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 made an additional promise to perform the obligation he owes to C. This does not occur in a bilateral contract since A is only promising to B what he is already bound to perform under the contract. Colman J pointed out that Glidewell LJ had effectively substituted a different rule ‘that the promisor must by his promise have conferred a benefit on the other party’ from that of the rule that consideration must move from the promisee.
One has to be guarded in going as far as this though. The members of the Court of Appeal in Roffey made it very clear that the principle enunciated in the case did not go so far as to change the rule of consideration as regards the initial formation of the contract and its application was confined to the alteration of obligations within existing contracts. Attempts to place limitations on the application can also be seen in cases such as Re Selectmove [1995] 2 All ER 531, as discussed later in this chapter. Not all judges have been convinced that Roffey does have such a narrow application, as illustrated in
Anangel Atlas Compania Naviera v IHI Co. Ltd (No 2) [1990] 2 Lloyd’s Rep 526, and
in truth it may be extremely difficult to confine the effects of Roffey to the very narrow circumstances in which it appears to arise.
It should be noted that the rule that consideration must move from the promisee was threatened by the Law Commission in its 1996 Report No 242, where it recommended the abolition of the rule in furtherance of its reform of the doctrine of privity of contract, although only to the extent that it allows third parties to enforce a contract made in their favour. The requirement for consideration will still prevail in the contract between the original parties.
From a practical point of view in Roffey, it is somewhat perverse that, if the defendants had not taken the trouble to increase the fees owed to the plaintiff, they could merely have allowed him to carry on with the contract and could then have sued him for their losses under the penalty clause when the plaintiff inevitably failed to complete the work and was in breach of contract.
The problem facing the courts is clearly one of attempting to hold businesspersons to their promises. Whilst the Court of Appeal in Roffey has attempted to do this by way of a narrow departure from normal principles, another way forward is by varying the doctrine of estoppel. As indicated earlier this was not available in the Roffey case itself because of the fact that usually promissory estoppel cannot be used as initiating a course of action in that it is only available as a defence. The Australian courts have, however, attempted to enforce such promises by adopting a flexible concept of estoppel as seen in
Waltons Stores Interstate Ltd v Maher (1988) 164 CLR 387 and Commonwealth of Australia v Vermayen (1990) 170 CLR 394. In New Zealand another variation can be
seen in the Court of Appeal decision of Antons Trawling Co. Ltd v Smith [2003] 2 NZLR 23
For more on this aspect of promissary estoppel refer to page 75.
CHAPTER 3 CONSIDERATION
where reliance alone was held to be sufficient to render the alteration promise enforce- able provided the claimant could demonstrate that he had acted on the promise and its terms so as to be able to claim the extra money due in the promise. These approaches to the problem at least leave the principles of consideration in contract intact.
3. Existing contractual duties owed to third parties
An existing contractual duty owed to a third party may amount to sufficient considera- tion in return for a promise given by the promisee. This exception is usually expressed in the context of existing contractual duties, though there appears to be no reason why it could not equally apply to existing public duties. However, such instances would be rare since such duties are largely imposed by statute.
A typical example of this exception can be seen in the case of Shadwell v Shadwell (1860) 9 CBNS 159, where the plaintiff’s uncle wrote congratulating him on his engage- ment and promised to pay him £150 per annum until such time as he was earning £600 per annum as a chancery barrister. The plaintiff married and sued his uncle’s executors on the promise. It was held that, even though the plaintiff was already contractually bound to marry, this was nevertheless good consideration for the uncle’s promise.
Whilst Shadwell v Shadwell illustrates the point, it is of dubious authority not least because, as a family arrangement, it is questionable whether an intention to create a legal relationship existed or not. Further, it is doubtful whether the uncle intended the marriage to amount to consideration and, if he did not, where does the consideration lie?
The decision in Shadwell v Shadwell was followed in the case of Chichester v Cobb (1866) 14 LT 433 where the facts were somewhat, though not altogether, similar. The case which firmly establishes the principle contained in the exception is Scotson v Pegg.