this case summary I will be outlining the key details of the Williams v. Roffey
Bros. & Nicholls LTD. 1991 1 Q.B. 1 case which was held in the court of
appeal. This case was initially held in the high court. Williams had approached
the high court in the first instance and had won the case before the company
appealed, leading to the present decision. The defendants (Roffey Bros. &
Nicholls), appealed on the grounds that an agreement between the parties
reached on 9 April 1986 whereby they agreed to pay the plaintiff an additional
£10,300 over and above the contract price originally agreed of £20,000 was
enforceable by the plaintiff and did not fail for lack of consideration. The
defendants argued that traditionally, performance of an existing contractual
duty cannot be consideration for a further promise from the party to whom the
existing duty is owed since there was no additional legal benefit or detriment.
plaintiff entered a subcontract with the defendants, who held the main building
contract, to carry out carpentry work in 27 flats for £20,000. The plaintiff
realised that the agreed price was too low for him to operate satisfactorily
and at a profit. The main contract contained a time penalty clause so the
defendants, who were concerned about the work not being completed on time, made
an oral agreement to pay the plaintiff an additional sum of £10,300 on which
the carpentry work had to be completed. Seven weeks later, when plaintiff had
substantially completed eight more flats, the defendants made only one further
payment of £1500. The plaintiff then sued the defendants for the additional sum
substantial completion entitled the plaintiff to payment: particularly A)
whether, on the true construction of contract, entire performance was a
condition precedent to payment; and B) Whether the official referee was wrong
in law in applying the principle of H. Dakin & Co.Ltd. v Lee 1916 1 K.B.
566 and rejecting the defendant’s submissions that the plaintiff had failed to
perform a condition on the fulfilment of which his right to sue depended.
the agreement was enforceable
there was sufficient consideration
the consideration moved from the promisee
judge held that the agreement for payment of the additional sum was enforceable
and did not fail for lack of consideration.
REASONING FOR DECISION –
denning stated that if the balance could be regarded as retention money then
the contractor should have done all of the work correctly, without defects or
omissions, in order to be entitled to the balance. Since retention money is
usually only 10 or 15 per cent, whereas this balance was more than 50 per cent,
he believed that the balance should not be regarded as retention money, but as
an ordinary lump sum contract. He went on to say that it was substantially performed,
and the contractor was entitled, therefore, to the contract price, less a
deduction for the defects.
B) Lord Romer stated that he
believed the referee was right in applying the principle because when a man
fully performs his contractual duties and supplies all that he agreed to supply
but what he supplies is subject to minor defects that he can be said to have
substantially performed his promise, it is, far more quittable to apply the H.
Dakin & Co. Ltd. V Lee principle than to deprive him wholly of his
agreement was enforceable because the promise that was made by the defendants
to pay the plaintiff the additional sum of £10,300, in return for the
completion of his existing contractual obligations on time, resulted in a
commercial advantage to the defendants. The defendants were able to gain
practical benefits because of the completion of the block of flats and also
managed to prevent dis-benefits by avoiding liability under the time penalty
clause. In addition to this, the defendants did not have to go through the struggle
of finding new subcontractors. There was no detriment to the plaintiff but regardless
of this, it is not necessary for there to be both benefit and detriment.
was sufficient consideration found because it was said that a main contractor
who agrees too low a price with a subcontractor is acting contrary to his own
interests. The agreement is in the interests of both parties and due to this it
does not fail for consideration.
defendants argued that the consideration did not move from the promisee based
on the principle illustrated in Tweedle v Atkinson 1861 1 B. & S. 393.
The judge said that his understanding of “consideration must move from the
promise is that “such consideration must be provided by the promisee or arise
out of his contractual relationship with the promisor. It is consideration
provided by somebody else, not a party to the contract, which does not “move
from the promise.” This was the situation in Tweedle v Atkinson 1861 1 B.
& S. 393 but it was not the situation in this case because the benefits to
the defendants arose out of their agreement with the plaintiff, who was the promisee.
The judge implemented a passage from Chitty
on Contracts, 26th ed. (1989), p. 126, para. 183 which said, “The
requirement that consideration must move from the promisee is most generally
satisfied where some detriment is suffered by him. But the requirement may
equally well be satisfied where the promisee confers a benefit on the promisor
without in fact suffering any detriment.” Due to this, the judge ruled that
there was valid consideration and the appeal was dismissed.
RATIO DECIDENDI –
23, Russel LJ said; “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”
Is this case
still current law?
The green case signal on the Westlaw database indicates
and verifies that Williams v. Roffey Bros. & Nicholls LTD.
1991 1 Q.B. 1 is still current law. Therefore, elucidating the impression
that the ratio decidendi in this case has not been overruled and the decision
in the case has not been reversed on appeal. All of this indicates that it has
received positive judicial treatment for the reason that it has been applied in
various subsequent cases such as Stevensdrake
Ltd (t/a Stevensdrake Solicitors) v Hunt 2016 EWHC 1111
have followed this decision?
One case that followed this decision is Stevensdrake Ltd (t/a Stevensdrake
Solicitors) v Hunt 2016 EWHC 1111
(Ch). According to the
Westlaw database, in this case, the defendant had been the liquidator of a
company and the solicitors had acted for him in relation to misfeasance claims
against the company’s former administrators (S and P). The claim was settled
for £125,000, £39,100 of which was paid to counsel and the solicitors and the
defendants each received £35,200. The solicitors argued that the agreement as
to the apportionment of the settlement monies was no more than a temporary cash-flow
arrangement and that they did not insist on allocation to themselves of the
total amount at the time because it was expected that full recovery would be
obtained from P. The court had to decide whether a distribution of monies
between the claimant solicitors and the defendant could be reopened
and it was held that an objective
review of the facts did not leave any real scope for a finding other than that
the “split” was agreed to and implemented on the basis that it was in
furtherance not only of the liquidation but also of the established working
relationship between the defendant and the solicitor handling the case. That
meant that the agreement as to the division of the monies did not fail for want
of consideration, which is why the case of Williams v.
Roffey Bros. & Nicholls LTD. 1991 1 Q.B. 1 was applied. In addition to
this, promissory estoppel was engaged. It operated to make it inequitable for
the solicitors to pursue the defendant for the whole or any part of the relevant
cases that have distinguished this
decision and outline the grounds for this distinguishment.
During court hearings, various cases can be
mentioned as a form of judicial precedent in order to support any points they
deem to be relevant to the case at hand. However, if a certain precedent was mentioned
that is not quite similar to the case being heard in court, it can be avoided
by distinguishing the case.
The first case that distinguished the decision
in Williams v. Roffey Bros. & Nicholls LTD. 1991
1 Q.B. 1 is Corbern v Whatmusic Holdings Ltd 2003 EWHHC 2134 (Ch). In this
case, the claimant had resigned as director after the defendants (a company)
applied to strike out and restrain the advertisement of a petition presented by
the claimant based on the alleged non-payment of wages. The claimant attempted
to recover the money through correspondence and then issued a statutory demand.
The defendant agreed that the claimant was entitled to the £2,200 but argued
that the claimant agreed to go without payment until the company had enough
funds to meet its obligations. The company further argued that there had been
consideration for the claimants promise in the form of the benefits he would
gain from its continued existence as a company. The claimant denied that there
had been such an agreement.
The case of Williams v.
Roffey Bros. & Nicholls LTD. 1991 1 Q.B. 1 was raised as precedent for
the case stated above. However, the judge refused to follow it. The judge said “It
was suggested that Williams v. Roffey Bros. &
Nicholls LTD. 1991 1 Q.B. 1 allows him to find consideration for Corbern’s alleged
promise in the benefits he would have gained from the continuation of the company.
But based on the reasoning given by the Court of Appeal in Reselect Group Ltd
1994 BCC 349 at 353 and 354, such an attempted extension would sterilise Foakes v. Beer, 9 App.Cas. 605”
there was little
documentary evidence that the alleged agreement ever existed, and it appeared
that there had been no consideration for the promise allegedly made by the
claimant. Moreover, the benefits the claimant allegedly gained from the company’s
continued existence was not sufficient to establish consideration. In other
words, in Williams
v. Roffey Bros. & Nicholls LTD. 1991 1
Q.B, the facts showed that there were benefits that derived because, for
example, the defendant avoided the facing the consequences that came with the
time penalty clause that existed in the main contract. Due to this, it was sufficient
enough to constitute consideration. Whereas in this case, the facts differ as
they show that the benefits that allegedly derived from the company’s existence
was not enough to be classed as a benefit and could not, as a result, constitute
consideration therefore highlighting the lack of similarity between both cases.
A second distinguished case is Selectmove Ltd,
Re 1995 1 W.L.R. 474. In this case, The Inland Revenue petitioned for the winding-up
of the company, Selectmove, on the basis of arrears of tax under the PAYE
system. The winding-up order was made and Selectmove appealed on the ground
that at a meeting with Revenue, it was agreed that due to Selectmove’s cash flow
problems the tax due would be paid in arrears. Consequently, Selectmove argued
that the petition debt was disputed, and the order should be set aside.
The issues were:
Whether the tax collector was entitled to
accept the instalment proposal
Whether there was consideration for the agreement
Whether, if there was no agreement, estoppel
prevented the Revenue from claiming debt
The plaintiff had pointed out that the company
did in fact pay its further PAYE and NIC liabilities and £7,000 of its arrears.
He relied on the decision in Williams v. Roffey Bros.
& Nicholls LTD. 1991 1 Q.B. 1 whereby a promise to perform an existing obligation
can amount to good consideration provided that there are practical benefits
Selectmove’s appeal was dismissed. The case of Williams
v. Roffey Bros. & Nicholls LTD. 1991 1
Q.B was distinguished by the judge. The judge’s reasoning was “If the
principle of Williams v Roffey Bros. & Nicholls (Contractors) Ltd. 1991 1
Q.B. 1 is to be extended to an obligation to make payment, it would in effect
leave the principle in Foakes v. Beer, 9 App.Cas. 605 without any application. When a creditor and a debtor who are at
arm’s length reach agreement on the payment of the debt by instalments to
accommodate the debtor, the creditor will no doubt always see a practical
benefit to himself in so doing. In the absence of authority there would be much
to be said for the enforceability of such a contract. But that was a matter expressly
considered in Foakes v. Beer yet held not to constitute good consideration in
law. Foakes v. Beer was not even referred to in Williams v.
Roffey Bros. & Nicholls LTD. 1991 1 Q.B. 1, and it is in my judgment impossible, consistently with the
doctrine of precedent, for this court to extend the principle of Williams’s
case to any circumstances governed by the principle of Foakes v. Beer, 9
In other words,
v Roffey Bros. & Nicholls (Contractors) Ltd. 1991 1 Q.B. 1 could not be
applied here because the facts in this case were more similar to the Foakes v.
Beer, 9 App.Cas. 605, whereby the absence of authority to enforce such a
contract was held not to constitute good consideration. As the case facts
relate more to the Foakes v. Beer, 9
App.Cas. 605 case than the Williams v Roffey Bros. & Nicholls
(Contractors) Ltd. 1991 1 Q.B. 1 case, it would not have been appropriate to
follow the Williams case. The judge could not have extended the Williams case
to an obligation to make payment either due to parliamentary sovereignty. If an
extension were to be made it would have to be made by Parliament, the supreme