The Evolution of Consideration in Contract Law: A Critical Analysis

This article examines the evolution of consideration in contract law, focusing on the landmark case of Williams v Roffey Bros. It discusses the traditional rule of consideration, its criticism in the Stilk v Myrick case, and the departure from it in Williams v Roffey Bros. The article argues in favor of the court's decision to prioritize fairness, reasonableness, and commercial utility over technical questions of consideration. It also explores the conflicting judgments in Foakes v Beer and Re Seletmove Ltd and their impact on the concept of consideration. Overall, the article concludes that Williams v Roffey Bros has redefined the concept of consideration and highlights the shift towards a more pragmatic approach in contract law.

Running head: BUSINESS LAW
Business Law
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Author Note

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Substantive law governs the subject matter and the calibre of the dispute. It is
described as the applicable law or the law of contract sometimes as per its use and application
in different situation. The substantive law of contract list out the rights and responsibilities of
the parties to a contract along with the remedies in case there is a breach of such contract.
Substantive laws of contract are either codified in the form of laws and statutes or they may
exist as precedents under common law1. The law of contract majorly depends on making an
agreement and legally binding it to form a valid contract. For a contract to be valid, an offer,
an acceptance, an intention to form the contract and a valid consideration is extremely
important. Consideration to a contract is referred to the agreed amount or value which is the
inducement all motivation for the parties to carry out their individual duty towards the
agreement. The traditional rule of consideration which talked about pre-existing legal duty
was changed in the Williams v Roffey Bros case2. The court took the route of fairness,
reasonableness and commercial utility or practical benefit to decide the case. The decision of
this case deviated from the traditional rule which was followed since the Stilk v Myrick case
in 18093. The court did not consider the technical questions of consideration while deciding
whether or not to enforce a promise in the Roffey Bros case. In this paper, the court’s
decision to follow fairness, reasonableness and commercial utility would be defended over its
decision of not following the technical questions of consideration and its traditional rules4.
In Stilk v Myrick, a few sellers agreed to sail and return through Baltic Sea. When
some of the crew did not come on the day of the voyage the captain promised to distribute the
absentees’ wages to the ones who are present. However on return the captain refused to pay
the extra waves to the crew as discussed before voyage. The court dismissed the plea of the
crew of recovering the extra wages from the captain. The court argued that the captain only
1 McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.
2 Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5
3 Stilk v Myrick (1809) 2 Camp 317, 179 ER 1168
4 Adams and Brownsword, “Contract, consideration and the critical path”, 53, Modern Law Review (1990): 536

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applies to pay the pre agreed wages to the crew which was legally binding due to the pre
existing contract. The crew was unsuccessful to recover their claim due to the absence of a
valid and exact consideration that existed on the oral agreement discussed with the captain on
a later date. The doctrine of pre-existing duty was highly criticized after the decision of this
case over delivered. Therefore the deviation from the traditional rule of consideration in the
case of Williams v Roffey was a relief to many.
In the case of Williams v Roffey, the traditional rule of consideration was thoroughly
changed and deconstructed to form a brand new principle. As Richards Stone argued that the
deconstruction of the traditional rule of consideration was essential to expand the horizon of
good and valid consideration5. In the Roffey Bros case, the court held that it would be a good
consideration when the pre existing agreed duty was carried out. Thus, yielding benefits or
avoiding disbenefit of an existing legal duty would constitute a valid and good consideration.
It is important to understand the doctrine of consideration for critically discussing the
principles that were held in the Roffey Bros case. The rules of consideration can be divided
under three categories: a) the first one of which holds that a consideration should be valid and
not adequate; b) past consideration is not a good consideration; and c) the promisee must pay
the consideration to the promisor. While, the traditional rule of consideration was followed in
the Stilk v Myrick case which works on the pre existing duty doctrine. In this case, a few
sellers agreed to sail and return through Baltic Sea. When some of the crew did not come on
the day of the voyage the captain promised to distribute the absentees’ wages to the ones who
are present. However, on return the captain refused to pay the extra wages to the crew as
discussed before voyage. The court dismissed the plea of the crew of recovering the extra
wages from the captain. The court argued that it was correct on the captain part to only pay
5 Stone, Richard, and James Devenney. The modern law of contract. Routledge, 2017.

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the pre-decided wages to the crew which was legally binding due to the pre existing contract.
The crew was unsuccessful to recover their claim due to the absence of a valid and exact
consideration that existed on the oral agreement discussed with the captain on a later date.
The doctrine of pre existing duty was highly criticized after the decision of this case was
delivered. Therefore, the deviation from the traditional rule of consideration in the case of
Williams v Roffey was a relief to many.
In Williams v Roffey case, there was an issue regarding subcontracting in a particular
building work. The construction company has hired Williams for completing certain work
within a specific time frame which he applies to. But on a later date the company refused to
pay him the extra money for meeting the deadline. Therefore, Williams sued Roffey Bros
where it was argued by the court that the claimant was eligible to receive the damages even if
he could only complete the work of 8 flats within the deadline. It was commented by the
court that William deserves to receive the compensation for he did not abandon the work
midway. Lord Glidewell laid down the practical concept of benefit test which referred to the
benefit of both the parties from an agreement. He stated that it is important to ensure that the
promisor and the promisee have received certain benefits, and not unlike previous
circumstances where the promisee would have been in a disadvantage for keeping the
promise that he made. The judgement of the Roffey Bros case that deviated from the Stilk v
Myrick case brought waves of evolution in the scenario of contract law in Australia. Lord
Glidewell argues that the judges in the Roffey Bros case did not intend to bring about a new
principle but to refine the older version.
The judgement in the Williams v Roffey case referred two considerations as
commercial utility or a mutual benefit which flows from the promisee to the promisor that
arises from a promise. Not only Australia but the good decision let down in the rock eyebrow

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case was welcomed in England Wales and was Evan welcome to by the Court of Appeal of
New Zealand. Even though the decision of the case has been criticized yet it has been
welcomed by many as it had challenge to the traditional rules and laid down a refined one.
The Roffey Bros case has several flaws and it is conflicting with the judgement laid
down in the Foakes v Beer case. This case is the instance where it can be seen that a contract
can be rescinded or waived off in case there is no valid consideration. The Foakes case and
the Roffey Bros case was decided within a span of 100 years apart yet they are conflicting on
several rounds the first and the foremost being the fact that focus was heard by the House of
Lords while Roffey Bros Case who is decided by the Court of Appeal. This makes the
decision of the Roffey Bros case not binding upon several cases of similar situation. Even
though the judges accepted the newer version of the traditional rule of consideration yet they
did not show the courage to adopt the new rule in their judgements, for deep thought it might
lessen the value of the Foakes case6.
Thus, it is challenging to lay down such judgement as they directly challenge the
established and landmark principles. In addition, the courts find it unacceptable to enforce the
precedents that are passed by the lower courts. It is to be argued that the decision of Roffey
Bros case directly confronts the traditional rule of consideration while making decisions on
whether or not to enforce a promise. However, the court is valuing the question of fairness,
reasonableness and commercial utility even when it is conflicting with the Foakes case and
also that it was not approved by the House of Lords. Even though it was under a lot of
controversies, yet the case is undoubtedly pragmatic7.
In Re Seletmove Ltd, the court did not change the principles of consideration pay part
payment home loan and debt was involved. It was held in the court that acceptance of part
6 Giancaspro, Mark. "Should the Practical Benefit Principle Extend to Contract Formation?." (2015).
7 Whincop, Michael J., Mary Keyes, and Richard A. Posner. Policy and Pragmatism in the Conflict of Laws.
Routledge, 2018.

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payment pertaining to loans and debts were neither enforceable, nor binding for the company.
This case is distinguished from the Roffey Bros case on the grounds of charges. It is
important for the court to distinguish between the two cases in order to follow the precedents
that were held in the Foakes case, by the House of Lords. Therefore even if the judgment
delivers in the Seletmove case boys inconsistent with the Roffey Bros case, yet it had to
follow the decisions of the Foakes case. Nonetheless, the Foakes case does not follow
existence of commercial utility, unlike the Roffey Bros case. Criticizing the judgment held in
the Foakes case, it was held that the payment of debt in installment is helpful for the creditors
and it is better than pressurising the creditors to pay the entire amount at one time.
Therefore, concluding with supporting the idea that the court refers to the questions of
fairness, reasonableness and commercial utility while deciding whether or not to enforce a
promise, over choosing the technical questions of consideration. As commented by Edwin
Peel, the court of appeal had to follow the decisions of the Foakes case in the Selectmove
case, for its decision was laid down by the House of Lords8. While, Lord Gibson argued that
there must be a mutual benefit of the parties where the creditor and the debtor agrees to settle
their outstanding by installment. The debtor and creditor would both look for their
convenience and for their own commercial utility or benefit in this process, as consideration
is meant to benefit the parties to the contract. Criticizing the judgment held in the Foakes
case, it was held that the payment of debt in installment is helpful for the creditors and it is
better than pressurising the creditors to pay the entire amount at one time. Here, consideration
flows from the promisee to the promisor. They must be a proper law or a precedent for
imposing such contacts. In the Foakes case, it was held at the factors that are being expressly
accepted were not a good consideration in terms of law9. However the followers of traditional
8 Peel, Edwin. Treitel on the Law of Contract. Vol. 414. London: Sweet & maxwell, 2015.
9 Knapp, Charles L., Nathan M. Crystal, and Harry G. Prince. Problems in Contract Law: cases and materials.
Wolters Kluwer Law & Business, 2016.

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principle of consideration would still be in favour of following the Foakes case, while the
followers of contemporary rule would be in favour of Williams v Roffey Bros Ltd. It is
argued that Williams v Roffey Bros Ltd Case had refurbished the traditional principle of
consideration, forming a fresh idea that supports the abolition of the element of consideration.
The court of appeal in New Zealand have followed to the foot step of Williams v Roffey Bros
Ltd case and have taken the steps to abolish the idea of consideration by introducing the
'benefit test’ since the case of Anton’s Trawling Co Ltd v Smith10.
Therefore, it is to be concluded that the Roffey Bros have redefined the concept of
consideration by revamping the age old traditional rules of consideration. The doctrine of pre-
existing duty was highly criticized after the decision of Stilk case over delivered. Therefore
the deviation from the traditional rule of consideration in the case of Williams v Roffey was a
relief to many In doing so, the courts have preferred to take the route of fairness,
reasonableness and commercial utility for enforcing a promise rather than following the
traditional rules of consideration. The major case laws discussed above are the strict evidence
of the statement.
10 Antons Trawling Co Ltd v Smith [2003] 2 NZLR 23 (CA)

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Bibliography
Books/Journal Articles
Adams and Brownsword, “Contract, consideration and the critical path”, 53, Modern Law
Review (1990): 536
Giancaspro, Mark. "Should the Practical Benefit Principle Extend to Contract Formation?."
(2015).
Knapp, Charles L., Nathan M. Crystal, and Harry G. Prince. Problems in Contract Law:
cases and materials. Wolters Kluwer Law & Business, 2016.
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK),
2014.
Peel, Edwin. Treitel on the Law of Contract. Vol. 414. London: Sweet & maxwell, 2015.
Stone, Richard, and James Devenney. The modern law of contract. Routledge, 2017.
Whincop, Michael J., Mary Keyes, and Richard A. Posner. Policy and Pragmatism in the
Conflict of Laws. Routledge, 2018.
Case law
Antons Trawling Co Ltd v Smith [2003] 2 NZLR 23 (CA)
Stilk v Myrick (1809) 2 Camp 317, 179 ER 1168
Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5