey Bros failed to make all the extra payments.
The Court of Appeal held that Williams had provided consideration for the promise of extra payment, even though he was only carrying out his existing contractual duties. The court found that Roffey Bros had obtained a "practical benefit" from their promise to pay more. Glidewell LJ identified these benefits as including: ensuring Williams continued the work, avoiding the penalty clause in the main contract, and avoiding the trouble and expense of finding a new carpenter. Therefore, the court established that the performance of an existing contractual duty could be valid consideration for a new promise, provided the promisor receives a practical benefit or avoids a disbenefit, and the promise was not given as a result of economic duress or fraud.
Conclusion
In conclusion, the statement "A promise to perform an existing contractual duty is not valid consideration" represents the traditional starting point of English law, as established by Stilk v Myrick. However, it is no longer a complete or accurate summary of the current legal position. The decision in Williams v Roffey Bros has significantly altered the landscape by introducing the concept of 'practical benefit'. While the courts did not formally overrule Stilk v Myrick, they have refined and limited its application to situations where a promisor receives no tangible benefit from the performance. Today, where one party’s promise to pay more secures a practical benefit for them, and that promise has not been extorted through duress, the courts are likely to find that there is valid consideration, and the promise to pay more will be binding.
References
- Chen-Wishart, M. (2022) Contract Law. 7th edn. Oxford University Press.
- Hartley v Ponsonby (1857) 7 E&B 872.
- Stilk v Myrick (1809) 2 Camp 317.
- Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1.
