Contractual variation is the process of changing an existing contract.
To undergo variation, both parties must form a new contract. This can make it difficult to vary a contract as both parties have to provide some change / benefit / detriment to comply with consideration.
Promise to Pay More:
In Stilk v Myrick, during a naval passage 2 sailors leave the vessel before its return journey. The captain promises a share of the deserter’s wages to the remaining crew if they stay. Their original contract was changed, as their wages were changed. Upon arrival, the captain refuses to pay the additional wages. Kings Bench declares that the contractual variation was not legally binding because of a lack of consideration – the sailors already had a contractual duty to sail the ship back.
In Williams v Roffey Bros, W was subcontracted by RB to undertake carpentry work. W only partially completes the work as he would run out of money if he took the original wages. RB promises an extra fee per flat for the remaining ones. The Court of Appeal states, though not bound by precedent, distinguishes it from Stilk on a matter of duress. While the captain relied on the sailors, RB could’ve found another contractor. The Court of Appeal states that the variation is contractually binding because of the ‘practical benefit’ that W is more likely to perform, RB will avoid litigation or finding another contractor and RB avoid late fees from their contractor.
Promise to Pay Less:
In Foakes v Beer, F owes B money, plus interest. B states to F that he only has to pay her the money without the additional interest. B then changes her mind and sues for the amount of the interest. The House of Lords states that the variation is not legally binding due to a lack of consideration, so F owes the interest. This issue could have been avoided if F provided some other consideration.
In MWB v Rock Advertising, MWB rented out an office to RB. RB owes back rent of over £12,000. After negotiation, MWB agrees to take less rent now and collect the rest later. MWB later demanded the full amount owed. Despite being bound by HL ruling in Foakes, CA applies the ‘practical benefit’ from Williams. The Court of Appeal stated that the ‘practical benefit’ of MWB agreeing to the variation include the increased likelihood of performance, avoiding litigation and ensuring the office space is occupied, thus earning rent. The Supreme Court also dismisses the appeal.
References:
Cases Mentioned:
Stilk v Myrick [1809] EWHC KB J58 Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5 Foakes v Beer [1884] UKHL 1 Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24
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