Williams v Roffey Bros. & Nicholls (Contractors) Ltd.
[1991] 1 Q.B. 1
Court of Appeal (Civil Division)
Facts:
W entered into subcontract with R. W encountered financial difficulty as he has quoted too low a price to R for the work.
R’s main contract had a time limit with a penalty fee if work was not concluded by a set date.
R made oral contract with W for an increased fee for the remaining work.
New contract enforced; R’s agreement was deemed valid by oral variation to contract.
Legal Facts / Procedural History:
County Court (Kingston-upon-Thames)
Legal Issues:
Whether a ‘practical benefit’ is sufficient consideration.
Whether W is entitled to be paid for substantial completion.
Appellant (Roffey Bros. & Nicholls) Arguments:
The contract that established the additional payment is unenforceable since there was not valid consideration. Using the principles in Stilk, W was merely fulfilling his obligations in line with the original contract, not providing a new benefit to R.
No basis for promissory estoppel.
Even if W did have a contractual claim, since the agreement was dependent on the work being completed, he was not yet entitled to the amount since the work was not fully done yet. “Substantial” completion is not full completion.
Respondent (Williams) Arguments:
It is in the interests of businesses to be able to vary existing contracts. A reasonable and accepted renegotiation should be enforceable.
The ‘practical benefit’ of creating a new contract is a commercial advantage to R and is therefore consideration for the new contract. R would not have to litigate against W for breach of contract, they avoided a penalty fee and did not have to find a new worker.
Judgement (Purchas LJ, Glidewell LJ and Russel LJ):
Appeal dismissed.
Glidewell LJ:
Claimants are entitled to the money they are owed, minus the cost of remedying any defects, because of “substantial” completion.
It was in the interests of both parties to create a new contract due to the ‘practical benefits’, so it is therefore binding.
No fraud or duress.
Russel LJ:
The judge made a deduction off of what W was entitled to based on the fact that there was only substantial, not full, completion. Therefore, it was fair.
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