Course Title: LAWS10200 Obligations 1

Study Plan: Performance of Existing Obligations –

Williams v Roffey - What is a Practical Benefit?
Learning Outcomes

Learning Outcomes
At the end of this study plan you will:
Understand the issues around ‘practical benefit’ and good consideration
when dealing with performance of an existing obligation.
Understand some of the commercial issues connected to this issue.
Have begun to develop research skills related to use of secondary
resources and analysis of academic opinion.

1.1 Section 1: Introduction

Essential Reading
Before completing this study plan you should read the following pages of your
essential text:Arvind, Contract Law, pages 73-83and alsoFinch & Fafinski, pages
157-164 (to refresh your understanding of the different types of secondary
1.1 Addyoutitle
resources here
may use)

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1.2 Performance of existing obligations – the issue of what
is a Practical Benefit?
This study plan helps you to examine a key issue within the topic of consideration as well as
to enhance your skills in locating, and using, secondary resources.

Traditionally, a promise to perform a contractual obligation already owed to the other party
will not amount to good consideration (see Stilk v Myrick (1809) 2 Camp 317. This principle
was applied in many cases until an issue arose in Williams v Roffey [1991] 1 QB 1. Although
Williams does not overrule Stilk, the case raises a number of interesting issues. You should
read the case of Williams but the focus of this study plan will be on the use of secondary
resources. Let us turn to the facts of Williams……

As discussed in the podcast, Roffey were a building company who entered into a contract to
refurbish 27 flats belonging to a housing corporation. The contract had a penalty clause for
late completion. Roffey sub-contracted some work to Williams, a carpenter. Williams fell
behind with his work and Roffey offered a bonus payment to finish on time (to try and avoid
their own penalty clause?). Williams carried on working until the payments stopped. When
sued for breach of contract, Roffey sought to argue that the extra payment was
unenforceable due to lack of consideration. Williams was only agreeing to do what he was
already bound to do and Stilk v Myrick was cited as the relevant principle to be applied.

The court held that a promise to make bonus payments to complete work on time was
enforceable if the promisor obtained a practical benefit and the promise was not given
under duress or by fraud. On the facts, it was the appellants’ own idea to offer the extra
payment. Therefore, there was no duress. The appellants also gained a practical benefit by
seeking to avoid the penalty clause.  Consequently, the promise for extra pay was
enforceable.

The case raises a number of interesting academic issues, which you will explore below. In
particular, an issue to consider is why does a practical benefit amount to consideration for
a promise to pay less as in Williams but a promise to accept less cannot amount to
consideration as in Foakes v Beer?

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2.1 Section 2: Using secondary resources

ActivityYou should read the case of Williams v Roffey. To develop your

commercial awareness of the issues in Williams, and use of secondary
resources, also read the following (they are all available online via
Westlaw):Practitioner TextChitty on Contracts, 33rd edition (online via
Westlaw)Section 8 ‘Existing Duties as Consideration’Adam Shaws-Mellor and Jill
Poole, ‘Recession, changed circumstances, and renegotiations: the inadequacy of
principle in English law’ (2018) JBL 2 101-121Consider the following:1. Can you
explain the rules relating to sufficient consideration, past consideration and also
consideration in the context of performance of an existing obligation?
2. Can you provide examples of commercial reality that might generate the need
for renegotiations to take place?
3. Does the approach taken in Williams afford a sensible and practical solution to a
common commercial problem? You might also want to consider the practical issues
that the impact of Covid-19 might cause.
In addition, compare and contrast the style of writing (and summary of the key
principles) in a practitioner text and an academic article.

Other Suggested Activities (delete if not required)

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Section 3: What about renegotiations and part payment of
debt?

You have already encountered the principle relating to consideration and part payment of
debt. The rule in Pinnel’s Case (1602) 5 Co Rep 117a and Foakes v Beer (1884) 9 App Cas 605
clarify that any promise by a creditor to accept a less amount owed so as to discharge a larger
debt will generally lack consideration.

However, what about a situation where such an arrangement gives rise to some form of
‘practical benefit’. It is easy to see how such arrangements may be of commercial benefit to
those owed outstanding monies. So, an issue to consider is why can a practical benefit gained
from a promise to pay extra amount to good consideration (as in Williams) but a promise to
pay less cannot? These issues have been explored in two cases Re Selectmove [1995] 1 WLR
474 and MWB v Rock Advertising [2018] UKSC 24

ActivityYou should read the cases of:

Re Selectmove [1995] 1 WLR 47MWB v Rock Advertising [2018] UKSC 24
1. Make a good case note of both cases for use in seminar 3.2. Use your
knowledge of search mechanisms for secondary resources to find:1 x short
practitioner article (or briefing note) which discusses the commercial
implications of the decision in MWB.1 x academic article which discusses the
decision in MWB.