Antecedentes del problema

This category may be further subdivided as follows:

1. Where a public duty is imposed by law

Very often certain persons, by their official status, or because of obligations imposed on them by the law, are obliged to carry out or do things in a certain way in order to dis-charge the public duties required of them. The carrying out of the public duties imposed on them by the law is not recognised by the law when it is used to support a simple con-tract. The leading case in this field is Collins v Godefroy (1831) 1 B & Ad 950, where the plaintiff attended and gave evidence at a civil trial by reason of a subpoena issued by the defendant. Afterwards the defendant promised to pay him a fee of six guineas. It was held that the plaintiff could not recover the moneys owed since he had furnished no consideration for the promise since he was already legally obliged to attend the trial. His consideration, in other words, was insufficient to support the promise of the defendant.

The issue of existing public duties has proved a particular problem in respect to public authorities, particularly the police, over the years.

Glassbrook Bros v Glamorgan County Council [1925] AC 270

In this case a colliery manager applied for police protection for his mine during a strike. He insisted that the mine could only be protected by having police officers actually billeted on the colliery premises. The police authorities considered that the colliery could be adequately pro-tected by units of police officers patrolling the area in the vicinity of the mine, but nevertheless agreed to billet police officers at the premises provided the manager agreed to pay the spe-cified rate. The bill for the protection amounted to £2,300, which the manager refused to pay, indicating that the police protection amounted to insufficient consideration since the police were already under an existing public duty to protect the premises. The House of Lords held that whilst it was true that the police were under a public duty to protect the premises, they were entitled to exercise their discretion as to the level of protection required. If the police considered that the premises would be adequately protected by an external mobile force then any level of security over and above that, as insisted on by the manager, amounted to good and sufficient consideration to support the promise of the mine manager to pay the £2,300.

CONSIDERATION MUST BE SUFFICIENT THOUGH NOT NECESSARILY ADEQUATE a police constable, supplied the information and claimed the reward. The defendant refused to pay and alleged in his defence that the plaintiff had done no more than the public duty imposed on him by the law to supply such information. The defendant also stated that such a contract was contrary to public policy. The basis for this is that to allow officials such as police officers to claim in circumstances where they were already under an existing public duty to act would be to risk the promotion of corruption and extor-tion. Both these defences were rejected by the court, the first on the ground that there were certain services a police officer was not required to render and clearly these services can amount to sufficient consideration in the proper circumstances. The second defence was rejected on the basis that to hold a contract void as being contrary to public policy requires very clear grounds for doing so and the courts do not readily accede to such a finding, particularly in cases of reward since the effect here is to encourage and promote the interests of justice.

The principles and decisions in the above two cases have also been seen in the following case.

Harris v Sheffield United Football Club Ltd [1987] 2 All ER 838

Police officers were required to be on duty within the grounds of the club when matches were being played there. The club was required to pay for ‘special police services’ when these were provided at the request of the club. The club refused to pay for these services on the basis that the police were merely carrying out their normal public duties in ensuring the maintenance of law and order and thus provided insufficient consideration for the promise of the club to pay for those services. The court held that the police provided more than their public duty required of them and therefore they were entitled to charge and claim for the moneys owed to them in respect of the ‘special police services’.

It can be seen in the above cases that the courts will very often find on a matter of public policy, rather than the presence of consideration, in deciding that there is suffi-cient consideration to support the promisor’s promise. In some circumstances, however, the finding of good consideration on a matter of policy is not possible and, in these circumstances, the courts can go to extraordinary lengths to find for the existence of sufficient consideration. Such an instance may be seen in the following case.

Ward v Byham [1956] 2 All ER 318

An unmarried couple lived together from 1949 to 1954. In 1950 they had a child. However, in 1954 the man turned the woman out of their house, keeping and looking after the child.

A few months later the woman, the plaintiff, requested that the child be returned to live with her. The defendant replied, offering her the child, together with £1 per week maintenance, on condition, first, that the child could decide for herself whether or not she wanted to live with her mother and, second, that the plaintiff could ‘prove that she would be well looked after and happy’. The child decided that she did want to live with her mother and the defendant relinquished her to the mother for some seven months, paying the agreed £1 per week main-tenance. The plaintiff then married another man and the defendant promptly ceased to make any further payments. The plaintiff sued for breach of contract and the defendant pleaded s 42 of the National Assistance Act 1948. The provision stated that the mother of an illegitimate child was bound to maintain that child. The defendant alleged that the mother had done no more than fulfil a duty imposed on her by law in return for the promise of the £1 per week maintenance, and that therefore her consideration was insufficient to support the defendant’s promise of maintenance.

CHAPTER 3 CONSIDERATION

The Court of Appeal held that the plaintiff had exceeded the duty imposed on her by s 42 since, whilst the mother of an illegitimate child is bound to maintain the child she is not necessarily bound to ‘look after the child well’ nor make it ‘happy’. The plaintiff therefore had provided sufficient consideration for the promise of the defendant and was successful in her action.

Denning LJ significantly went further than this and stated that the defendant would be bound even if the plaintiff had done no more than the duty imposed on her by law since ‘a promise to perform an existing duty, or the performance of it, should be regarded as good consideration, because it is a benefit to the person to whom it is given’. This view was not shared by other members of the court. He qualified this statement, however, in Williams v Williams [1957] 1 All ER 305, adding, ‘so long as there is nothing in the transaction which is contrary to the public interest’.

2. Where the plaintiff is bound by the provisions of an existing contractual obligation owed to the defendant

A plaintiff provides insufficient consideration to support a promise made by the defend-ant if the plaintiff merely performs, or promises to perform, an obligation already owed by the plaintiff to the defendant by virtue of a previous contract made between them.

Stilk v Myrick (1809) 2 Camp 317

The plaintiff entered into a contract to sail a ship from London to the Baltic and back. During the voyage two crew members jumped ship and subsequently the captain promised to divide the wages due to these two men between the rest of the crew since the ship was now short-handed as he had been unable to find replacements. On returning to London the captain refused to pay the extra wages and, when sued, alleged that the plaintiff had done no more than that which he was already contractually obliged to do, and that this could not therefore amount to sufficient consideration for the extra wages. The court agreed with this reasoning and found for the defendant.

The basis of the court’s decision ignored the reasoning in an earlier decision contained in Harris v Watson (1791) Peake 102. The facts of this case were very similar to Stilk v Myrick but here the decision was based on what is known today as economic duress. In other words, the reason the claim was disallowed was that if an emergency arose, such as a ship being short-handed, it would otherwise be possible for the rest of the crew to ‘hold a gun to the head’ of the captain and demand extra money. Lord Kenyon in the Harris case thought that the rule was founded on the ground of public policy, whilst in Stilk Lord Ellenborough denied this and stated that the proper reasoning was that the contract was void for lack of sufficient consideration, the seaman being under an existing con-tractual duty. A better view may be that the rule relating to existing duties not amount-ing to sufficient consideration is based on the possibility of the occurrence of economic duress.

The decision in Stilk v Myrick might have been different if the plaintiff could have

For more on duress refer to Chapter 11.

CONSIDERATION MUST BE SUFFICIENT THOUGH NOT NECESSARILY ADEQUATE this case that the nature of the voyage had changed. The ship had become so short-handed that it had now become hazardous to proceed. The remaining crew had not contracted for such a voyage, and therefore they were held to be discharged from their existing contractual duties and free to make a new contract.

Both the principle in Stilk v Myrick and the exception propounded in Hartley v Ponsonby have been affirmed in North Ocean Shipping Co. Ltd v Hyundai Construction Co. Ltd [1979] QB 705. More recently, however, the principle and the qualification to it have been subject to further discussion and analysis in Williams v Roffey Bros & Nicholls (Contractors) Ltd [1990] 1 All ER 512. The case requires very careful consideration since the ramifications of the decision could potentially go far beyond the boundaries of suffi-ciency of consideration and, indeed, raise questions about the doctrine of consideration generally.

Williams v Roffey Bros & Nicholls (Contractors) Ltd [1990] 1 All ER 512

The facts were that the defendant building contractors entered into a contract to refurbish a block of 27 flats. They subcontracted the joinery work to the plaintiff for a price of £20,000. It was an implied term of the subcontract that the plaintiff would receive interim payments for completed work. The plaintiff received £16,000 for completing work on the roof, nine flats and preliminary work on the remaining flats. This sum represented 80 per cent of the contract price though in fact the plaintiff still had far more than 20 per cent of the work to complete.

The plaintiff thus found himself in financial difficulties because his initial price was too low and he had failed to supervise his workforce adequately. The defendants, who were under a penalty clause in the main contract if the work was not completed on time, became aware of the plain-tiff’s difficulties. The defendants agreed to pay the plaintiff an extra £10,300 based on a sum of

£575 per flat on completion to ensure that he continued the work and completed the work on time. The plaintiff completed a further eight flats and the defendants made one further pay-ment of £1,500. The plaintiff stopped work and brought an action for £10,847. The defendants denied their liability and, in particular, denied they were liable to pay any part of the £10,300 since the promise to pay these moneys was not supported by sufficient consideration from the plaintiff. The plaintiff was already under an existing contractual duty to complete the flats and as a result this could not amount to sufficient consideration to support the promise to pay the extra £10,300. Further, the defendants argued that the additional sums were only payable when the work was completed and that, as the plaintiff had left the site before this was done, he was not entitled to the extra moneys. However, both at first instance and in the Court of Appeal, it was held that the subcontractor was entitled to the contract price, less a deduction for defects.

The main argument in the case surrounded the problem of sufficiency of consideration and whether it existed to support the promise to pay the additional price of £575 per flat com-pleted. At first instance the judge found that the contractors, the defendants, had agreed too low a price with the subcontractor and that this was clearly contrary to their interests – they would never get the job done unless they paid more money. The judge concluded that the agreement to pay the additional moneys was in both the parties’ interests and that the agree-ment did not fail for lack of consideration. On the face of things the decision appears to be wrong since clearly on orthodox theory the subcontractor was already under an existing con-tractual duty to the defendants and this could not therefore amount to ‘good’ consideration. It may well be the case that the subcontractor had put in too low a price in his bid for the work, but it is not for the court to rewrite the contract simply because the plaintiff had made a bad bargain. It is always possible for the parties to abandon the contract by agreement and enter into a new one if they so wish. No evidence of this was forthcoming in the facts of the case.

CHAPTER 3 CONSIDERATION

On appeal to the Court of Appeal the defendants indicated that they hoped to obtain three principal benefits from the agreement, namely, getting the job finished, avoiding any penalties and avoiding the trouble of engaging new carpenters. The defendants nevertheless maintained that these benefits were not benefits of law since the plaintiff was already bound by his con-tractual duties to carry out the contract. The Court of Appeal held that the defendants were obliged to pay the extra moneys due and that the plaintiff had provided sufficient considera-tion to support the promise of the defendants.

In the Court of Appeal Glidewell LJ expressed the law in the following terms:

(i) if A has entered into a contract with B to do work for, or to supply goods or services to, B in return for payment by B and (ii) at some stage before A has completely performed his obligations under the contract, B has reason to doubt whether A will, or will be able to, complete his side of the bargain, and (iii) B thereupon promises A an additional payment in return for A’s promise to perform his contractual obligations on time and (iv) as a result of giving his promise B obtains in practice a benefit, or obviates a disbenefit, and (v) B’s promise is not given as a result of economic duress or fraud on the part of A, then (vi) the benefit to B is capable of being consideration for B’s promise, so that the promise will be legally binding.

On the face of things, the decision seems to go completely contrary to Stilk v Myrick, though Glidewell LJ was at pains to affirm the decision in that case and stated that his decision in Williams v Roffey Bros was merely a refinement of Stilk v Myrick. It will be recalled that in Stilk v Myrick Lord Ellenborough approved of the decision in Harris v Watson but not on the basis of the decision, that is, the application of public policy;

instead he relied on the lack of consideration. It might be said then that the rule relating to sufficiency of consideration was a means of applying a crude notion of economic duress, which was unknown in a substantive form until recent times. If this is the case then it may be possible to extrapolate a principle that an existing duty may be good consideration in the absence of economic duress or fraud on the part of the plaintiff provided the defendant obtains a benefit in fact from the existing duty being executed.

Such a proposition would also give credibility to Lord Denning’s comments in Ward v Byham and Williams v Williams, above, and which appeared to be tacitly approved of in Glidewell’s judgment. Further, the proposition would also support and explain the existence of the exception to the rule in Stilk v Myrick where a promise to perform, or the performance of, a pre-existing contractual obligation to a third party can be valid consideration, as expressed in Pao On v Lao Yiu Long and New Zealand Shipping Co.

Ltd v A M Satterthwaite & Co. Ltd, The Eurymedon [1975] AC 154 (see below).

It should be noted that promissory estoppel could not be pleaded by the plaintiff in the case since this cannot be used as a means of bringing an action. Clearly the case could give rise to a great deal of discussion, not least an argument that the stance taken by the Court of Appeal is a move towards an adoption of a law of obligations, which is not based on the doctrine of consideration. Indeed, the role played by promissory estoppel itself, as we shall see later, takes us somewhat nearer this result. In any event the emergence of

CONSIDERATION MUST BE SUFFICIENT THOUGH NOT NECESSARILY ADEQUATE the consideration does not move from the promisee, i.e. Williams, as required in the classical rules of consideration and contract. The decision as it stands is therefore in conflict with two very well-established principles of the doctrine of consideration and it is because of this conflict that the judgment in Roffey has come under increasing judicial criticism. Thus in South Caribbean Trading Ltd v Trafigura Beheer [2005] 1 Lloyd’s Rep 128, Colman J expressed serious doubts about the correctness of the reasoning in Roffey, considering that the decision is inconsistent with the long-standing rule that consideration must move from the promisee. He pointed out that in Roffey Glidewell LJ had relied heavily on the Pao On case which involved a tripartite agreement in which a pre-existing contractual obligation to a third party could amount to valid consideration.

Thus if there is a promise by A to B to perform a contractual obligation that A already owes to C this could amount to consideration as against B. This is correct since here for the additional promise by A to B, consideration has moved away from A since he has

Thus if there is a promise by A to B to perform a contractual obligation that A already owes to C this could amount to consideration as against B. This is correct since here for the additional promise by A to B, consideration has moved away from A since he has