Contract Law Case Study Case Study

The scenario raises issues dealing primarily with consideration and variation of a contractual agreement. The issues arising are primarily two; the validity of variation of terms made between Kitchens for You Ltd (KFY) and Lizzie Tyler and the enforceability of the original agreement arrived at by Kitchens for You Ltd (KFY) and Lizzie Tyler. Firstly, KFY and Lizzie Tyler have a valid contract that is enforceable under which KFY agreed to refurbish the kitchen and seating area, to cope with the increased orders from the café/seating area and the takeaway counter for a total cost of £32,370. It is paramount to realize no doubt exists as to the validity of this contract.
Therefore, the main issue is the enforceability of the variation to the contractual terms for an extra £2,000 as requested by KFY. The request for the extra money amounts to a variation where the consideration should be provided by the promise who is this case is the KFY. In the landmark case of Misa v. Currie, consideration was held to consist of some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other party. However, KFC, in this case, is promising to complete the task that they were contractually obligated to perform. As a general rule, an existing contractual duty cannot amount to valid consideration. For example, in the landmark case of Stilk v. Myrick the plaintiff was a ship captain who had promised members of his crew to share money of two deserters if the crew led to the ship getting to its destination. The court ruled that the promise lack support from consideration because it was the crew’s duty to lead the ship to its destination. Roffey 
The exception to this rule was outlined in the case of Roffey v Williams and has consideration being provided as “practical benefit” for the promisor. However, the courts first seek to discover whether duress occurred as it vitiates the practical benefit. Duress in Roffey v Williams was defined as an illegitimate threat that vitiates consent. Similar to this case, the contractor faces various problems that he then requests Tyler for extra money. By informing Tyler of the need for more money, KFY is expressing a repudiatory breach. Tyler could either agree to the breach of the contract or affirm the contract. When she affirms the contract, she could have kept the contract operational and accept the variation. On the other hand, by accepting the KFY breach she could receive damages as compensation for her loss. In this case, Tyler accepted the variation.
However, it is obvious that there was duress involved in her acceptance. In DSND Subsea Ltd v Petroleum Geo-Services ASA case that sought to differentiate duress and “the rough and tumble of the pressures of normal commercial bargaining” conditions set include, an actual or threatened breach of contract, whether the plaintiff had any realistic, practical alternative other than accepting the terms laid out, and whether the victim protested at the time. In this case, KFY threatened to fail to complete their work in the agreed time. Tyler had no realistic alternatives if she wanted to open her café on time considering her landlord could not extend her lease further. Finally, as can be evidenced by document 2 Tyler protested that changes to the contract.

In conclusion, Tyler is likely to succeed should KFY take legal action against her.

The scenario of Lizzie issue with Veronica Meadows primarily deals with the legal intricacies of part payment of debts. The rule in the Pinnel’s case is that part payment of debt is not good consideration for a promise to forgo the balance. Veronica Meadows (VM) owed Lizzie Tyler money for failing to settle payment for three orders. VM offered to pay half of the money owed as a full and final settlement of the debt. With Lizzie going through financial hardships, she agreed to accept, the money reasoning that half the money was better than nothing. Presently, Lizzie is seeking to recover the rest of the money owed by VM.
In the Pinnel’s case, Cole owed Pinnel an amount of money that was due for payment on the 11 November, but on Pinnel’s request Cole paid a part of the debt as full settlement of the debt on 1 October that Pinnel accepted. However, Pinnel sued later for the amount owed and the court held that the part-payment of debt could not be regarded as consideration. The agreement would have been valid if the debtor had provided fresh consideration at the request of the creditor. This rule was upheld in Ferguson v Davies where the court held that acceptance by the creditor of a lesser sum could not constitute accord and satisfaction unless the plaintiff received and accepted additional benefit as consideration.
There are three main exceptions to this rule that could have applied to the scenario under difference circumstances; where the part payment is made by a third party conditioned on the release of the debtor from the obligation imposed to pay the full amount. An example of this exception is in the Hirachand Punamchand v Temple where a father paid a small sum to a lender as full payment for his son’s debt. On suing for the full amount, the court held that the payment operated as valid consideration. Composition agreements are also exceptions from this rule, where a debtor agrees with a group of creditors to accept a percentage of their individual debts as full settlement. Wood v Robarts held a creditor could not sue for the balance, as it would amount to fraud on other creditors. The final exception is the doctrine of promissory estoppel that is contained in the obiter dicta of Denning J in Property Trust Ltd v High Trees House Ltd, Here a promise is held binding under specific circumstances even in the absence of consideration.

Therefore, Tyler can recover her money from VM.

Primary Sources
Cases
Currie v. Misa (1875) LR 10 Ex 153; (1875-76) LR 1 App Cas 554

Ferguson v. Davies; CA 21 Nov 1996

Hirachand Punamchand -v- Temple [1911] 2 KB 330
SND Subsea v. Petroleum Geo-Services [2000] BLR 531
Stilk v. Myrick [1809] EWHC KB J58
Williams v. Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5
Pinnel's Case [1602] 5 Co. Rep. 117a

Statues and Statutory Instruments

Secondary Sources
Books
MC Wishart, Contract Law (1st edn, Oxford University Publishers 2007) 34-39
M Frey, Essentials of Contract Law (3rd edn, Cengage Learning 2015) 100
L Mulcahy, Contract Law in Perspective (1st edn, Routledge 2008) 232-251
BS Omri, 'Introduction: a law and economics approach to European contract law' [2013] 50(1) Common Market Law Review 3-9M Hogg, 'Contract Theory: Is There a Path Through the Theoretical Jungle?' [2012] 44(1) Edinburgh School of Law Research Paper 2011-2044

JA Pojanowski, 'Statutes in Common Law Courts' [2012] 91(1) Texas Law Review 479Online Journals

Geoffrey England and Nicholas Rafferty, 'Contractual Variations: Consideration and Duress' [1980] 18(4) Osgoode Hall Law Journal <http://digitalcommons.osgoode.yorku.ca/cgi/viewcontent.cgi?article=2032&context=ohlj> accessed 3 January 2016

Websites and Blogs

Dov Ohrenstein, 'Key Developments in Contract Law: Economic Duress' (Chambers, 5 November 2015) <http://www.radcliffechambers.com/media/Misc_Articles/Key_Developments_in_Contract_Law_-_Economic_Duress_2013.pdf> accessed 3 January 2016