Williams v Roffey Bros & Nicholls [1989]

Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5 is a seminal case in English contract law that brought about a significant shift in the traditional understanding of consideration. It dealt with the issue of whether a promise to fulfil an existing contractual duty could be considered valid consideration when varying a contract. The case departed from the established principle that promises to perform pre-existing contractual obligations were generally insufficient as good consideration.

Roffey Bros, the main contractor, had a contract with Shepherds Bush Housing Association Ltd to refurbish 27 flats in London. They subcontracted the carpentry work to Mr Lester Williams for a total sum of £20,000, payable in instalments. As the project progressed, some work was completed, and payments totalling £16,200 were made to Williams. However, Williams encountered financial difficulties because the agreed-upon price for his carpentry work was deemed too low. This financial strain raised concerns about the timely completion of the project, triggering a penalty clause that would make Roffey Bros liable to Shepherds Bush Housing Association Ltd for late completion. In response to this situation, Roffey Bros held a meeting with Williams and promised that an extra £575 per flat would be paid if Williams could ensure the timely completion of the remaining work. This promise was made to avoid the penalty clause and secure on-time project completion. Williams continued working and completed carpentry for eight flats but stopped due to receiving only £1,500. Subsequently, new carpenters were brought in to finish the remaining work. Williams initiated legal proceedings, claiming the agreed-upon additional payment.

Glidewell LJ departed from the traditional view, holding that Williams provided good consideration despite merely performing a pre-existing duty. Williams was awarded £3,500, acknowledging the practical benefit Roffey Bros gained from the timely completion of the flats. The judgment refined the principle set in Stilk v Myrick [1809], which previously held that a promise to perform an existing legal duty could not be good consideration for a new contract.

Glidewell LJ introduced a test for legitimate variation, stating conditions under which a contract could be legitimately altered, including situations where one party has reason to doubt the other's ability to fulfil their obligation. The judgment emphasised that for the promise to be valid consideration, there should be no economic duress or fraud involved.

Russell LJ advocated for a more pragmatic approach, suggesting that courts should readily find the existence of consideration to reflect the parties' intentions, particularly when bargaining powers are not unequal. The judgment highlighted that the variation in terms, including increased payment and the need for timely completion, was supported by consideration.

Williams v Roffey Bros marked a departure from the strict application of the doctrine of consideration, allowing promises to perform pre-existing duties to be considered good consideration under specific circumstances. The case introduced a more pragmatic approach to contract law, considering the practical benefits and intentions of the parties, especially in situations where bargaining powers are not unequal. The decision provided a degree of flexibility in contractual arrangements, enabling parties to adjust terms without facing the rigid constraints of traditional consideration principles. The court recognised and addressed the commercial realities of the construction industry, where unforeseen circumstances and financial constraints might necessitate variations in contractual terms.

In summary, Williams v Roffey Bros & Nicholls is a landmark case that redefined the concept of consideration in contract law, allowing for a more practical and flexible approach in situations where parties seek to vary existing contracts for mutual benefit.