Facts
- Roffey Bros & Nicholls (the defendants) contracted to refurbish a block of flats and subcontracted the carpentry work to Williams (the claimant) for a fixed price.
- Williams encountered financial difficulties and informed Roffey Bros that, due to the low fixed price, he could not finish the work on schedule.
- The main contract between Roffey Bros and the housing corporation contained a penalty clause for late completion.
- To ensure timely completion and avoid penalties, Roffey Bros promised to pay Williams an extra amount per flat over the original contract.
- Williams continued the work under this new promise, but Roffey Bros later refused to pay the additional sum.
- Roffey Bros argued that Williams was already contractually obligated to perform the work and thus had not provided new consideration for the promise of additional payment.
- Williams brought a claim for the extra payment.
Issues
- Whether performing an existing contractual duty could be valid consideration for a further promise of payment.
- Whether the promise of additional payment was binding where the promisee already had a duty to perform the work.
- Whether a “practical benefit” obtained by the promisor from a further promise can constitute good consideration.
- Whether the promise was made absent duress or fraud, affecting the enforceability of the agreement.
Decision
- The Court of Appeal found in favour of Williams, holding that a promise of extra payment for the performance of an existing duty can be supported by consideration if it confers a practical benefit or obviates a disbenefit to the promisor.
- The court determined that Roffey Bros gained a practical benefit, namely ensuring timely completion to avoid penalty clauses and other related advantages.
- It was expressly held that the promise was enforceable as long as the additional agreement was not procured by duress or fraud.
- The decision distinguished the case from the traditional rule in Stilk v Myrick and limited the expansion to situations involving payment for additional performance, not part-payment of debt.
Legal Principles
- Consideration in contract law may be satisfied by a practical benefit to the promisor arising from a promise to perform an existing contractual obligation, provided no duress or fraud is present.
- The doctrine does not extend to promises to accept less (part payment of debts), as confirmed by subsequent cases like Re Selectmove and MWB Business Exchange Centres Ltd v Rock Advertising Ltd.
- Economic duress operates as a limitation, rendering unenforceable any agreement procured through illegitimate pressure.
Conclusion
Williams v Roffey significantly reshaped the doctrine of consideration by recognizing practical benefit as valid consideration for promises of increased payment under existing contracts, provided such promises are free from duress and not related to part payment of debts. The scope of this principle, however, remains circumscribed by both precedent and the requirement for absence of economic duress.
