Consideration — practice questions

1. Identify the Legal Issue: The core issue is whether SubCo provided valid consideration for BuildCo's promise to pay an additional £40,000. SubCo was already under an existing contractual duty to complete the work for £200,000.

2. State the General Rule: According to Stilk v Myrick, performing an existing contractual duty is not good consideration for a new promise. On this basis, SubCo's completion of the work would not be consideration for the extra £40,000.

3. Apply the 'Practical Benefit' Exception (Williams v Roffey): The Court of Appeal in Williams v Roffey established an exception. The promise to pay more is enforceable if the promisor (BuildCo) obtains a 'practical benefit' and the promise was not made under duress.

4. Analyse the Practical Benefit: BuildCo received several practical benefits from their promise: * They avoided the £50,000 penalty clause in their main contract. * They avoided the time and expense of finding an alternative subcontractor. * They ensured the work was completed on schedule, maintaining a smooth workflow. * The benefit of avoiding a £50,000 penalty far outweighs the cost of the extra £40,000 payment.

5. Consider Economic Duress: There is no evidence that SubCo used illegitimate pressure or economic duress. They genuinely under-priced the job and informed BuildCo of their financial difficulty. The promise to pay more was made by BuildCo to solve their own problem.

6. Conclusion: Since BuildCo obtained a significant practical benefit and there was no duress, the promise to pay the extra £40,000 is supported by valid consideration under the principle of Williams v Roffey. SubCo is legally entitled to claim the additional £40,000.

1. Identify the Issue: The issue is whether C's promise to accept £300 in full settlement of a £500 debt is binding.

2. Apply the Rule in Pinnel's Case / Foakes v Beer: The rule states that part payment of an existing debt is not good consideration for a promise to forgive the balance. The debtor (D) is simply doing less than they are already contractually obliged to do.

3. Analyse the Consideration: D has paid £300. This is part of the existing £500 debt. D has not provided any fresh consideration for C's promise to waive the remaining £200. The payment was made on the due date, not earlier, and no chattel was provided.

4. Distinguish from Williams v Roffey: The 'practical benefit' argument from Williams v Roffey does not apply to part payment of debts, as confirmed in Re Selectmove. The practical benefit of receiving some money rather than none is not sufficient consideration in this context.

5. Conclusion: C's promise is not legally binding due to a lack of consideration from D. Therefore, C can successfully sue for the remaining £200.