Legal Consideration in a Social Agreement

Topics: Contract, Contract law, Contractual term Pages: 5 (1899 words) Published: October 25, 2010
Contract is an agreement which can be enforced by law. It has been defined that a legally binding contracts need offer and acceptance in order to create a legal relation. Basically there is a need for a contract to be supported by consideration. In other words, in English law of contracts it is required that the parties bring something valuable in exchange for the promise that they have made in that agreement. Therefore a legal consideration converts a social agreement into a legal agreement. According to Lord Pollock’s definition, consideration is “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” (Graw, S 2008. pp 115). As Knight stated, “In simple, traditional terms consideration is provided when the promisee suffers a detriment or the promisor gains a benefit, making a binding contract”. He also believes that “Without consideration, there is only a gratuitous promise and gratuitous promises are unenforceable in contract law (without a deed)” (Knight). The doctrine of consideration’s history is going back to the 16th century. Throughout the history, there have been many cases that helped in expansion and modification of the doctrine of consideration. This paper is going to study the traditional approach of the courts on the concept of consideration in contract law. This concept is going to be approached through the cases of Stilk v Myrick (1809) and Williams v Roffey Bros & Nichollas (1991), and Musumici v Winadell Pty Ltd (1994).

Stilk v Myrick (1809)
Stilk was to be paid 5 pounds per month during a voyage at sea. Two seamen abandoned and the Captain made an agreement that the wages of the two deserters would be divided equally among the rest of the crew if the two seamen could not be replaced at Gottenburgh. Myrick refused to honor the agreement so Stilk sued for his share of wages but the agreement wasn’t enforceable because Myrick didn’t give any consideration to pay. Moreover from the beginning of the journey, the crew were bound by the terms of the original contract to work and bring the ship back to London. Therefore the court held that under these facts, and according to their contract, the rest of the crew had the obligation to do all that they could under all emergencies during the voyage. Williams v Roffey Bros & Nichollas (1991)

The Roffey Brothers entered into a contract with a housing association to refurbish 27 flats. They sub-contracted carpentry work to Williams for the amount of 20000 pounds. However after some time, Williams got into financial difficulties and Roffey Bros became worried that they would not be able to complete the work on time. In order to avoid the penalty Roffey Bros offered to pay Williams an additional £575 for each flat completed which was an additional sum of 10,300 pounds. Williams continued to work on this basis, but after the completion of eight flats they have only received 1500 pounds so it became apparent that Roffey Bros were not going to pay the additional money. So they sued Roffey Bros. The Court of Appeal held that the agreement was enforceable and Roffey must pay Williams the extra money. Musumeci v Winadell Pty Ltd (1994)

Musumeci had leased a fruit and vegetable shop in a shopping centre run by Winadell. A larger fruit and vegetable shop opened in the centre. Since Musumeci was struggling to pay the rent with increased competition, Winadell agreed to the request to reduce the rent. However Winadell sought to resile from the arrangement, he did not want to terminate the lease so Musumeci sued. In other words Musumeci required damages for breach, relying on the Winadell’s promise for rent reduction. In this case, the Australian court adopted the principles from the Williams v Roffey Bros case with added more qualifications which is going to be discussed in the next part. Contract law and the traditional approach of the courts

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Cited: in: Carter et al, 1995, pp 7).
Conclusion
There are numbers of cases in contract law which demonstrates that the concept of consideration has been changed throughout the time. For instant the case of Stilk v Myrick (1809) states that if one of the parties does what they contractually are bounded to do, there is no consideration. In other words the performance of the pre-existing contract could not constitute consideration. However, the case of William v Roffey Brothers claims that there are more complex situations in commercial contracts. The court held that the case was economic duress and it brings the “practical benefit” to the doctrine of consideration. The development of the doctrine of consideration was necessary in order to get the commercial certainty in transactions. In 1991 the Australian court stated that the practical benefit may be found in every transaction and there might be practical benefits for the promise, but on the other hand, promisor could face unfair pressure and the practical benefit is not worth more than a remedy against the other party. It is important to note that for every agreement there are various number of elements to consider.
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