Law of Contract - Consideration (Part 2)

3. The consideration must not be past

If party “A” voluntarily performs an act, and party “B” makes a promise afterwards, the consideration for the promise is said to be in the past.

Re McArdle ([1951] 1 All ER 905).

A wife and her three grown-up children lived together in a house. The wife of one of the children did some decorating and later the children promised to pay her £488 and they signed a document to this effect.

It was held that the promise was unenforceable, as all the work had been done before the promise was made and was therefore past consideration.

There are several exceptions to this rule. The most memorable exception derives from the ancient case of Lampleigh v Braithwait ((1615) Hob. 105).

Braithwait killed someone and then asked Lampleigh to get him a pardon. Lampleigh got the pardon and gave it to Braithwait who promised to pay Lampleigh £100 for his trouble.

It was held that although Lampleigh's consideration was past (he had got the pardon) Braithwaite's promise to pay could be linked to Braithwaite's earlier request and treated as one agreement, so it could be implied at the time of the request that Lampleigh would be paid.

Treitel derives the following principles from this case:
An act done before a promise was made can be consideration for it if three conditions are satisfied:

The act must have been done at the request of the promisor.

It must have been understood that payment would be made.

The payment must have been legally recoverable

4. Consideration must not be the performance of an existing public duty.

Where a party already has an existing duty to perform an act, he will not be able to enforce a promise made to him in return for performing that act.

This sounds complicated – it is best explained by the following example.

Collins v Godefroy ([1831] 1 B & Ad 950)

Godefroy promised to pay Collins if Collins would attend court and give evidence for Godefroy. Collins had been served with a subpoena (a court order telling someone they must attend). Collins sued for payment. It was held that as Collins was under a legal duty to attend court he had not provided consideration. His action therefore failed.

If a party exceeds his public duty, this can be good consideration (Glasbrook Bros. Ltd v Glamorgan C.C. [1921] A.C. 270).

5. Consideration must not be the performance of a pre-existing contractual duty.

This rule originates from the case of Stilk v Myrick ((1809) 2 Camp. 317. also (1809) 6 Esp. 129).
Two sailors deserted from a ship when it docked in a Baltic port. The captain of the ship promised to divide the two sailors’ wages amongst the rest of the crew if they sailed the ship back to London.

It was held that this promise was not binding as the crew were already under a contractual duty to sail the ship home. The crew were unable to claim the extra wages.

Although this case remains good law, a more recent case has brought considerable confusion into this area.

Williams v Roffey Bros. (Ltd [1990] 1 All ER 512)

Roffey had a contract to refurbish a block of flats and had sub-contracted the carpentry work to Williams. After the work had begun, it became apparent that Williams had underestimated the cost of the work and was in financial difficulties. Roffey, concerned that the work would not be completed on time and that as a result they would fall foul of a penalty clause in their main contract with the owner, agreed to pay Williams an extra payment per flat. Williams completed the work on more flats but did not receive full payment. He stopped work and brought an action for damages. In the Court of Appeal, Roffey argued that Williams was only doing what he was contractually bound to do and so had not provided consideration.

It was held that where a party to an existing contract later agrees to pay an extra "bonus" in order to ensure that the other party performs his obligations under the contract, then that agreement is binding if the party agreeing to pay the bonus has thereby obtained some new practical advantage or avoided a disadvantage. In the present case there were benefits to Roffey including (a) making sure Williams continued his work, (b) avoiding payment under a damages clause of the main contract if Williams was late, and (c) avoiding the expense and trouble of getting someone else. Therefore, Williams was entitled to payment.

The principle behind Williams v Roffey is that if a “practical benefit” is conferred, performance of a pre-existing duty can be good consideration.

Please note that although Stilk v Myrick and Williams v Roffey appear to contradict each other, they both remain good law.
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