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

Introductin:

“The approach of the Court of Appeal [in Williams v Roffey Bros & Nicholls (Contractors)

Ltd [1991] 1 QB 1] strongly suggests that the modern courts will be more willing to find the

presence of consideration in the renegotiation of a contract and leave it to duress to regulate

the fairness of the renegotiation. Indeed, one of the factors which relied upon in adopting a

more liberal approach to consideration was the fact that the court could always set aside the

renegotiated contract on the ground of duress where the ingredients were established.”

Modern courts’ willingness to look for “presence of consideration in the renegotiation of

a contract”, subject to “duress to regulate the fairness of the renegotiation” while adopting

a liberal approach. On the grounds of duress, the renegotiated contract can always be set

aside by the courts. Furthermore, the relationship between consideration of renegotiation

of contracts and the economic duress has somewhat evolved gradually in the context,

leading the courts to adopt a relaxed approach towards the strict application of the law on

consideration.

While we explore the above and also attempt to understand how satisfactory the current

legal approach to consideration and duress is; we shall start by first briefly understanding

and analysing the Court’s approach of the appeal [Williams v Roffey Bros (Contractors)

Ltd, 1991]. Thereafter, we will discuss “The Doctrine of Duress” and “The Doctrine of

Consideration”.

The Case: Williams v Roffey Bros (Contractors) Ltd



This is a very appreciated and leading English law contract case: Williams v Roffey Bros

& Nicolls (Contractors) Ltd [Williams v Roffey Bros (Contractors) Ltd, 1991]. It was

instrumental in deciding that in modifying a contract, the court will be required to discover

reconsideration; on condition of the evidence of ‘factual benefits’ given from one party to the

other.

Facts

A contract to refurnish around twenty-seven flats in the area of Twynholm Mansions (At

Lille Road, London) was awarded to Roffey Bros by Shepherds Bush Housing Association

Ltd. For an amount of £20,000 carpentry was subcontracted to Lester Williams by Roffey

Bros. The amount was to be payable in instalments. On completion of part of work, an

amount of £16,200 was paid. Owing to the ‘low price’ the Williams ran into a financial

difficulty. Under a liability for the ‘penalty clause’ for late completion according to the

contract, the contracting party promised an extra amount of £575 for each flat for the ‘in-
time’ completion. Consequently, after completing eight flats William ceased the work as he

had received an amount of £1,500 only. Later, the contracting party roped in new carpenters,

which resulted in William filing a court claim.

The Court held that Williams should receive an amount that will be as much as eight times of

the amount originally promised. The court further said that the contracting party had agreed

that the original amount that was fixed for the contract was too less than the standard rates.

And it also advised for raising the amount keeping in place the mutual interests of both the

sides.

Judgement



The court held that considerations provided by William were sufficiently good enough,

in spite of the fact that he was performing a pre-existing duty. It was further added that

the court’s idea of “promissory estoppels” was still not completely developed and argued

sufficiently in the correct manner. Therefore the concept of economic duress provides a

possible resolution.

A test for identifying the legitimacy of variation in contract was set. The test included two

parties where One (A) has contracted work to the other (Say, B). A condition may arise

which leads A (the contractor) to believe that, even before the work is completed, B would

not be able to deliver the finished goods or services in time. This drives A to promise a higher

remuneration to B with a purpose of encouraging him to complete the work in time. Here in

the case, herewith, no economic duress is identified.

Though an already existing duty has been performed, the obvious benefit of having the work

completed in-time or before-time, can be recognised as good enough consideration.

As the principle had not been processed for anymore refinement, the three identified

cases carried the complete dependency, and were unanimously applied after the legal

considerations were found out. The considerations were such that none of the post-
contractual changes or variations could have been upheld. Thus the above test was considered

to be just a refinement of “the Stilk v Myrick principle” while leaving it unharmed. It was

held as to not to be the accurate measure. It was stated that numerous practical benefits apart

from the ones that from the part of the original consideration may actually go on to form

greater to the required good consideration in lieu of the fulfilment of the contract.

Russell LJ’s interpretation in the favour of the claimer:



 “The courts nowadays should be more ready to find [consideration’s] existence so as to

reflect the intention of the parties to the contract where the bargaining powers are not

unequal.”

Notable was the fact that even Roffey Bros’ employees felt the existence of below par

designed remuneration, far less than reasonable. This led to an imminent requirement to

change the existing way of payment in to a better designed formal method that takes into

consideration the economic factors and then decided upon to the money per flat. Finally the

variation was supported by consideration which now appears to be a pragmatic approach

towards a more amicable and collaborative relationship between the parties.

Duress and Consideration: Relationship

Concept of Economic Duress

In the English contract laws, the fairly established doctrine of duress states that one party

from the contract is allowed to decide the terms of an agreement through providing proof of

an undue force or pressure that was put on them by the other party to the contract, that is,

against property or person, at the time of formulation of the initial agreement. Here, the party

that is subjected to undue duress or pressure states that it had no option other than accepting

the terms and enters the contract.

Presently, Economic duress is found to be a comparatively fresh development in the

context of contract law but is considered of increasing importance owing to the undeniable

and practically noted consequences for the parties that enter into any kind of contractual

commercial agreements.


In recent years the Courts have now come to accept that, apart from the threats that are posed

against a single person (part of a contract) or their property, the economic threat of could also

be of equal significant force in making a party to sign an agreement despite their reservations.

Economic duress is therefore this undue commercial pressure that lets an innocent party to

give into unfavourable choices.

Doctrine of Consideration

Before the recognition of the concept of economic duress, the position of such commercial

situation was kept safe by famous the doctrine of consideration. Here, consideration is

termed as the amount that is paid by one party the promise of another. While the law

states that consideration mandatorily has to suffice but there is no compulsion of it being

adequate. It was recognized that, the initial duty assigned was never a condition for sufficient

consideration for promising a higher remuneration. In a case where sailors were not able to

claim an extra share of wages for those who had left as no further consideration had been

given for the promise of the desired additional wages. Moreover, they were already contract-
bound by a pre-existing task of serving on the ship as much as possible. Logic behind the

mentioned statements says that someone who is entering a contract with somewhat a strong

bargaining position could actually stress on payment of extra wages or money for performing

a already assigned duty, while the second party may not be left with any choice but to agree

to the first party’s demands. Such possibility of extortion was seen in certain cases.

The Relationship: In light of Williams v Roffey Brothers

Enforcement of a promise of additional payment in context of a pre-assigned duty has not

always been held up. In the previously discussed case, on part of the contracting party an

amount extra to the initially agreed amount was paid to the other party A to perform an



existing duty as part of the terms of the contract. This was done when B was aware of the

knowledge regarding the inappropriateness of the amount that was initially contracted with

A and was in fact too low when compared to the standard rates. They were also aware that A

would be unable to meet deadlines of the assigned work and eventually prove damaging to

B, commercially. As is evident, the additional payment to be made to A by B had practical

benefits for B, and doing this would also serve as the consideration for the same. On A’s part

there was no suggestion of duress.

In cases where the previously discussed case was not applied, as the Courts have been

considering that where a debt is repaid by instalments as there would certainly exist some

kind of actual benefit to the contract giver or the credit giver. Henceforth, the practical

benefit alone, in any case, will not be treated as the sole consideration since the in debt party

shall owe the amount in any case. Also, it happens in the case when the credit giver would

actually get an some extra benefit that “Williams v Roffey” will be applied.

Conclusively the aftermath of the examples and court-cases is that, whenever there are

any products supplied in form of services provided or manufactured goods, and there is

a practical benefit derived, reasonable re-negotiations are possible with no duress. So the

Economic duress is indeed a parameter that let measure reasonability of the re-negotiations.

Relaxation on the strict application of law of consideration

Economic duress is nowadays needed to be differentiated from commercial pressures that are

legitimate. Threats that attempt to drift business and that tend to drop or remove discounts

and prohibit buying and selling from a competitor. These are categorised as legitimate

commercial pressures instead of any kind of duress.

LLB CONTRACT LAW 8

Recent cases have helped establish that the innocent party must not have voluntarily opted

for entering into the contract, for application of economic duress for the contract that a party

enters and the amount that is paid. Also, the pressure exercised on the innocent party in order

to make them agreeing to the contract and enter will be termed as illegitimate. Therefore,

any threats that is not proper and legitimate and that lead to compulsion on the part of that

party to enter into a contract shall be termed an economic duress [CTN Cash & Carry Ltd v

Gallagher, 1994]. It may simply be stated as the absence of choice for the party.

Conclusion

In conclusion, though economic duress in English Law is considered to be a fresh concept,

its implications were far more important than visible. Economic duress and similar problems,

in a way were faintly shielded by the classic “doctrine of consideration” which protected

innocent parties by not allowing any kind of further promises in absence of consideration

enforcements and thereby protects the contracted parties from possible kinds of contract-
originated extortion and commercially unethical pressure where bargaining powers were

unequal for the two parties.

As it was visibly dissatisfactory for the previously discussed case of “Williams v Roffey”

displayed that for extended promises, practical benefits are considered to be sufficient

consideration, providing a clear advantageous position for the other party. A very bleak

difference that distinguishes between what can be considered to be a straight and thoughtful

commercial negotiation, and a threatening economic duress; let a part in the contract create a

somewhat financially superior position in the contract. The innocent parties these days seem

better protected through recognition of the possible economic duress instead of arguments

over inadequate past consideration.



The law according to the courts needs to be therefore applied for the party that is actually

facing injustice arising from the varying of the initial contract. Keeping in consideration the

details that differentiate legitimate commercial modification to duress or economic duress,

the law of consideration has to be put to application in an albeit subtle manner. This needs

to be so as to recognise only the legitimate terms of the contract as proper and sufficient

considerations. The purpose of this is to avoid misjudgement on the part of courts and

injustice on the part of either of the parties.

Present volatility of the commercial market owing to the various external factors such as the

economic turbulence in the commercial space, the related ‘demand-supply’ variation for the

contracting party in the market, the availability of cheaper labour, the special terms laid down

in the contract and the ever increasing competition for both the parties, the contracted as well

as the contracting, makes the task of the court altogether a lot more complex that it was

previously. Still the numerous examples of the cases go to prove that either of the parties

could be at fault, knowingly or unknowingly. However, in light of the case that we are

discussing even though the fault lies with the contracting firm and the courts held in favour

of the contracted, innocent party, the mere acknowledgement on the part of the contracting

party of the fact that the promised amount was needed as the original amount that was fixed

in the initial contract was not reasonable. The intensions of the contracting party is therefore

seen as fair and the initial fixed amount was merely a result of successful commercial

negotiation on the part of contracting party and a miss of commercial opportunity on the part

of the contracted firm. Having said this, it is also upheld that even though the contracted

party missed to avail an opportunity and entered the contract even when the contracted

amount was low, there is absolutely no way that it’s right can be jeopardised considering that

the contracted party nevertheless remained innocent. The additional payment, therefore,



promised by the contracting party to the innocent party have two fold effects: first,

encouraging the contracting firm to complete the pre-existing duty that is bound to it

according to the original contract; secondly, it also outlines an attempt on the part of the

contracting party to avoid a possible damage that can occur to its financial settings because of

the task that would otherwise be left incomplete by the innocent party. Therefore it makes it a

sufficient consideration to be termed as a case of economic duress and amounts to an undue

pressure that led the contracted firm with less choice other than entering the contract. For

courts, the complexity increases when the contracting firm is equally innocent and trying to

keep decision making power to be equally distributed among the two parties but the external

economic factor play a major role disabling the two parties to keep to the terms of the

original contract, owing to the loss that each one of them may encounter.

Altogether the current legal approach to consideration and duress is a vital attempt to

maintain the rights of both parties in the contract and takes care of upholding the practical

benefit driven approach. The law in itself create a balance of ‘negotiation-power’ between

both the parties of the contracts without jeopardising the common interests. The law is

already playing an important role in making the courts view the contract-cases in a new light

and is set to further streamline itself with more judicial contribution so as to re-affirm it

importance and aid justice.

References:

Philip Newman,Barrister and NitinKhandhia, Solicitor, The law of Economic Duress, Vol. 01

pp. 2-15

Harris v Watson discussed in Smith, J. C. – Smith & Thomas A Casebook on Contract (11th

Edition) p.233 and p.235, Sweet & Maxwell, London

J.R. Carby-Hall, (1986) "Termination of Employment Other Than By Dismissal", Managerial

Law, Vol. 28 pp.1 - 17

M.H.Ogilvie, “Economic Duress, Inequality of Bargaining Power and Threatened Breach of

Contract”

Resource Book 2 W300: Law – Agreements Rights and Responsibilities (2003), Open

University, Milton Keynes

 Stilk v Myrick (1809), Smith, J. C. – Smith & Thomas: A Casebook on Contract (11th

Edition) p.234, Sweet & Maxwell, London

Treitel, The Law of Contract, 10th Edition, 1999, Sweet & Maxwell pp.88-92

Williams v Roffey Brothers & Nicholls (Contractors Ltd, Smith & Thomas: A Casebook on

Contract (11th Edition) p.236, Sweet & Maxwell, London