Existing obligations

Pre-Existing Duty Rule

Doing what you are already contractually obliged to do is not good consideration

Stilk v Myrick (Facts)

Sailors promised extra wages to complete voyage after desertion of crew

Stilk v Myrick (Held)

No consideration because sailors did nothing beyond existing contractual duty

Stilk v Myrick Principle

Existing contractual duty owed to same party is not good consideration

Hartley v Ponsonby (Facts)

Many crew deserted, voyage became dangerous and fundamentally different

Hartley v Ponsonby (Held)

Extra payment enforceable because sailors exceeded original obligations

Hartley v Ponsonby Principle

Doing more than existing duty = good consideration

Williams v Roffey (Facts)

Contractor promised extra payment to subcontractor to finish work on time due to risk of delay penalties

Williams v Roffey (Held)

Promise enforceable due to “practical benefit” gained by contractor

Williams v Roffey Principle

Existing duty can be good consideration if promisor gains practical benefit and no duress

Practical Benefit Test (Williams v Roffey)

Existing contract + doubt about performance + promise of extra payment + practical benefit gained + no economic duress = valid consideration

Examples of Practical Benefit

Avoiding penalties, avoiding hiring new contractor, ensuring timely completion

Public Duty Rule

Performing a public duty is not good consideration

England v Davidson (Facts)

Police officer gave information for reward leading to conviction

England v Davidson (Held)

Good consideration because officer went beyond public duty

Public Duty Exception

Doing more than required by law = good consideration

Existing Duty to Third Party Rule

Performing obligation owed to third party is good consideration

New Zealand Shipping v Satterthwaite (The Eurymedon) (Facts)

Stevedores unloading goods already under duty to third party contract

The Eurymedon (Held)

Valid consideration because promisee gained direct enforceable obligation

The Eurymedon Principle

Performing third-party duty = good consideration due to new contractual relationship

Part Payment of Debt Rule

Paying less than owed is not good consideration

Foakes v Beer (Facts)

Debtor agreed to pay debt in instalments, creditor promised not to enforce further

Foakes v Beer (Held)

Agreement unenforceable; creditor could still claim interest

Foakes v Beer Principle

Part payment of debt does not discharge full debt without fresh consideration

Exception to Foakes v Beer (New Element)

Different time, place, or form of payment = good consideration (Pinnel’s Case)

Exception (Third Party Payment)

Payment by third party prevents creditor claiming balance

Re Selectmove (Principle)

Practical benefit does not apply to part payment of debt

MWB v Rock (CA View)

Suggested practical benefit may apply to debt variation, but not confirmed by Supreme Court

Promissory Estoppel

Equity may enforce promise without consideration where there is reliance

Same party duty

not consideration (unless practical benefit or extra work)

Public duty

not consideration (unless exceeded)

Third party duty

good consideration

Part payment of debt

not consideration (unless exception applies)