Fred v Arthur

This case study looks at what happens when one or both of the parties can no longer fulfil their promise exactly how was guaranteed when the contract was originally drawn up. Simplified, Fred v Arthur composes of Fred contracting Arthur to transport materials with the first delivery completion date of 1st August. Some time after the contract is agreed, Arthur communicates to Fred that, due to taking on too much work, he is no longer able to meet the first delivery date on time. However, should Fred pay him an additional £1,000 on top of the originally agreed £3,000, delivery would be possible by 1st August. Fred told Arthur he would pay the extra £1,000, but after completion of the job, did not.

Fred v Arthur has comparable elements with three cases in particular. These are Stilk v Myrick [1809], Williams v Roffey Bros & Nicholls Contractors Ltd. [1991] and Atlas Express v Kafco Importers & Distributors Ltd. [1989]. Stilk v Myrick is a defining case in English contract law. Until recently the rule under English law was that performance of a contractual duty originally owed to a promisor was no consideration for a new contract, this rule can be traced back to Stilk v Myrick. In this case Stilk was a seaman travelling to the Baltic and returning to London, on the journey, two of Myrick’s crew deserted. On failure to replace the two men Myrick agreed with Stilk and the remaining eight other seamen he would split the abandonee’s wages equally between those that remained. Once docked home in England Myrick refused to recompense the inflated wage, only paying according to the contract, Stilk sued for the disputably outstanding amount. This case was reported on twice, once by Espinasse and once by Campbell. However, the two opinions put forward by these reporters were not viewed with matching degrees of weight. Espinasse’s report stated that Stilk was unsuccessful due to a policy issue; that should this Stilk triumph in his claim, any Master of a ship finding himself in a similar position would be vulnerable to being extorted for higher wages for completion of the originally agreed task(s). This report was viewed with less favour as it was confined only to situations in which the Master was under duress to accept the new terms. Campbell instead stated that Stilk was unsuccessful because there was no new consideration as Stilk was purely completing the terms as he had previously guaranteed, this is the precedent that was held by case law for many years, and is still relevant today. Fred v Arthur can draw comparison to the ruling in Stilk v Myrick as it could be said that Arthur was merely performing to the originally stated terms. Therefore, no consideration is present and the new terms are void. However, we will discuss this in more detail once we have explored how the law has moved on since Stilk v Myrick.

Chronologically the next case we will examine today in understanding this area of the law is Atlas Express v Kafco Importers and Distributors Ltd. In this case Kafco, a small company, secured a contract with Woolworths to sell their product. Kafco contracted Atlas Express for the carriage of the items to Woolworths’ branches for a period of six months. After completing one delivery Atlas communicated to Kafco that they had underestimated the size of the product and therefore required more money to deliver it. Kafco refused to negotiate the price, nonetheless the next delivery van sent to Kafco’s premises had a higher than agreed price, with the driver stating that should the Kafco representative refuse to sign an acceptance form then the van would be taken away unloaded. It was vital to Kafco’s commercial survival that the product be delivered on time, and a replacement haulage company would be impossible to secure on such short notice. Therefore, the Kafco representative signed the document, but Kafco refused to pay the higher rate on completion of the job. Atlas Express sued for the difference. It was claimed by the defendant that agreement was only via economic duress and, regardless of this; there was not the necessary consideration to warrant a variation of the original terms. Both factors relied upon by Kafco were held to be accurate and Atlas was not awarded the magnified sum. In judgement, Tucker J states that economic duress is recognised in English law and that the Kafco representative signed the amended agreement under such duress, this is significant because it is the first case to recognise explicitly economic duress within English law. Tucker J also stated: ‘…In any event, I find there was no consideration for the new agreement. The plaintiffs were already obliged to deliver the defendant’s goods at the rate agreed under the terms of the original agreement. There was no consideration for the increased minimum charge…’ This case is highly comparable to Fred v Arthur, for both the precedent used, and for the similarities of the situation in which Arthur and Atlas Express claim they require extra money for their services. We have seen both in Stilk v Myrick and more clearly defined here that if pressure is put on A by B to alter the terms of the contract for the benefit of B, B will have no case in claiming imbursement, monetary or otherwise, higher than stated in the originally drafted agreement. Applied to Fred v Arthur the precedent of economic duress would support the argument that Arthur cannot claim the additional £1,000 as Fred was under duress at the point of agreement due to the fact he required delivery performed to a deadline and would have faced near impossibility in securing a replacement delivery company. The alternate defence in Atlas Express v Kafco Importers & Distributors Ltd. is also relevant and applicable; that there was no consideration for the new agreement. This is obvious as Arthur was simply performing his side of the bargain to the standard previously agreed.

The final case to be explored is Williams v Roffey Bros & Nicholls Contractors Ltd. which is also held as a defining case within the law of contract due to the alteration it makes to an area of the principle of consideration. Roffey Bros held a contract with a third party to refurbish a set of flats, the carpentry work was sub-contracted to Williams for a set fee. After the work had begun, it became clear that Williams had underestimated the cost of the job and was in financial difficulties hindering the building process. Should Williams be unable to complete his job on time it was probable that Roffey Bros would miss their deadline with the owner of the flats, incurring a penalty. Taking this into account Roffey Bros offered Williams more money to complete the job within the deadline, Williams accepted and completed the job on time but was only paid according to the terms in the original contract. On appeal Roffey argued, in line with Stilk v Myrick and Atlas Express v Kafco Importers and Distributors, that Williams was merely doing what he was contractually bound to do and so had not provided consideration. The significance of this case comes to light in the judgement, in which Glidewell LJ, provides a distinction between Williams v Roffey Bros and previous cases in the field. It is shown that where a party to an existing contract later agrees to pay a ‘bonus’ in order to ensure that the other party performs their duty according to the original terms, then the agreement can be binding provided the opposing party obtains some kind of advantage, or otherwise avoids disadvantage. In Williams v Roffey Bros the avoidance of a penalty payment to the owner of the flats, combined with the avoidance of time and expense inevitably incurred by Roffey Bros should a new sub-contractor be employed was deemed to be avoidance of disadvantage and therefore, Williams was awarded the entire payment as stated in the revised terms.

The judgement of Williams v Roffey Bros & Nicholls Contractors Ltd. changes the landscape of consideration in this area of law and allows for additional payment to be made to the contractee in similar situations. Reverting to Fred v Arthur we must now ask, does Fred receive an advantage or avoid disadvantage by paying Arthur the higher fee? At first glance it seems that Fred has indeed avoided the disadvantage of being late with his deliveries to Woolworths and therefore, may be required to pay Arthur the full amount stated in the revised agreement. However, this would be unjust; the fair outcome would be to recognise the precedent set down in Stilk v Myrick and Atlas Express v Kafco Importers and Distributors Ltd. of protecting the contractor from extortion when economic duress is present, and as referred to in the judgement of Stilk v Myrick, if this was not protected, could encourage other contractees to manipulate in a comparable manner. On a moral side note the responsibility should lay at the door of Arthur, or similar contractees, when accepting an item for delivery, it would not appear just to assume that Fred, or like contractors, must communicate every last detail of their product to a delivery company. If needs be Arthur should have asked for a sample item or other such precaution before accepting if there was a possibility that the contract may be jeopardised by the size or weight of an item.

After researching cases relevant to Fred v Arthur, the reasonable conclusion is Fred does not pay Arthur more than was originally agreed in the first contract. The idea of economic duress is foremost in this conclusion and Williams v Roffey Bros’ precedent of avoidance of disadvantage will be set aside necessarily, although not discredited, for a just outcome.

Bibliography

Academic Answers. (2009). Cases on Consideration. Retrieved November 12, 2009, from Law Teacher: https://www.lawteacher.net/contract-law/cases/consideration-cases.php

Burrows, A. (2007, 2009). A Casebook on Contract, Second Edition. Oxford: Hart Publishings.

McKendrick, E. (2009). Contract Law 8th Edition. Oxford: Palgrave MacMillan Law Masters.