This advice deals with the issues of consideration and promissory estoppel.
There are numerous definitions of consideration in legal texts, one being “‘A valuable consideration, in the sense of law, may consist either in some right, interest, profit or benefit accruing to the one party or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other”.
In relation to Rent a Tents contract with Susie the terms of the contract are that in return for Rent a Tent providing a marquee for the birthday weekend Susie will pay £2,000. This is a binding contract as the several requirements to make a binding contract are, offer and acceptance, intention to create legal relations and consideration. ‘.
However Rent a Tent then approached Susie and seeked to change the agreement and increase the cost of hire of the marquee to £2,500 to which Susie reluctantly agreed. Can this be considered economic duress? Lord Scarman stated "The classic case of duress is, however, not the lack of will to submit but the victim's intentional submission arising from the realisation that there is no other practical choice open to him."
It needs to be considered whether this is a new binding agreement and if the variation of the price is supported by sufficient consideration. ‘Sufficient’ does not mean that consideration needs to be adequate … ‘.The benefit or detriment need not be equivalent in value to that which is received in return…the point is that the benefit or detriment must be ‘legally sufficient’ in the sense that the law recognizes that benefit or detriment as constituting consideration, but its value is irrelevant. If both parties merely perform an existing contractual duty in return for a promise then consideration is not sufficient.
Here it would appear that Rent a Tent are merely performing their duty to provide a marquee and that Susie is paying extra for this so is not getting any benefit for the extra payment that she has agreed to make. There appears to be no practical benefit to the promisor, for paying the £500 on top of the already agreed £2000. The promisee however is gaining without detriment which is not considered good consideration. The agreement is therefore not binding as Rent a Tent had an existing duty to provide a marquee
If however it can be shown that the promise was freely made and that Susie was receiving an objective benefit, or obviating a detriment, for the payment she agreed to make, the agreement will be supported by consideration and will be binding. The Court of Appeal held that it would be more ready to construe someone performing essentially what they were bound to do before as giving consideration for the new deal if they conferred a "practical benefit" on the other side. This essentially followed an earlier judgment.
This principle will not apply here as the promise of extra payment was not freely given and there was no ‘practical benefit’. When Rent a Tent upped their price by £500 there was no mutual interest or benefit for both parties, only for Rent a Tent. It was suggested by Rent a Tent rather than offered by Susie, so Susie does not owe Rent a Tent the extra £500. The fact that Rent a Tent asked for more money to complete an already existing contractual duty means that it will not amount to good consideration.
If Rent a Tent had agreed to exceed their contractual duty in return for extra payment then the agreement would be binding as it would be supported by consideration. However this does not apply here as a new binding contract was made with fresh consideration. Susie can be considered to have made the promise freely, resulting in the original contract being overruled and a new binding contract taking its place. This could mean that Susie would be entitled to pay Rent a Tent the full amount of £2500.
After the party Susie tells Rent a Tent that she will only pay £1,800. Rent a Tent agrees to accept this figure...
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