Introduction necessary to summarise what was decided in

Introduction

 

To critically assess the relationship between the doctrines of consideration and promissory estoppel following the decision of the Court of Appeal in Williams v. Roffey Bros & Nicholls (Contractors) Ltd (hereafter, Williams v. Roffey),1 it is first necessary to contextualise this essay’s analysis by defining the doctrines of consideration and promissory estoppels. As part of this process, it was also necessary to provide an account of how these doctrines had developed prior to the decision in Williams v. Roffey.2 Then, with a view to considering the relationship between the respective doctrines of consideration and promissory estoppel, it is necessary to summarise what was decided in Williams v. Roffey3 itself. Following on from this aspect of this essay’s discussion, it is then necessary to consider whether and how the relationship between the aforementioned doctrines has changed since the decision of the Court of Appeal that is the subject of this essay’s analysis. Principally, it is considered whether there is a need for the doctrine of promissory estoppel to actually replace the doctrine of consideration in view of the repercussions of Williams v. Roffey4 to resolve the problems caused by this case. Finally, there is a need to conclude by summarising the key points derived from this discussion regarding the relationship between the two doctrines.

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Main Body of Analysis

 

(a) What are the doctrines of consideration and promissory of estoppel and how did they develop prior to Williams v. Roffey?5

 

Typically, it is provided under English law that a promise that is made exclusive of consideration cannot usually be enforced and is thus considered to be a promise that is made gratuitously.6 The reason for this is that the doctrine states that, except where a promise is made by way of a deed, a promise will not be deemed to be binding contractually; although legal consequences could still arise under promissory estoppel.7 Moreover it was found in Currie v. Misa8 that the doctrine of consideration is considered to be made up of either the promisor receiving a benefit or the promisee receiving a detriment.9 Such an understanding is only further supported by Dunlop Pneumatic Tyre Co Ltd v. Selfridge & Co Ltd10 where Lord Dunedin found the doctrine of consideration was also deemed to be “an act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought and the promise thus given for value is enforceable”.11 Finally, consideration should: (a) not be past;12 (b) be sufficient but does not have to be adequate;13 (c) move from the promisee;14 (d) not include an existing public duty;15 (e) not include an existing contractual duty;16 and (f) not include a debt’s part payment for a promise to forego the balance owed.17

 

Then, regarding the doctrine of promissory estoppel, the application of this doctrine prevents a party from acting in a particular way since one party made a promise and another acted by relying upon that promise.18 The doctrine of promissory estoppel first arose in Hughes v. Metropolitan Railway Company19 where Hughes owned property that had been leased to the Railway Company which allowed him to get them to provide for the property’s repair no more than six months after giving them notice do so. Nevertheless, a problem arose: within one month of Hughes giving the Railway Company notice, it was proposed by the Railway Company that their leasehold interest should be purchased by Hughes but nothing could be settled.20 Therefore, upon completion of the six months notice period, Hughes claimed for breach of contract and sought to have the Railway Company evicted from his property.21 However, it was determined by the House of Lords that the landlord had made an implied promise not to provide for their legal rights’ enforcement regarding the time limit for repairs and the fact the Railway Company had acted to their detriment based on this promise.22

 

The doctrine of promissory estoppel was then lost since the court in the case of Foakes v. Beer23 did not apply the decision in Hughes v. Metropolitan Railway Company.24 This is because the court in Foakes v. Beer25 instead opted to uphold the Pinnel’s Case26 principle in the event that a fixed sum is owed and a lesser sum’s payment will not satisfy the full amount without consideration.27 The reason for this is that it was found in Pinnel’s Case28 that the part payment of a debt is invalid consideration for a promise for the balance owed to be foregone aside from where, at the request of the promisor, part payment is provided: (a) prior to the due date; (b) with a chattel; or (c) to another destination. The part payment of a debt will also be considered to be consideration that is valid where a third party makes it for a promise to provide for the balance to be foregone.29

 

However, the Pinnel’s Case30 principle was then called into question once the doctrine of promissory estoppel had been resurrected by the decision in Collier v. P & MJ Wright (Holdings) Ltd31 regarding ‘alteration promises’.32 Such a view is supported by the fact that, founded upon the judgement of Lord Denning in Central London Property Trust Ltd v. High Trees House Ltd,33 the application of the doctrine of promissory estoppel may have assisted the claimant in this instance.34 This was considered to be a problem since any ‘backtracking’ could have been looked upon as being wholly ‘inequitable’ in the circumstances.35

 

(b) What was the decision in Williams v. Roffey36 and how has it impacted upon the relationship between the doctrines of consideration and promissory estoppel?

 

In brief, the facts of Williams v. Roffey37 involved Roffey Bros who subcontracted carpentry work on flats refurbishment to Williams. However, although some work was done on the flats, the price agreed turned out to be too low for completing all of the flats required.38 Therefore, since Roffey Bros was going to be liable for late completion in this instance, they promised Williams extra money per flat that was completed but only a few more flats were actually completed before Williams stopped due to an underpayment on the extra amounts that he was owed.39 As a result, it was held by the Court of Appeal that Williams provided consideration despite the fact he simply performed a duty that was pre-existing since promissory estoppel had not been argued or developed properly in the circumstances.40 

 

With regard to how Williams v. Roffey41 has impacted upon the doctrines of consideration and promissory estoppel’s relationship, the Court of Appeal’s decision in Re Selectmove Ltd42 followed shortly thereafter. This is because, although the principle in Williams v. Roffey43 was considered, it was determined by the Court of Appeal that this principle was not to be extended to cover debts part payment.44 The reason for this is that, as Lord Justice Gibson (with Lord Justice Balcombe and Lord Justice Stuart-Smith concurring) found, the earlier decision in Foakes v. Beer45 prevented any variation of any agreement to provide for a debt’s repayment without there being good consideration.46

 

It would seem a particular complication has arisen as a result of a practical benefit’s identification in Williams v. Roffey47 as opposed to a legal benefit. The judges in this case suggested there had been a shift in emphasis when it came to the matter of dealing with consideration and that there was a need for courts to find its existence to reflect the contracting parties intention.48 However, this did not sit all that well with the principle of legal benefit.49 This is because if a practical benefit existed regarding a promise to provide more then clearly the application of this principle may be extended to also cover promises that involved accepting less.50 The problem is that such reasoning would seem to contradict the principle derived from the decision in Foakes v. Beer,51 despite the fact this case was not considered in Williams v. Roffey,52 even though the decision of the Court of Appeal overruled the decision in this case.53 Then, in Re Selectmove Ltd54 the Court of Appeal applied the rule in Foakes v. Beer55 rather than Williams v. Roffey,56 but still found a factual benefit and seemingly wanted to follow the rule derived from Williams v. Roffey.57

 

In view of the decision in Williams v. Roffey,58 it would seem a degree of dissatisfaction has arisen with the doctrine of consideration’s function and scope. Such a view is supported by the case of South Caribbean Trading Ltd v. Trafigura Beheev BV59 where it was found that the court would not have followed the decision of the Court of Appeal in Williams v. Roffey60 if it was not considered to be binding upon him. However, the decision in Williams v. Roffey61 was followed in Dresdner Kleinwort Limited and Another v. Attrill and Others.62 The case concerned an employer that undertook to establish a guaranteed minimum bonus pool for certain employees before arguing this was unenforceable due to a lack of consideration.63 Despite the fact it was unnecessary to reach a decision regarding the issue, the undertaking’s purpose was to allow the employer to be able to retain their staff during the financial crisis which was ostensibly successful.64 Therefore, the ongoing work of the employee was deemed at least arguably sufficient consideration for the creation of the aforementioned bonus pool in this instance.65

 

Nevertheless, the overall dissatisfaction with the doctrine of consideration’s function and scope, in the wake of Williams v. Roffey,66 has led to the question of whether consideration should be replaced with either the intention to create legal relations or the doctrine of promissory estoppels itself.67 Intention to create legal relations involves objectively reflecting the parties to a given contract’s true intentions by differentiating between social agreements and business agreements.68 This is because the approach of the Court of Appeal in Williams v. Roffey69 would seem to support the view the doctrine of consideration may become either part of (or be replaced by) the intention to create legal relations.70

 

However, if the doctrine of consideration were to be retained, the case of Williams v. Roffey71 may still be deemed either a case of duress or one where promissory estoppels may best found a cause of action.72 Nevertheless, whilst the adoption of intention to create legal relations main benefit centres upon legal certainty, Chen-Wishart has found there are a number of complications involved with using this doctrine in place of consideration.73 These complications centre upon gratuitous promises enforcement in practice and Chen-Wishart’s belief replacing consideration with intention to create legal relations merely needs the courts to restart the task of determining those promises that are enforceable.74

 

In the alternative, as has already been recognised, the doctrine of promissory estoppel provides for a promise’s enforcement where there is no consideration.75 Reflecting back upon Williams v. Roffey,76 the judges in this case put forward the view a claim may have been made for promissory estoppel. However, it is arguable such a development would not have served to benefit the party that was looking to rely upon the promise in the first place.77 This is because that party would not only have obtained less compensation but would also have suffered a detriment since promissory estoppel is harder to invoke.78 Moreover, matters are also not helped by the fact promissory estoppel may only be utilised as a ‘shield’.79

 

To effectively resolve the complications experienced regarding the relationship between consideration and promissory estoppel in the wake of the decision in Williams v. Roffey,80 it may be beneficial to adopt the Australian approach.81 This approach is summed up by the High Court’s decision in Waltons Stores (Interstate) Ltd v. Maher82 which recognised estoppel may be used as a cause of action and also implied that it has a role to play regarding contracts formation as well as their modification. However, whilst promissory estoppel could have potentially replaced the doctrine of consideration on this basis, Justice Brennan still recognised that it performed a different function to consideration.83 This is because whilst consideration protected a contract’s expectation interest, promissory estoppel was focussed upon the reliance interest and thus cannot be deemed to be a viable alternative to consideration in isolation.84

 

Conclusion

 

It is clear from the analysis completed in this essay that the relationship between the doctrines of consideration and promissory estoppel following the decision of the Court of Appeal in Williams v. Roffey85 has proved somewhat difficult at times. However, it remains arguable both doctrines have a role to play. This is particularly true if the line of reasoning adopted by the Court of Appeal in Williams v. Roffey86 is followed to both limit and refine the use of the doctrine by recognising a practical benefit, as opposed to a legal benefit. It is also arguable it would be beneficial for the English legal system to follow the example of Australia derived from the High Court’s decision in Waltons Stores (Interstate) Ltd v. Maher.87 The reason for this is that the Australian approach permits promissory estoppel to be used as a cause of action to operate with consideration, since consideration would guarantee the enforceability of contracts, whilst promissory estoppel would guarantee the availability of remedies where contractual agreements fail to be exercised fairly.

1 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

2 Ibid

3 Ibid

4 Ibid

5 Ibid

6 See, by way of illustration, M P Furmston, Cheshire, Fifoot and Furmston’s Law of Contract (17th Edition, Oxford University Press 2017)

7 See, by way of illustration, White v. Jones 1995 2 AC 207

8 Currie v. Misa (1875) LR 10 Ex 153

9 Ibid, 162

10 Dunlop Pneumatic Tyre Co Ltd v. Selfridge & Co Ltd 1915 AC 847

11 Ibid, 855

12 See Re McArdle (1951) Ch 669 subject to Lampleigh v. Braithwaite 1615 EWHC KB J17

13 See, by way of illustration, Chappell v. Nestle 1960 AC 87

14 See, by way of illustration, Tweddle v. Atkinson 1861 EWHC QB J57

15 See Collins v. Godefrey (1831) 1 B & Ad 950 subject to Ward v. Byham 1956 1 WLR 496 

16 See Stilk v. Myrick (1809) 170 ER 1168 subject to Hartley v. Ponsonby 1857 7 EB 872 and Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

17 Pinnel’s Case (1602) 5 Co Rep 117a

18 R Lee, ‘Promissory Estoppel and Proprietary Estoppel: A Response to the Myth of a Unifying Approach’ (2015) 6(1) King’s Student Law Review 24

19 Hughes v. Metropolitan Railway Company (1877) 2 App Cas 439

20 Ibid

21 Ibid

22 Ibid

23 Foakes v. Beer 1884 UKHL 1 – see also P N Pham, ‘Waning of Promissory Estoppel’ (1993) 79 Cornell Law Review 1263 and J M Feinman, ‘The Last Promissory Estoppel Article’ (1992) 61 Fordham Law Review 303

24 Hughes v. Metropolitan Railway Company (1877) 2 App Cas 439

25 Ibid

26 Pinnel’s Case (1602) 5 Co Rep 117a

27 See, by way of illustration, A Trukhtanov, ‘Foakes v Beer: reform at common law at the expense of equity’ (2008) 124 Law Quarterly Review 364

28 Pinnel’s Case (1602) 5 Co Rep 117a

29 See, by way of illustration, Hirachand Punamchand v. Temple 1911 2 KB 330

30 Pinnel’s Case (1602) 5 Co Rep 117a

31 Collier v. P & MJ Wright (Holdings) Ltd 2007 EWCA Civ 1329

32 See, by way of illustration, L Pearce, ‘Foakes v. Beer and Promissory Estoppel: A Step Too Far’ (2008) 19(3) Kings Law Journal 630

33 Central London Property Trust Ltd v. High Trees House Ltd 1947 KB 130

34 Collier v. P & MJ Wright (Holdings) Ltd 2007 EWCA Civ 1329, paragraph 42 per Lord Denning

35 Ibid

36 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

37 Ibid

38 Ibid – see also M A Giancaspro, ‘For your Consideration: Old Rules, Practical Benefit and a New Approach to Contractual Variation’ (The University of Adelaide, School of Law, April 2014)

39 Ibid

40 Ibid – see also Syros Shipping Co. SA v. Elaghill Trading Co. 1980 2 Lloyds Rep. 390, 392

41 Ibid

42 Re Selectmove Ltd 1993 EWCA Civ 8

43 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

44 Re Selectmove Ltd 1993 EWCA Civ 8

45 Foakes v. Beer 1884 UKHL 1

46 Ibid

47 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

48 See, by way of illustration, M A Giancaspro, ‘For your Consideration: Old Rules, Practical Benefit and a New Approach to Contractual Variation’ (The University of Adelaide, School of Law, April 2014)

49 Ibid

50 Ibid

51 Foakes v. Beer 1884 UKHL 1

52 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

53 See, by way of illustration, M A Giancaspro, ‘For your Consideration: Old Rules, Practical Benefit and a New Approach to Contractual Variation’ (The University of Adelaide, School of Law, April 2014)

54 Re Selectmove Ltd 1993 EWCA Civ 8

55 Foakes v. Beer 1884 UKHL 1

56 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

57 Ibid

58 Ibid

59 South Caribbean Trading Ltd v. Trafigura Beheev BV 2005 1 Lloyd’s Rep 128

60 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

61 Ibid

62 Dresdner Kleinwort Limited and Another v. Attrill and Others 2013 EWCA Civ 394

63 Ibid

64 Ibid

65 Ibid

66 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

67 See, by way of illustration, Z Liao, ‘Intention to Create Legal Relations and the Reform of Contract Law: A Conservative Approach in the Modern Global Era’ (2013) 4(2) Beijing Law Review 82

68 Ibid

69 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

70 See, by way of illustration, Z Liao, ‘Intention to Create Legal Relations and the Reform of Contract Law: A Conservative Approach in the Modern Global Era’ (2013) 4(2) Beijing Law Review 82

71 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

72 See, by way of illustration, D Valente, ‘Enforcing Promises: Consideration and Intention in the Law of Contract’ (University of Otago Dissertation, October 2010)

73 See, by way of illustration, M Chen-Wishart, ‘Consideration and Serious Intention’ (Oxford Legal Studies Research Paper No.29/2010)

74 Ibid

75 See, by way of illustration, Hughes v. Metropolitan Railway Company (1877) 2 App Cas 439

76 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

77 See, by way of Illustration, E McKendrick, Contract Law (7th Edition, Oxford University 2017)

78 Ibid

79 Ibid

80 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

81 See, by way of illustration, C MacMillan and R Stone, ‘Elements of the Law of Conract’ (University Of London 2013)

82 Waltons Stores (Interstate) Ltd v. Maher 1988 164 CLR 387

83 Ibid, 429-430

84 Ibid

85 Williams v. Roffey Bros & Nicholls (Contractors) Ltd 1991 1 QB 1

86 Ibid

87 Waltons Stores (Interstate) Ltd v. Maher 1988 164 CLR 387