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Williams v Roffey Bros and Nicholls (Contractors) Ltd

(1990) 1 All ER 512

Overview

This case involved the issue of consideration; in particular, whether performing an existing contractual obligation (completing carpentry work on time) could constitute valid consideration for a promise to pay more money to ensure timely completion.

Carpenter

Facts

The plaintiff/respondent (Lester Williams) was a carepnter who contracted to perform carpentry work for Roffey Brothers & Nicholls (defendants/appellants). When it became apparent Williams could not complete on time, Roffey Brothers promised to pay Williams extra money to ensure it was completed on time. Roffey Brothers would have incurred liability to a third party if the work was not completed on time. 

Was Roffey Brothers liable to pay the extra amount?

Held

Lord Justice Glidewell

Roffey Brothers was liable.  

If

(1) A enters into a contract with B for the supply of goods or services in return for payment by B; and

(2) Prior to completion B has reason to doubt whether A will complete; and

(3) B then promise A additional payment in return for B promising to perform on time; and

(4) As a result of this promise B obtains a benefit or obviates a disbenefit [eg, liability to third party]; and

(5) B’s promise is not given as a result of A’s economic duress or fraud

Then

(6) The benefit to B (or obviation of disbenefit) is capable of being good consideration for B’s promise

In the course of his reasons Lord Justice Glidewell stated [emphasis added]:

What was the true intention of the parties when they arrived at the agreement pleaded by the defendants ...? The plaintiff had got into financial difficulties. The defendants, through their employee Mr. Cottrell, recognised the price that had been agreed originally with the plaintiff was less than what Mr. Cottrell himself regarded as a reasonable price. There was a desire on Mr. Cottrell's part to retain the services of the plaintiff so that the work could be completed without the need to employ another sub-contractor. There was further a need to replace what had hitherto been a haphazard method of payment by a more formalised scheme involving the payment of a specified sum on the completion of each flat. These were all advantages accruing to the defendants which can fairly be said to have been in consideration of their undertaking to pay the additional £10,300. True it was that the plaintiff did not undertake to do any work additional to that which he had originally undertaken to do but the terms upon which he was to carry out the work were varied and, in my judgment, that variation was supported by consideration which a pragmatic approach to the true relationship between the parties readily demonstrates.

For my part I wish to make it plain that I do riot base my judgment upon any reservation as to the correctness of the law long ago enunciated in Stilk v. Myrick. A gratuitous promise, pure and simple, remains unenforceable unless given under seal. But where, as in this case, a party undertakes to make a payment because by so doing it will gain an advantage arising out of the continuing relationship with the promisee the new bargain will not fail for want of consideration. ...

Lord Justice Russell

Agreed with Lord Justice Glidewell

Lord Justice Purchas

Agreed that the appeal should be dimssed for reasons given by Glidewell LJ and also observed:

[emphasis added] The question must be posed: What consideration has moved from the plaintiff to support the promise to pay the extra £10,300 added to the lump sum provision? ... there was clearly a commercial advantage to both sides from a pragmatic point of view in reaching the agreement of 9th April. The defendants were on risk that as a result of the bargain they had struck the plaintiff would not or indeed possibly could not comply with his existing obligations without further finance. As a result of the agreement the defendants secured their position commercially. There was, however, no obligation added to the contractual duties imposed upon the plaintiff under the original contact. Prima facie this would appear to be a classic Stilk v. Myrick case. It was, however, open to the plaintiff to be in deliberate breach of the contract in order to "cut his losses'' commercially. In normal circumstances the suggestion that a contracting party can rely upon his own breach to establish consideration is distinctly unattractive. In many cases it obviously would be and if there was any element of duress brought upon the other contracting party under the modern development of this branch of the law the proposed breaker of the contract would not benefit. With some hesitation ... I consider that the modern approach to the question of consideration would be that where there were benefits derived by each party to a contract of variation even though one party did not suffer a detriment this would not be fatal to the establishing of sufficient consideration to support the agreement. If both parties benefit from an agreement it is not necessary that each also suffers a detriment. In my judgment, on the facts as found by the judge, he was entitled to reach the conclusion that consideration existed and in those circumstances I would not disturb that finding. This is sufficient to determine the appeal. ... I would dismiss this appeal.