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Help me please, Contract coursework
I was given the following coursework, can anyone help me to get a general idea of how i should attempt to start answering this question. Any advice is welcome:
In June 2004, Amber, a business consultant, secured a contract with Zax Limited to provide them with a highly specialised computer system. The terms of the contract required the system to be fully operational by 30th September 2004, subject to a penalty of £5,000 for every day’s delay after this date. Amber entered into three sub-contracts. The first was with David to provide the software for the new system, the second with Ron to provide the necessary computer hardware, and the third with Sharon to write a manual explaining the operation of the new system. All the sub-contracted work had to be completed by 30th August 2004. Under these contracts, David and Ron would be paid £20,000 each and Sharon, £5,000.
At the end of July, David told Amber that he would not complete the software in time unless Amber agreed to increase his payment by a further £5,000. Amber agreed to pay the increased sum in order to ensure that the job was done on time. However, Amber thought that it was only fair that she increase the payments promised to the others. Accordingly, she promised each of them a bonus of £5,000 if the job was done on time. At the same time, Amber asked Sharon if she could produce the manual by 15th August so that it could be presented in advance to the managers of Zax Ltd.
In the event, all three completed their tasks by 15th August and the system was successfully installed before Amber’s contractual deadline with Zax Ltd. However, Amber has now refused to make any additional payments to David, Ron and Sharon beyond the original contractual rates agreed with each.
Advise David, Ron and Sharon as to their legal rights under their respective contracts.
Thank you for anyone who can help me!
In June 2004, Amber, a business consultant, secured a contract with Zax Limited to provide them with a highly specialised computer system. The terms of the contract required the system to be fully operational by 30th September 2004, subject to a penalty of £5,000 for every day’s delay after this date. Amber entered into three sub-contracts. The first was with David to provide the software for the new system, the second with Ron to provide the necessary computer hardware, and the third with Sharon to write a manual explaining the operation of the new system. All the sub-contracted work had to be completed by 30th August 2004. Under these contracts, David and Ron would be paid £20,000 each and Sharon, £5,000.
At the end of July, David told Amber that he would not complete the software in time unless Amber agreed to increase his payment by a further £5,000. Amber agreed to pay the increased sum in order to ensure that the job was done on time. However, Amber thought that it was only fair that she increase the payments promised to the others. Accordingly, she promised each of them a bonus of £5,000 if the job was done on time. At the same time, Amber asked Sharon if she could produce the manual by 15th August so that it could be presented in advance to the managers of Zax Ltd.
In the event, all three completed their tasks by 15th August and the system was successfully installed before Amber’s contractual deadline with Zax Ltd. However, Amber has now refused to make any additional payments to David, Ron and Sharon beyond the original contractual rates agreed with each.
Advise David, Ron and Sharon as to their legal rights under their respective contracts.
Thank you for anyone who can help me!
The terms of this contract stipulate that the three, separate payments are all conditional on the system being operational by a specific date. If all parties have given assent to their contractual obligations, then David's subsequent request of additional remuneration in order to ensure fulfilment of the terms, is not covered by the contract, and as such, wholly unwarranted. Obiter dicta, any concurrent refusal to complete the project on-time, whether or not arising from the employer's own refusal to comply with demands that are, nonetheless, patently unreasonable, would have been tantamount to extortion; and, subject to the contract, the three would incur the stated financial penalty for late completion. David could not justifiably claim monetary compensation on an ostensible inability to deliver on the terms to which he previously assented: mitigating circumstances notwithstanding, Amber's sole refusal to facilitate such a claim would not entitle David to a legal remedy, under the conditions of his contract. However, it occurs to me that, in stating her assent to David's proposition (however unreasonable), she has entered into a verbal contract whose terms David has fulfilled, and he would thus have a legal case regarding her subsequent non-compliance. Furthermore, Amber is bound by the terms of her individual promises to Sharon and Ron, whose respective conditions were also fulfilled; and, as such, they too are equally entitled to make a claim against her.
That's how I've broken it down, anyway. You'll probably want to cite relevant precedents to reinforce your judgement.
That's how I've broken it down, anyway. You'll probably want to cite relevant precedents to reinforce your judgement.
Thanks for your help Profesh, most kindly appreciated
My argument should be logically sound. Obviously, you're going to need to reconcile it with the factual, legal considerations of the issue; I'm no Law student, and my knowledge of the subject is presently far more intuitive than substantial.
Still, for what it's worth, I hope I've been of help.
Still, for what it's worth, I hope I've been of help.
Think of the rule in Williams v. Roffey Bros - where a party to an existing contract later agrees to pay an 'extra bonus' in order that one party performs his obligations under the original contract, then the new agreement is binding if the party agreeing to pay the bonus thereby gained some new practical advantage or avoided a disadvantage.
Haven't read the facts too closely, so not sure whom to which it would apply, but the essence of the question seems to be along these lines.
Haven't read the facts too closely, so not sure whom to which it would apply, but the essence of the question seems to be along these lines.
Williams v Roffey Brothers (1990) is definitely a case worth considering. Here are the facts from lawteacher.net:
Roffey had a contract to refurbish a block of flats and had sub-contracted the carpentry work to Williams. After the work had begun, it became apparent that Williams had underestimated the cost of the work and was in financial difficulties. Roffey, concerned that the work would not be completed on time and that as a result they would fall foul of a penalty clause in their main contract with the owner, agreed to pay Williams an extra payment per flat. Williams completed the work on more flats but did not receive full payment. He stopped work and brought an action for damages. In the Court of Appeal, Roffey argued that Williams was only doing what he was contractually bound to do and so had not provided consideration.
It was held that where a party to an existing contract later agrees to pay an extra "bonus" in order to ensure that the other party performs his obligations under the contract, then that agreement is binding if the party agreeing to pay the bonus has thereby obtained some new practical advantage or avoided a disadvantage. In the present case there were benefits to Roffey including (a) making sure Williams continued his work, (b) avoiding payment under a damages clause of the main contract if Williams was late, and (c) avoiding the expense and trouble of getting someone else. Therefore, Williams was entitled to payment.
This case seemed to conflict with the judgment in Stilk v Myrick (1809) where performance of existing contractual duties by ship crew were not sufficient to be able to enforce extra payment the Capt. had promised after two crew members left the ship.
The basic rule here that you are considering is that consideration need not be adequate but must be sufficient - i.e. consideration must be of some value, but need not be of an equivalent value.
It's worth mentioning Dunlop v Selfridge (1915?!) which established that consideration should show benefit and detriment to both parties to a contract.
Hope that helps, sorry I don't have time to go into more detail.
Oh one more thing... worth looking at the judgments of those involved in Williams - I believe Russell LJ and one other whose name slips my mind explained why the case was different from Stilk but not sufficient to distinguish - may help you with the evaluation marks.
Roffey had a contract to refurbish a block of flats and had sub-contracted the carpentry work to Williams. After the work had begun, it became apparent that Williams had underestimated the cost of the work and was in financial difficulties. Roffey, concerned that the work would not be completed on time and that as a result they would fall foul of a penalty clause in their main contract with the owner, agreed to pay Williams an extra payment per flat. Williams completed the work on more flats but did not receive full payment. He stopped work and brought an action for damages. In the Court of Appeal, Roffey argued that Williams was only doing what he was contractually bound to do and so had not provided consideration.
It was held that where a party to an existing contract later agrees to pay an extra "bonus" in order to ensure that the other party performs his obligations under the contract, then that agreement is binding if the party agreeing to pay the bonus has thereby obtained some new practical advantage or avoided a disadvantage. In the present case there were benefits to Roffey including (a) making sure Williams continued his work, (b) avoiding payment under a damages clause of the main contract if Williams was late, and (c) avoiding the expense and trouble of getting someone else. Therefore, Williams was entitled to payment.
This case seemed to conflict with the judgment in Stilk v Myrick (1809) where performance of existing contractual duties by ship crew were not sufficient to be able to enforce extra payment the Capt. had promised after two crew members left the ship.
The basic rule here that you are considering is that consideration need not be adequate but must be sufficient - i.e. consideration must be of some value, but need not be of an equivalent value.
It's worth mentioning Dunlop v Selfridge (1915?!) which established that consideration should show benefit and detriment to both parties to a contract.
Hope that helps, sorry I don't have time to go into more detail.
Oh one more thing... worth looking at the judgments of those involved in Williams - I believe Russell LJ and one other whose name slips my mind explained why the case was different from Stilk but not sufficient to distinguish - may help you with the evaluation marks.
Profesh
Well, a little rep wouldn't go amiss. You can pay us all back in instalments 
Thank you guys do much, sorry ive been really busy so i was unable to take in all you said.
Kindest Regards, Sabrina
Profesh
Furthermore, Amber is bound by the terms of her individual promises to Sharon and Ron, whose respective conditions were also fulfilled; and, as such, they too are equally entitled to make a claim against her.
Of course, the key concepts are clearly:
- Consideration (or, more importantly in this question, lack thereof in promising to do that which one is already bound to do; Williams v Roffey, Stilk v Myrick - Campbell or Espinasse report? Maybe also consider Holmes view of contract law?); and
- Economic Duress (and why wasn't there economic duress in W v R?).
Thank you guys, really!! But could you just expand on the estoppel point please!
Thanks
Sabrina
Thanks
Sabrina
jcw
Of course, the key concepts are clearly:
- Consideration (or, more importantly in this question, lack thereof in promising to do that which one is already bound to do; Williams v Roffey, Stilk v Myrick - Campbell or Espinasse report? Maybe also consider Holmes view of contract law?)
- Consideration (or, more importantly in this question, lack thereof in promising to do that which one is already bound to do; Williams v Roffey, Stilk v Myrick - Campbell or Espinasse report? Maybe also consider Holmes view of contract law?)
Of course; I was hoping that someone would be able to cite relevant examples. Thankyou
jcw
...and Economic Duress (and why wasn't there economic duress in W v R?).
Presumably, by this, you mean circumstances in which an employee would be otherwise prevented from completing the task at hand due to economic factors; and whether or not this would affect the outcome of the case. In this instance, however, they were able to fulfill the terms of the contract without any additional remuneration prior to completion. Please correct me if I'm wrong (forgive the impertinence; I find this all to be rather intriguing
).Profesh
Presumably, by this, you mean circumstances in which an employee would be otherwise prevented from completing the task at hand due to economic factors; and whether or not this would affect the outcome of the case. In this instance, however, they were able to fulfill the terms of the contract without any additional remuneration prior to completion. Please correct me if I'm wrong (forgive the impertinence; I find this all to be rather intriguing ).
).No, that would be frustration (although economic factors will rarely be relevant: Davis Contractors v Fareham UDC). Economic duress is where someone agrees to a contract or contactual variation (eg to pay more money) because their will is vitiated by illegitimate threats to their economic interests. Of course, if I say 'pay me £50 more or I'll hit you', that is voidable for duress. If I say, 'I know you are under the threat of a penalty clause if you complete late, and although I've already agreed to complete on time, I'm going to go slow and complete late unless you pay me £50' that could be economic duress. That is, you aren't agreeing of your own free will, because the other party has made an illegitimate threat against your economic interests.
Estoppel will almost certainly not be relevant in this question (unless we've moved to Australia). Combe v Combe makes pretty clear that estoppel can't provide consideration, and therefore estoppels won't be of use in increasing pacts (promises to pay more) (although they will be in decreasing pacts: agreements to accept less than owed).
jcw
No, that would be frustration (although economic factors will rarely be relevant: Davis Contractors v Fareham UDC). Economic duress is where someone agrees to a contract or contactual variation (eg to pay more money) because their will is vitiated by illegitimate threats to their economic interests. Of course, if I say 'pay me £50 more or I'll hit you', that is voidable for duress. If I say, 'I know you are under the threat of a penalty clause if you complete late, and although I've already agreed to complete on time, I'm going to go slow and complete late unless you pay me £50' that could be economic duress. That is, you aren't agreeing of your own free will, because the other party has made an illegitimate threat against your economic interests.
Estoppel will almost certainly not be relevant in this question (unless we've moved to Australia). Combe v Combe makes pretty clear that estoppel can't provide consideration, and therefore estoppels won't be of use in increasing pacts (promises to pay more) (although they will be in decreasing pacts: agreements to accept less than owed).
Estoppel will almost certainly not be relevant in this question (unless we've moved to Australia). Combe v Combe makes pretty clear that estoppel can't provide consideration, and therefore estoppels won't be of use in increasing pacts (promises to pay more) (although they will be in decreasing pacts: agreements to accept less than owed).
Good stuff. Thankyou
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