Component of a Contract

Consideration is a final and necessary component of a contract which something must be in exchange for an enforceable promise. Besides that it is also a necessary component in all simple contracts which are mostly business contracts.

If the good or service is legal, any verbal agreement between two parties can form a binding legal contract. The background of the existing duty rule started due to case of ‘Stilk v Myrick‘ (1809).The purpose of the rule states that one is responsible for its original consideration; there is no new consideration to be held.

Existing duty rule it’s not a good consideration. If one is already under a duty to do, he/she is already obliged to do it even if an extra offer is made for an extra work to do (Parker & Box). The strength of the existing duty rule is being able to determine whether a new consideration is binding or not and the weaknesses is that the

exemptions depends on the situation of the case. However, in Stilk v

Myrick(1809)

Camp 317 the existing duty under contract is a situation where the position of a person who is already under a contractual duty to the promissory. It was held loss due to no consideration for the masters’ promise as it was not enforceable in law.

The effect of the rule is that a promise to pay more is not enforceable, for the other party to do that which he is already obligated to do. Secondly, promisor is not legally bound to promise. If there is already a consideration for contract, parties can modify the contract if they want without an extra consideration. Lastly, the promise has no legal rights to sue because the promisor is asking or bargaining for the promisee to perform its right to breach.

In addition the history of the rule existed due to Stilk v Myrick case(1809) was used in a few cases, for example Collins v Godefroy(1831), Jamieson v Renwick (1891) and many more. Additionaly, it was changed over time due to Williams v Roffey Bros & Nicholls (contractors) [1991] 1 QB 1. The same principle from stilk v myrick the English courts have taken a different view in this case. The defendant used stilk v myrick principle but failed. It was a different situation where Williams had provided consideration for the payment therefore finishes his work on time. The defendant saves cost instead to get another completion to get the work done. However, in Musumici v Winadell Pty Ltd(1994) 34 NSWLR 723 the parties relied on the decision in Williams v Roffey Bros due to some similarity.  If Musumeci could rely on this exception, the Stilk v Myrick decision would apply that, it might have been argued that it is not ignoring the occurrence of a disbenefit. However, it was argued that Winadell prevent the occurrence of a disbenefit by reducing rent, even though not obliged to do so. In Hartley v Ponsonby, Hartley the sailor succeeded because there was an additional performance that went beyond what he has originally contracted that is sailing from Liverpool to Port Phillip. Sailing to Bombay was an additional sail after that.

There was a consideration for the master’s promise. On the other hand, in Stilk v Myrick, Stilk the sailor failed to claim the extra wages because they were already contractually bound to do.

The rationality is that the rule will be exempted for new consideration made, if new promise was of mutual benefit to the both sides. The pre-existing duty rule is not an effective way to prevent cruelty. Parties to a contract may agree freely to modify a party’s act, in the absence of consideration, without any cruelty, threat, or other improper behaviour. The general rule as used in Stilk v Myrick will not apply in three situations such as where an existing agreement is concluded by the parties and a new one is substituted for it. Even so, when an additional payment is promised in negotiation of a bonafide dispute and where additional risks are undertaken or where the promise provides some additional act or forbearance.

Rule Analysis:

In stilk v myrick, this case was taken to establish the general rule that existing contractual obligations owed to the promisor could not be a good consideration. In Williams v Roffey, however the Court of appeal seem to weaken the stilk v myrick principle.

Court decided that there was consideration because it benefits the defendants that the contract should continue. (JW Carter)

Justify the compromises instinctive in its solution which different views might assumed. (Brian Coote)

Taking some amounts to extra or extended performance may however form good consideration for a new promise.

Conclusion

The differences of cases allow the court to view it from a different angle.

Thus, allowing a better understanding of the rule and reduce bizarre or injustice verdicts in court.

Bibliography

Books

Graw, S. An introduction to the Law of Contract (6th ed, 2008)

Parker, D. & Box, G. Business Law for Business Students (1st ed, 2005)

Journal Articles

Carter, JW, Phang, A &Poole, J. ‘Reactions to William v Roffey’ (1995) 52 of 54 DOCUMENTS: Journal of Contract Law 8 JCL No 3,248.

Coote,B. ‘Consideration and the Variation of Contracts’.

Waddams,SM, Commetary on‘The renegotiation of contracts’ (1998) 48 of 54 DOCUMENTS: Journal of Contract Law /13 JCL No 3/Articles

Case Law

Carlill v Carbolic Smoke Ball Co

Collins v Godefroy(1831) 1 B & Ad 950 109 ER 1040

Jamieson v Renwick (1891) 17 VLR 124

Stilk v Myrick (1809) 2 Camp 317 170 ER1168

WilIiams v Roffey Bras and Nicholls (Contractors) Ltd [1991J 1 QB 1