[lucas166]

Jill works for Louis restaurant and has done for 5 years now. A month ago she received a letter stating that she has been given a bonus of 30,000 pounds for the exceptional work she has been doing for the company that has helped them achieve a 5 star rating. Jill is excited at the news and rings to confirm her acceptance. However a week later she receives another letter from her company saying that they have been receiving bad press in the paper as to the e amount of bonuses they give their employees.
She has come to you for advice

law problem question

[Forum User]

Where are you stuck? Do you recognise which area of contract law the question relates to?

[lucas166]

i imagine its consideration

[Forum User]

Yes, you're right. So where are you stuck, do you know the 'rules and exceptions' about past consideration?

[lucas166]

basically the rules and exceptions which apply here ?

[Forum User]

Well what is the general rule about past consideration? Do you know the cases re McArdle or Eastwood v Kenyon? Do you know the exceptions? Perhaps the cases you studied will be Lampleigh v Braithwait, re Casey's Patents, Pao On v Lau Yiu Long? Does that exception really apply here?

[lucas166]

oh yes i mentioned roscorla v thomas and re McaArdle however i got mixed up and said that performance of an existing duty impsed by law is no considerastion collins v godfroy too which is wrong and i spoke about how if it can be proved that she went beyond what was required of her in her job hence 'the exceptional' work then under the rules laid down in ward v byahm she may be able to challenge this.... wrong i know i just hope i get some marks for stating past consideration is no consideration and that the issue was lack of consideration. what do you think?

[Forum User]

Well, saying that performance of an existing duty imposed by law is no consideration is not technically wrong - it's just not relevant here since working in this restaurant was not a duty imposed by law.

I don't think Ward v Byham is an exception to past consideration. It's an exception to the rule that performance of a pre-existing duty owed under a contract is not good consideration. But the performance of the duty still follows the promise of extra remuneration in those type of cases.

Perhaps you could have looked at Pao On v Lao Yiu Long which lays down a three stage test when past performance can be good consideration:

1) The act was done at the promisor's request
2) The parties understood that the act would be remunerated
3) Had the promise occurred in advance of the act it would have been enforceable.

Clearly the work done was at the promisor's request and if he had promised the extra £30k in advance it would be enforceable so there are no issues with those. 2) is probably an issue because the act has already been remunerated (salary) and its questionable whether both parties understood that there would be some kind of performance bonus (we aren't told on the facts). I think 2) could only be satisfied if there was a written term in the contract that some performance bonus would be payable each year, in which case the letter would just be 'setting the amount' and enforceable.

But on the facts as given there is no sufficient consideration for the promise to pay £30k so it is not enforceable.

[lucas166]

i know its not its an exception to the rule that there is consideration for a duty impossed by law which i said was relevantr to this also although i know it is not lol now