Explanation on the Existing Contractual Duty to Supply Goods and Services

Article written by Teoh Soo Shin

The discussion will first have to start with the case of Stilk v Myrick (1809). Under this case, two sailors had deserted a ship during a voyage and the master promised to pay extra money to the remaining sailors if they continued the journey. The master then refused to pay and the sailors brought an action against the master to recover the extra payment. It was held that the promise was unenforceable due to lack of consideration. In reference to Campbell report, Ellenborough CJ under this case stated that the agreement under this case is void without taking into account public policy for lack of consideration. This is because the sailors had promised to do all they could if emergency occurs before they sail from London and the desertion of ship by two sailors was viewed as an emergency under his lordship opinion hence there was no consideration under this case. Therefore, the general rule is that the performance of existing contractual duty to supply goods and services does not amount to consideration.

Another similar case would be Hartley v Ponsonby (1857). Under this case, nearly half of the crew deserted the ship during the voyage and the master promised to pay more for the remaining sailors who were willing to continue the voyage but did not enforce his promise hence leading to this remaining sailors bringing a legal action against the master to recover the extra payment. The master tend to rely on Stilk v Myrick that the performance of an existing duty does not amount to consideration but has failed at last. The courts upheld the claim of the sailors in this case because the existing duty under consideration had became impossible to be carried out thus rendering the original contract frustrated and a new contract was being formed. In contrast, the existing contractual obligation under Stilk v Myrick was merely difficult to be carried out. In other words, it is not that the courts have recognized that the performance of an existing duty does amounts to consideration under Hartley v Ponsonby but rather it is the doctrine of frustration that intervened as to allow new consideration to be formed followed by the formation of a new contract.

Another important case to be noted is the case of Williams v Roffey Bros & Nicholls (Contractors) Ltd. (1990). Under the case, the subcontractor had entered into a contract with the main contractor to do some carpentry work. The initial contract price was 20,000 pound. The main contractor got to know that the original contract price of 20,000 pound was being underestimated. The main contractor was worried that the subcontractor would not be able to complete the work within the agreed time as he would then have to pay for penalty under the main contract. The main contractor agreed to pay Williams another 10,300 pound in addition to the original contract price of 20,000 pound after getting the advice of Mr.Cottrell whom is an independent surveyor working under Mr.Roffey’s side. But the main contractor refused to pay later hence leading to the courts’ action.

Under Williams v Roffey Bros & Nicholls (Contractors) Ltd. (1990), the courts held that the subcontractor was entitled for the extra payment because the main contractor has gotten his part of bargain which is to  avoid a penalty clause by offering the subcontractor extra payement. The courts has recognized practical benefit by ruling so because the defendant did not enjoy any legal benefit under this case.

Confusion may then arise over the reasons why is it that the claim under Stilk v Myrick was not being allowed but the claim under Williams v Roffey Bros. was allowed since both parties were merely carrying out their existing contractual obligation and if the doctrine of judicial precedent were to apply, Williams v Roffey Bros. should have followed Stilk v Myrick case. The issue was resolved under Williams v Roffey Bros & Nicholls (1990) 1 All ER at 526 by way of obiter dictas per Purchas LJ on grounds of public policy.

The public policy that was being referred to under Williams v Roffey Bros & Nicholls (1990) is the public policy under the case of Stilk v Myrick. The public policy is duress. Duress did not present under the case of Williams v Roffey Bros. since it is the main contractor who initiated the offer to pay more. Duress does apply to the master under Stilk v Myrick but not to the sailors. One should then take note that the masters were very dependant upon the sailors to complete the voyage at that time which is unlike today where the masters were no longer dependant upon the sailors to complete the voyage due to advancement of technology. Hence, the courts distinguished the case based on grounds that duress did not present under William v Roffey Bros. but it did present under Stilk v Myrick case. Purchas LJ was also of the opinion that it was not that the sailors under Stilk v Myrick did not confer practical benefit to the masters, but rather the courts were not to recognized it for public policy reason.

Subsequently, one may wnder as to how consideration did exist under Williams v Roffey Bros. & Nicholls (Contractors) Ltd. (1990). The answer is that the courts viewed Williams v Roffey Bros & Nicholls as having ‘two contracts’ which are the 20,000 and the 10,300 pound respectively. Hence, the subcontractor is said to have provided consideration by suffering detriment under the 10,300 pound contract. But in actual fact, there was only one contract since under ‘both contracts’ the subcontractor was merely carrying out the same work. This is the reason why it is said that practical benefit has been created by judges since in actual fact the subcontractor was just carrying out his original contractual obligation. Judges created consideration by way of inventing practical benefit. Glidewell LJ also mentioned an extract from Chity on Contracts ( 25th edn,1983) para173 under Williams v Roffey Bros. & Nicholls (1990) All ER at 522, when the counsel for the defence submitted that consideration did not moved from the promise, the authorities there cited:

‘the requirement that consideration must moved from the promisee is most generally satisfied where some detriment is suffered by him: e.g, where he parts with money or goods, or render services, in exchange for he promise. But the requirement may equally well be satisfied where the promise confers a benefit on the promisor without in fact suffering any detriment’.

The above principle will stand as long as the promise to pay more was not made under duressas it was the case under Williams v Roffey Bros.. The above extract was being mentioned as to justify the courts decision to recognize practical benefit under William v Roffey Bros. case.

Note that one may not be successful in arguing that since Roffey Bros. had only paid 20,000 pound to William hence it was reasonable for William to just carry out services worth of 20,000 pound. This si because it was William himself that suggest this quotation to Roffey hence he should not then later came back to argue that the money being paid by Roffey (20,000) was too little and it was unable for him to operate with a profit since he was given the chance to suggest the quotation, not Roffey. One must also take note of the decision of Ward v Byham which was being cited under Williams v Roffey Bros as it is a supporting decision which act as a catalyst which have persuaded the judges to reognise the practical benefit under William v Roffey Bros..

One may then have doubt as to the position of the case of Stilk v Myrick in light of the decision of Williams v Roffey Bros.. since it has been mentioned before, that the case of William v Roffey Bros. was being distinguished from Stilk v Myrick, but not being overruled, hence the case of Stilk v Myrick still remains to be valid. The case of William v Roffey Bros remains to be an exception as to the case of Stilk v Myrick by the subcontractor going over and above his duty. The subcontractor has gone over and above his duty by way of judges viewed the case as having two contracts and the additional duty was being carried out under the second contract of 10,300 pound. The principle under Stilk v Myrick still remains to be a cornerstone of the law of contract as per Purchas LJ under Williams v Roffey Bros. & Nicholls (1990) 1 All ER 1770 at 1177 as per Mocatta J and textbooks of authority such as Chitty on Contracts (25th edn,1983) vol 1 para 185.

In conclusion, it is important that the case of Stilk v Myrick was not being overruled by virtue of Williams v Roffey Bros., but rather it was being distinguished.