Stilk v Myrick (ENG) (performance of existing duty - contractual duty): After sailors deserted, ship’s

captain offered extra money as an incentive to the remaining sailors to stay aboard. Captain then refused
to pay. Court held that he did not have to pay as there was no consideration received from the remaining
sailors. They had only agreed to perform their existing contractual duties.

Williams v. Roffey (ENG) (Existing Duty - Practical benefit): Promisee was offered more money in order
to facilitate completion of existing contractual duties so that the promisors would not incur penalty late
fees. Promisors then refused to pay, arguing that there was no consideration given by the promisee.
Court held that there was consideration, in the form of the late fees being avoided.

Antons Trawling Co Ltd v Smith (NZ) (is consideration necessary for variation of contract?): A trawler-
man agreed that he could receive extra payment from an extra catch as part of his trawling contract.
After extra catch had been obtained, extra payment was denied. No consideration pleaded. Court found
agreement enforceable (following Williams v Roffey) but stated that they could also reach this conclusion
on the alternate grounds that consideration is not necessary at all in such cases. This statement is not
binding precedent as the court did not ultimately base its decision on this reasoning. TL:DR, no
consideration may be necessary for a variation of contract provided the variation is agreed voluntarily
and without illegitimate pressure. Obiter only. See Teat v Wilcocks, obiter backs up Antons.

Cook Islands Shipping Ltd v Colson Builders Ltd (NZ): (performance of existing contractual duty)
Shipping company contracted to carry goods at a set freight. On encountering difficulties, it indicated
that it would only be prepared to proceed if the other party paid an additional sum over and above the
freight. The other party agreed. Court held that the promise was not binding as the shipping company
was doing no more than it was already obliged to do under the original contract. Affirms Stilk v Myrick in
NZ.

Glasbrook Brothers v Glamorgan County Council (ENG): (performance of existing duty - duty exceeded)
Police guarding a coal mine during a strike agreed to provide a stationary guard at the request of the
colliery manager (as opposed to their preferred option of a mobile guard) at a rate of payment of 2200
pounds. Manager refused to pay citing the absence of consideration as the police were already obligated
to afford protection. Court ruled this was true but they had a discretion as to the form it should take, and
doing more than deemed necessary was sufficient consideration for the promise.

Collins v Godefroy (ENG): (performance of existing duty - public duty) The plaintiff was subpoenaed to
give evidence on the defendant’s behalf in a case where the defendant was a litigant. The defendant
promised the plaintiff six guineas for his trouble. Court held there was no contract as the plaintiff was
required by law to give evidence when subpoenaed. Performance of an existing duty is no consideration.

Machirus Properties Ltd v Power Sports World (1987) Ltd (NZ): (practical benefit) Landlord made
concession to tenant in order to keep the tenant in occupation. The continued occupation conferred
practical benefits to the landlord, therefore it was the consideration for the agreement and so it was
valid. See also Musumeci (Aussie)

Pinnel’s case (1602) (ENG) (Part payment of debt): Early case outlining the principle that a promise to
forgo the balance of a debt is not enforceable. The debtor has no consideration for the promise to
release the balance of the debt as one can hardly satisfy this requirement by promising to to what one is
already bound to do. It would be different if, at the creditor’s request, some new element had been
introduced. See Foakes v Beer.
Foakes v Beer (ENG)(Part-Payment of Debt): Foakes (promisee) owed 2090 pounds to Beer (promisor).
Beer promised that if Foakes paid 500 up front and the balance in instalments, Beer wouldn’t initiate
proceedings on the judgment. No reference made to interest. Foakes eventually paid the balance but
refused to pay the interest. Beer then went to court. Court held for Beer as Foakes had not provided any
consideration for his side of the promise. This case gave rise to a complex rule regarding part payment of
a debt. (see flowchart)

Re Selectmove (ENG)(Part-Payment of Debt): IRD allegedly agreed to accept payment of tax by

instalments. Court applied the rule from Foakes v Beer. Williams v Roffey was pleaded, but it was
distinguished and held that the rule in that case only applies to contracts for the sale of goods/services.

HBF Dalgety Ltd v Morton (NZ) (part payment): Dalgetys acted for the Mortons on the sale of their farm
and claimed commission of $9786. Morton sent an envelope containing a cheque for $2450 and said
“my estimate of costs on a ‘work done’ basis”. Dalgetys banked the cheque but then wrote a letter saying
it hadn’t been received in full settlement. Court held that Dalgetys were entitled to the balance of their
commission because an agreement to accept a lesser sum in satisfaction of a larger sum must be clearly
spelt out. Morton’s words did not do that.

Magnum Photo Supplies Ltd v Viko NZ Ltd (NZ) (part payment): Debtor wrote to creditor offering lesser
sum than what was due, stating that presentation of the cheque will constitute acceptance of the offer
and that they looked forward to confirmation of acceptance. Creditors inadvertently banked the cheque.
A receipt was sent to the debtors indicating that the cheque had been received. Creditors claimed that
the banking was an administrative error and did not constitute acceptance. Court held that the debtors
had asked for confirmation even though they had stated that presentation would constitute acceptance.
More importantly, they were only notified that the cheque had been received, not that it had been
banked, and they only found out that it had been at the same time the creditors refused the offer. There
was no basis for them to believe that their offer had been accepted.

Homeguard Products (NZ) Ltd v Kiwi Packaging Ltd (NZ) (part payment - disputed debt): parties
disagreed on the debt owed. Creditor alleged two different sums at different times. The debtor sent a
cheque for less than either of the creditor’s sums “in full satisfaction” of the debt, which the creditor
banked. Court held that if a debt is unliquidated or in dispute then Foakes v Beer doesn’t apply to it;
acceptance by the creditor of a lesser amount than they are claiming “in full satisfaction” does in fact
satisfy and extinguish the debt. This rule was controversial and some of the following cases disputed it.

Re Mcardle (past consideration)(ENG): Testator left house to 5 sons in equal shares, subject to a life
interest for his widow. Wife of one son did improvements, bearing costs. After completion, the 5 sons
agreed to reimburse her. After the widow died, the wife asked for payment. Sons refused to pay her. She
tried to enforce her agreement in court. Court held that it wasn’t enforceable because the work was
completed before the contract was signed. It was therefore past consideration.

Lampleigh v Braithwait (1615): Past consideration may be valid if it was implied at the time of
performance that it would be rewarded by payment.

Ryan v Mason (past consideration)(NZ): Salary rise in 2007 held incapable of being consideration for a
restraint of trade clause entered into in 2008.
Hamer v. Sidway (forbearance)(USA): Uncle held to promise to pay nephew $4000 if nephew did not
drink/smoke/swear/gamble until age 21. Case demonstrates rule that forbearance (promising not to do
something) may be consideration.

Couch v branch investment (NZ): Mr C(ouch) borrowed money from plaintiff to buy a launch. Loan
recorded as hire purchase agreement, which was a sham. Launch later sank, and Mr C subsequently
failed to pay $6500 due under the agreement. New agreement then entered into which provided that, in
consideration of the plaintiff forbearing for 1 month to take court action in respect of the $6500, the
Couches would pay that sum on demand at 10% interest, to give the plaintiff a mortgage over 2 houses,
and to put the houses on the market for sale.

Martin v short (NZ): Consideration for a guarantee was held to consist of the creditors forbearing to sue
the debtor. Question was whether the creditors honestly believed they had a good cause of action.

Paulger v Butland (forbearance to sue as consideration)(NZ): Company in financial difficulties wrote to

creditors saying the company’s business was being sold and debt payment couldn’t be made to the
creditors until the sale was finalised. The letter stated that the company would make good all debts
within 90 days, and that the writer personally guaranteed that all such payments would be made. A
creditor then sued the writer personally for the money. Court held that this was an offer of a personal
guarantee by the writer, which was accepted by the creditors by forbearing to enforce payment until
after the 90 day period, this forbearance in fact constituted the consideration for the promise of the
guarantee.

NZ Shipping Co v AM Satterthwaite & Co (The Eurymedon)(NZ)(third parties): The plaintiff made an

offer to the defendant that if the defendant would unload the plaintiff’s goods from a ship (which the
defendant was already bound to do by a contract with a third party) the plaintiff would treat the
defendant as exempt from any liability for damage to the goods. Privy council found the defendant’s act
of unloading the ship to be good consideration: “An agreement to do an act which the promisor is under
an existing obligation to a third party to do may quite well amount to valid consideration…”

Moyes and Groves Ltd v Radiation (NZ) Ltd (NZ) (delay in delivery of goods)(extra performance): Buyer
ordered goods from seller. Goods took 3 years to arrive - contract had been forgotten. Price increased.
Buyer agreed to pay new price but later refused. Court held that there was fresh consideration for the
new agreement. Argued that the long delay meant the original contract had been abandoned, and the
seller’s giving up this claim was consideration for the buyers promise to pay the increased price. Shows
that any extra performance, however small, rendered by the promisor over and above the initial duty
constitutes consideration for the new promise.

Thomas v Thomas [1842] (adequacy v sufficiency)(ENG): Plaintiff’s husband expressed wish that if the
plaintiff survived him, she should have use of his house. When he died the executor (the defendant)
agreed to allow her to occupy the house (a) because of the husband’s wishes and (b) on the payment by
her of 1 pound a year. Court disregarded the husband’s wishes (motive not equal to consideration) but
the promise to pay 1 pound a year was sufficient, if not adequate, consideration for the promise.

D&C Builders Ltd v Rees (ENG): Despite early authority that payment by promissory note is a sufficient
difference to amount to consideration, it is clear that payment by cheque is not also, a promise can only
be relied on when it has been given with full consent, and not if it has been extracted by threats
Kain v Wynn Williams & Co (NZ): Appeal case. CREDIT CONTRACT. Kains agree to a conditional fee
agreement with Wynn Williams to pay court fees, professional fees plus interest (there are 5 terms to the
agreement). Kains argue that a conditional fee agreement is a consumer credit contract and their 14
days issued to pay the conditional fee agreement was consideration (constituting a contract as it
supposedly supplies credit). Formal disclosure is required, but in this circumstance not made. The
relevant contract here is the retainer whereby the solicitor agrees to perform legal services in
consideration for the client’s promise to pay a fee. There is a contractual right to defer payment must be
supported by consideration. Even if the supplier agrees to a delay in payment, there is no credit
agreement unless he receives consideration for consenting to the delay, as by stipulating for interest. The
case finds a promise to perform a pre-existing obligation cannot amount to consideration. The 14-day
grace payment period was a standard term of engagement with its clients and provides indulgence for
checking and payment purposes. Therefore it is not consideration.

MWB Business exchange v Rock advertising Ltd (ENG): Parties had oral arrangement to reschedule
payment obligations (effectively partially delaying payments from licensee who had financial difficulties)
Court applied Williams v Roffey rather than Foakes. They thought the licensor enjoyed practical benefits
from the new arrangement so there was good consideration. Decided by CA. Supreme Court changed
some things so be careful with this case.

Promissory Estoppel

Central London Property Trust Ltd v High Trees House Ltd (ENG): Plaintiffs leased a block of flats to the
defendants. In January 1940 the parties agreed in writing to reduce the rent. This was plainly owing to
war conditions which had caused vacancies in the flats. By 1945, the building was returning to full
occupancy. In september 1945 the plaintiffs wrote to the defendants to request a return to the full rent
and claiming arrears for the period since 1940. They then brought a test action to recover part of the
debt for the two quarters which had elapsed since June 1945. Court held that the full rent was payable
from the time that the flats became fully occupied in mid-1945. But it was stated that if the plaintiffs had
tried to claim for the full rent from 1940 onwards, they would not have been able to. This was reasoned
on the basis that if a party leads another party to believe that he will not enforce his strict legal rights,
then the Courts will prevent him from doing so at a later stage. Being obiter dicta and in a court of first
instance this was doubly not a binding precedent, yet it essentially created the doctrine of promissory
estoppel

Walton Stores (Interstate) Ltd v Maher (estoppel - AUS): Maher agreed to build and lease a building to
Waltons. Contract was prepared, and after amendments were suggested Walton’s solicitor told Maher
that he would let him know by the next day if there were any they did not agree to. Maher heard
nothing - began building a few days later. Walton was aware of this. Months later Walton informed
Maher that they wouldn’t accept the deal. Contract never signed. Court held that Maher could claim
damages not for breach of contract (there never was a concluded agreement) but to relieve the
unconscionable position which had arisen through Maher’s reliance on the understanding that the
contract would be signed. Promissory estoppel was the basis of the decision. This case swept away the
limitations placed on such estoppel by High Trees. Here the doctrine was used as a cause of action, in a
situation with no pre-existing contract.
Re Goile ex parte Steelbuild agencies Ltd (NZ): As promissory estoppel is an equitable doctrine, the
promisee must have acted equitably. In this case it was held that the promisee cannot rely on promissory
estoppel if he or she has failed to act in conformity with his or her side of the arrangement. Thus, a
debtor who failed to pay any instalments of a debt was held unable to rely on a promise to release him
from some of the debt if he paid an agreed number of instalments.

Welby v Drake (ENG)(part payment/estoppel/3rd parties): Defendant drew a bill for 18 pounds which
was returned unaccepted and came into the hands of the plaintiff. The defendant’s father made an
agreement with the plaintiff whereby he promised to pay him 9 pounds in return for the plaintiff’s
promise to receive it in full satisfaction of his claim. Money paid, but plaintiff still sued the defendant.
Court held that the plaintiff could not recover the balance as by suing the son he committed a fraud on
the father, who had only advanced his money on the grounds that it would eliminate liability for his son.
Where a lesser amount is paid in satisfaction of a debt by a third party to that debt, the creditor cannot
sue for the balance.

Burbery v Hindsbank (NZ)(estoppel): A receiver was held to be estopped from asserting his rights to
distrain on chattels when he had led the owners of a security over some of the chattels to believe he
would not do so. There was no contract but the Court held that it didn’t matter. From Cooke J: “The
principle of promissory estoppel does not seem to me to be limited to dealings between parties who
have prior contractual relationships inter se”.

Wilson Parking NZ Ltd v Fanshawe 136 Ltd (NZ)(estoppel): This case concerns remedies available for
estoppel when it is established. Wilson leased property, and had right of first refusal (ROFR) should the
owner sell/buy back the property. Sale was proposed, Wilson waived ROFR, and agreed to waive it in the
event of a buy back. Buy back was proposed and the buyer relied on Wilson’s representation that it
would waive its ROFR. Wilson tried to renege, to buyer’s detriment. Court held that there was estoppel
established. The question was whether money or a declaration that Wilson was estopped from
exercising ROFR was the appropriate remedy. Court held that it was the latter.

Hansard v Hansard (NZ)(estoppel): Whether defence of estoppel is available to trustees. Case found the
4 necessary elements to establish estoppel. Creation or encouragement of a belief or expectation (by
clear
words or conduct), reliance on that belief/expectation, detriment as a result of that reliance, it would be
unconscionable for the party against whom the estopped is alleged to go back on his word.

Duress: Pao On v Lao Yiu Long (HK): A promise to perform, or the performance of, a pre-existing
contractual duty to a third party can be valid consideration. It lays out the 4 elements required to
determine duress which are 1. Did they protest, 2. Did they have another viable course of action, 3. Were
they independently advised? 4. Took steps to avoid the contract after it was made.

North Ocean Shipping Co Ltd v Hyundai Construction Co (Atlantic Baron): HC agrees to build tanker for
NOS and NOS agrees to pay it off in five installments. USD went down by 10% so HC claimed 10% more
money. NOS initially rejected but then paid the extra. One year later NOS claimed for that 10% on the
grounds of economic duress. Court found in favour of HC: while the increase did amount to economic
duress, NOS’s payments without protest affirmed the contract.
CNT Cash & Carry Ltd v Gallagher: G delivered to wrong address and cigarettes were stolen - CTN did not
want to pay for stolen cigarettes. G threatened them with stopping future credit dealings so CTN paid,
but then sued for repayment on the grounds of economic duress. Court found against CTN because
(among other reasons) G acted in good faith when it demanded CTN pay - it genuinely felt entitled to
pay.

Dimskal shipping v International Transport Workers’ Federation: (Coercion) D refused to let ITWF dock
ship unless it entered ITF contract. Coercion applies when it is established that economic pressure was a
major reason for entering into contract. Court found in favour of P - the contract was void due to
economic duress.

AG England & Wales v R (NZ): Soldier wanting to publish book, had signed a confidential agreement. If
hadn’t signed would have had to return to old post. Was this duress/absence of reasonable choice?
Issue: “whether there was illegitimate pressure and whether that pressure brought about an absence of
practical choice” - Tipping. The Privy Council advised that the contract was not avoidable for duress. No
illegitimate pressure, so no duress. That first element is "pressure amounting to compulsion of the will of
the victim and the second was the illegitimacy of the pressure”.

Definitions

Consideration: Your act, forbearance, or promise in exchange for another party’s promise. Generally a
promise not supported by consideration is not enforceable. Consideration is the price paid by the
promisee for the promisor's promise (law of contracts in New Zealand Textbook) - deeds are an
exception to consideration

Executory Consideration: Exchange of promises - relating to an act that will occur in the future. Executed
Consideration: promise made in return for performance of an act (for example carbolic smoke ball,
promise of £100 if they are not cured after using ball 3 times daily for 2 weeks)

Past Consideration: An act that predates and is not in response to a promise, made subsequent to and
independent of a party’s actions. Past consideration is NO consideration. However, not all past actions
are past consideration. If an act has been done prior to a promise, it could be good consideration for the
promise if the act was done at the promisor’s request; there was understanding (meaning an act was to
be remunerated by payment or other benefit); and payment/benefit would have been legally
enforceable had it been promised in advance.

Adequacy vs Sufficiency: Consideration needs to be sufficient but it need not be adequate. Sufficient
means it must be real and of some value and to be sufficient in the eyes of the law. Adequate refers to
the value of consideration. A small value you may not be commercially adequate, but is acceptable in
this circumstance.

Contract v Deed: A deed must be in writing, executed and delivered, however it does not require
consideration. An individual executes a deed if he or she signs the deed, and if his or her signature is
witnessed by a non-party person.
Existing contractual duty: Performance of, or promise to perform existing contractual duty is not good
consideration. However performance of an existing contractual duty may be good consideration for a
new
promise if there is extra performance by the promisee; the primosor gets “practical benefit”; or existing
duty was to 3rd party. Performance, or promise to perform existing duty under a contract between
promisor and a third part is good consideration.

Part Payment of Debt: Part-Payment of undisputed debt (liquidated) is never valid consideration.
Exceptions - promise to accept a lesser sum plus something to which the creditor was not entitled can be
enforceable. Note: payment by a cheque is not a sufficient difference to amount to consideration (D&C
Builders).

Promissory Estoppel: Prevents or estops a party from going back on his promise where it would be
INEQUITABLE or UNCONSCIONABLE (unfair, or unreasonable) to allow him to do so. If promisee has
acted in reliance upon promise, then promisor will be bound by promise even though promise was not
supported by consideration. Last defence, generally consideration is still required.

Capacity: Certain categories of people in society may not have either the maturity or the capacity to
understand fully the nature and extent of contractual agreements. Minors, mentally disordered persons,
drunkenness. Contract and Commercial Law Act (CCLA)

Flowchart:

Undisputed/Liquidated sum of money: Foakes v Beer applies BUT only if payment + something extra
(time/location/cloak) = that ‘something’ constitutes practical benefits (W v R). Note: in Re Selectmove
this is restricted to contracts for goods & services.

Disputed/unliquidated sum of money: F V B doesn’t apply. Agreement to accept lesser sum (accord)
where banking of cheque may = full and final settlement (satisfaction): Homeguard. BUT must be
genuine: dispute (Dalgety), accord (Magnum).