Performance Of Pre Existing Duty - Contract Law

Performance of Pre-Existing Duty

Pre-existing duties imposed by public law

• Chen Wishart: general rule is that a promise to perform/performance of pre-existing duty in public law is not consideration for a reciprocal promise

  • BUT courts circumvent rule if public policy reasons of using police as private army etc. are not undermined

    • Mainly by holding that more was promised than was strictly owed under the pre-existing legal duty.

    • Baker LJ in West Yorkshire Police Auth. v Reading Festival Ltd [2006]:

      • When services will have been asked for but will be beyond what police consider necessary to meet public duty obligation

      • OR where organisers would else have to pay for the service from their own pocket

        • Then consideration will be given by the police through additional service, and consideration given by X through payment.

    • Ward v Byham [1956]:

      • Denning LJ: Promise to continue to perform pre-existing duty is always good consideration

        • Because gives a direct benefit to the person to whom it is given.

      • Goold: May also be a case about how X did get something beyond that bargained – not just looking after child, but making it “happy”.

      • Chen Wishart: Denning recognises circumvention of ordinary principle of consideration.

Pre-existing duties owed to a third party

• Performance of existing contractual duty to third party = consideration

• So if Y pays X to perform his pre-existing duty to Z

  • Then this will be consideration (by Y, not Z)

  • Pao On v Lau Yiu Long [1980]:

    • Lord Scarman:

      • Promise to perform to 2^nd party, or the performance of a pre-existing contractual obligation to a third party

        • can be valid consideration.

      • Agreement to do an act which the promisor is under an existing obligation to a third party to do,

        • may quite well amount to valid consideration

          • because promisee obtains the benefit of a direct obligation.

Contract Modifications –where there is a pre-existing contractual duty to the other party

Agreements to end the contract

• When contract not fully executed and both parties owe outstanding obligations to each other

  • Each party provides consideration by agreeing release of the other from their obligation in return for release from their own obligation

• BUT if only one party wants to terminate the contract

  • So, if X has outstanding obligations to Y

  • But Y has not no outstanding obligations to X

    • X can only terminate the contract by giving Y something extra in consideration in return for release.

More for same - Where X agrees to modify the contract by paying more for Y’s pre-existing contractual duty

• Traditional Rule

  • Still v Myrick [1809]: M agreed with S to work a voyage. 2 of 11 S deserted, so M agreed to share the wages of the deserters with the remaining 9S if they worked the ship back to London. When they got there, M refused to pay

    • Campbell’s Report: S’s claim failed because provided no consideration for the master’s promise – was already contractually obliged to sail the shop home

      • So unless additional consideration, modification for giving more for pre-existing duty means new agreement is unenforceable.

    • Espinasse’s Report: S’s claim failed b/c didn’t want sailors to make extortionate demands on masters of ships during voyage

      • Leaves door open for modifications allowing greater payment for same duty w/o consideration as long as no duress.

        • Traditionally accepted rule = Campbell.

• Traditional Exceptions to the Traditional Rule

  • Where promisee gives “more” than he was obliged to under pre-existing duty

    • E.g. able seaman promoted to second mate and thus entitled to more pay as more onerous duties to perform

      • X therefore gets “more” as consideration for extra pay.

  • Where original contract is abandoned and a new one formed

    • In which case, no pre-existing duty b/c been extinguished

    • New consideration is the promise to perform a new duty (albeit same one as before) for new price.

      • McKendrick: why didn’t S use this argument instead? Could it not be argued it was a new contract and the former had been abandoned?

• A contradiction to the traditional rule – practical benefit is valid consideration

  • Williams v Roffey Brothers [1990]: D, under a penalty clause for failing to complete on time, subcontracted work to C. C then asked for more money so as to fulfil obligations. D promised this, work completed, but D refused to pay.

    • Glidewell LJ

      • D received numerous benefits from agreeing to pay more

        • Ensures C continues work

        • Avoids penalty for delay

        • Avoiding trouble and expense of finding substitute.

      • If A and B have a contract where A promises to perform for payment and B later promises A an additional payment in return for A's promise to perform his contractual obligations on time

        • And as a result of giving his promise B obtains in practice a benefit, or obviates a disbenefit,

          • the benefit to B is capable of being consideration for B's promise

            • so that the promise will be legally binding

      • This is so even if B receives no legal benefit from the second agreement.

Same for less – Where X promises to pay the same despite Y having only given part performance

• Traditional Rule:

  • Foakes v Beer: B promised to forego the interest of F’s debt if F paid up in time. When F paid up within the required time, B turned round and demanded the interest as well.

    • Lord Blackburn:

      • Authorities say you need something collateral in addition to a lesser sum in order to discharge a greater sum

        • Can’t just pay the lesser sum in discharge of a greater

          • So do actually need legal benefit, not just practical.

      • Problem = all men of business recognise that prompt payment of part of their demand may be better for them

        • rather than sticking to their rights and demanding the entirety

• Arguably, even though Foakes recognised no legal benefit, it could have seen some practical benefit per Roffey

  • Re Selectmove Ltd [1994]:

    • Held Practical benefit not recognised b/c would disapply Foakes without authority to do so – was up...