Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991]

English Contract Law

Williams v Roffey Bros &  Nicholls (Contractors) Ltd [1991]
‘Carpenter Shop’ by Carl Larsson

The amendment of an existing contract underpins the argument between contracting parties when a main building contractor secures a residential refurbishment project and accepts the tender of a carpentry subcontractor’s tender despite the low value of his submission.

Having agreed to both first and second fix twenty-seven flats within a specified time for £20,000, the respondent carried out the work on the understanding that payments were made on an arbitrary basis, and so after six months he had first-fixed all twenty-seven flats but second-fixed only nine, while having been paid £16,200 for the work performed.

Aware that his tender was now unprofitable, the respondent renegotiated to keep his business afloat and avoid the financial penalty clause applied to the appellants should the project overrun, whereupon both parties agreed to continue working together on the condition that a further £10,300 would be paid in incremental payments of £575 for each flat completed, however when the respondent left the project only £1,500 had been paid and only seventeen of the twenty-seven flats were substantially completed.

Initially seeking around £33,000 in damages the respondent reduced his claim to around £11,000, citing that the appellants had breached the terms of their oral agreement; whereas the appellants argued that the agreement to pay the additional £10,300 was unenforceable due to non-completion, and that no consideration had been given by the  respondent during revision of the original contract. 

Argued in the Kingston-Upon Thames County Court the judge found that while the flats had not been completed there had been sufficient consideration as to allow calculable damages of around £11,800, and awarded accordingly, while presented to the Court of Appeal the issues around payment for incomplete performance of a contract and the argument for lack of consideration were given closer examination before the Court  noted how p.126, para.183 of Chitty on Contracts stated that:

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

Thus the Court dismissed the appeal on grounds that the respondent’s agreement to continue working toward completion of the flats provided a degree of benefit to the appellants, because failure to do so rendered them subject to the penalty clause, while the Court finally reminded the parties that:

(i) if A has entered into a contract with B to do work for, or to supply goods or services to, B in return for payment by B; and (ii) at some stage before A has completely performed his obligations under the contract B has reason to doubt whether A will, or will be able to, complete his side of the bargain; and (iii) B thereupon promises A an additional payment in return for A’s promise to perform his contractual obligations on time; and (iv) as a result of giving his promise, B obtains in practice a benefit, or obviates a disbenefit; and (v) B’s promise is not given as a result of economic duress or fraud on the part of A; then (vi) the benefit to B is capable of being consideration for B’s promise, so that the promise will be legally binding.”

Central London Property Trust Ltd v High Trees House Ltd [1947]

English Contract Law

Central London Property Trust Ltd v High Trees House Ltd [1947]
‘Crescent of Houses’ by Egon Schiele

‘Equity regards as done that which ought to be done’ while in this instance the maxim is perfectly suited to the exploitative coloration of a business agreement, when in September 1937 a parent company and subsidiary entered into a written lease agreement concerning a newly built block of flats.

Shortly after the outbreak of World War II the buildings became partially occupied due to the risk of bombing, and so in order to keep the relationship profitable and fair the claimants agreed to reduce the rent from 2500l to 1250l per annum, yet while the rent reduction was put in writing it failed to express the end of the revision despite the original lease agreement running for a period of ninety-nine years.

Although the defendants enjoyed the reduced rent up to December 1945 despite the buildings now enjoying full occupancy with many tenants now paying higher rents than those initially agreed, however the death of the parent company’s owner revealed the oversight, whereupon the claimant and surviving business partner sought to recover rent arrears to the sum of 625l for the period between 29 September 1945 and 25 December 1945, while the defendants argued that the letter containing the reduced rent constituted a legally binding and thus enforceable contract for the remainder of the lease.

Referring to the binding effects of a promise, the court of the King’s Bench quickly balanced the probability of a breach where an agreement to reduce rents was challenged, however on this occasion the court upheld the claim on grounds that when agreeing to the reduce the rent it had been undertaken with mind to the onset of war, therefore no reasonable person would have entered into an arrangement where one party would unlawfully profit at the expense of another, while further reminding the parties that:

“[A] promise intended to be binding, intended to be acted on and in fact acted on, is binding so far as its terms properly apply.”

Moore v. Elmer (1901)

US Contract Law

Moore v. Elmer
‘Clairvoyant-Veritas’ by Gabriel Von Max

A promise to pay while absent of any consideration may at first blush appear to be enforceable, however the eyes of the law see things in quite a different light, as was found in this rather bizarre suit between a clairvoyant and the administrators of an estate.

For reasons best known to themselves, the plaintiff and former client had somehow entered into a bargain, whereby a written statement in January 1898 expressed that:

“In consideration of business and test sittings received from Madame Sesemore, the clairvoyant, otherwise known as Mrs. Josephene L. Moore on numerous occasions I the undersigned do hereby agree to give the above named Josephene or her heirs, if she is not alive, the balance of her mortgage note which is the Herman E. Bogardus mortgage note of Jan. 5, 1893, and the interest on same on or after the last day of Jan. 1900, if my death occurs before then which she has this day predicted and claims to be the truth, and which I the undersigned strongly doubt. 

Wherein if she is right I am willing to make a recompense to her as above stated, but not payable unless death occurs before 1900. Willard Elmer.”

And so upon his death, the plaintiff sued for recovery in the Hampden County Superior Court, while his various family members argued that the claim was void for want of consideration, after which the court dismissed the suit and the matter was argued again before the Massachusetts Supreme Court.

Here the court turned first to Chamberlain v. Whitford, wherein it had held that:

“An executed and past consideration is not sufficient to support a subsequent promise. It is not enough to show that a service has been rendered, and that it was beneficial to the party sought to be charged, unless it was rendered at his express request, or under such circumstances that the law would imply a request.”

While in Dearborn v. Brown the court had earlier held that:

“[T]he past performance of services constitutes no consideration even for an express promise, unless they were performed at the express or implied request of the defendant, or unless they were done in performance of some duty or obligation resting on the defendant.”

To which it had been evident that no money had been exchanged for the readings, nor any express terms set out during their meetings. And so when summarising the fruitlessness of the claim, the court finally relied upon Johnson v. Kimball in which it had later held that:

“An executed gift is neither consideration for an express contract nor a ground for implying one as a fiction of law.”

Thus the claim was one without merit and so the suit was again dismissed to the relief of the surviving parties and the dismay of a wanton clairvoyant, although one might have expected her to learn of the outcome prior to any litigation.

Greiner v. Greiner (1930)

US Contract Law

Greiner v Greiner
Image: ‘Plaza Lights, Kansas City’ by Thomas Kinkade

Inducement of consideration on the part of a promisee to a contract, whether written or oral, is an action that while not seemingly of benefit to the promisor, requires completion of the gesture by lawful means should natural justice be seen to be done.

In 1926, the appellant inherited a substantial amount of land from one of her sons, after which she aimed to use it to make amends for her late husband’s death, whose own will had disinherited four of his children, while the remaining four became beneficiaries to portions of his estate.

By way of reparation, the appellant sought the counsel of a number of those children, while on a number of occasions, explaining that she intended for the respondent to relocate from his home in Logan County, to a plot estimated at around 80-97 acres in size. This became problematic for the respondent as he was indebted by way of mortgage and could not just ‘up sticks’ and move, at which point the appellant took steps to reassign the mortgage to herself, so as to allow the respondent to take up residence on the land set aside for him.

This was duly executed until around a year later, when the respondent was served with a notice to quit by one of his brothers, whereupon he sought remedy by way of a conveyance from the appellant to support his right to title. Given that the appellant was illiterate, it became apparent that she had not taken the steps needed to complete such a disposition, but had instead relied upon her own insistence that she would bequeath him the land by way of a will, which was yet to be drafted.

When heard at the district court, the judge ruled in favour of the respondent, whereupon the appellant contested it within the Supreme Court of Kansas. Here, reference was made to s.32 of the Restatement Law of Contracts which reads:

“In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses.”

While s.90 of the same document reads:

“A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise.”

Which translated that despite a failure to endorse her intentions through written expression, the appellant had by virtue of her repeated declarations, created an enforceable contract of disposition that by extension had led to the relocation of the respondent on the pretence that title was both implied and ultimately due through either deed or testamentary powers. It was this irreversible fact that led the Court to uphold the previous decision and dismiss the appeal outright on grounds that financial remedy would not be sufficient to the cause in hand.