Video 7.1 transcript

So, in this video, we'll look at variation of contracts and whether you need consideration to vary a contract. And hopefully, you'll have read this section of the chapter already. As I try and recap the structure of what's going on a little bit, because it is complicated. I think it's important to remember that the starting point is still Foakes v Beer, which is the leading house of Lords case, which says that part payment of the debt is not good consideration to extinguish that debt. So, if I owe you a hundred pounds and I offer you fifty pounds to extinguish that debt, that's not good consideration to extinguish the debt. Because nobody could say fifty pounds is better than a hundred pounds. But if I give you a horse, hawk, or robe, as the saying goes, then maybe you could value the horse, hawk, or robe more than a hundred pounds. You can have your own idiosyncratic valuation of these things. And you've already seen the court won’t assess the adequacy of the consideration. And I think Foakes v Beer must be your starting point as a house of Lords case, which has not been overruled. But it has come under attack, and I think it's useful to think of there being three major prongs of attack on Foakes v Beer. The first is Williams v Roffey, which obviously says there might be consideration, if the creditor gets practical benefits in getting performance of the promise, rather than just the promise of performance. So, the difference between being promised performance and actually receiving performance. Now that's a difficult distinction to draw of course, and it's unclear how Williams v Roffey and Foakes v Beer really fits. It's a court of appeal decision, Williams v Roffey, so Foakes v Beer is binding upon it. So presumably, you have to distinguish Foakes v Beer in some way to fit with Williams v Roffey. That it might be that there is consideration with Williams v Roffey because there's practical benefits. But then, it seems like there would have been practical benefit in Foakes v Beer as well, probably. And so maybe Williams v Roffey is concerned with situations concerning promises to pay more, rather than promises to accept less. But again, that's a difficult distinction to draw and it's a real shame that in Williams v Roffey, Foakes v Beer was not even mentioned. So that's a difficult issue. That's a difficult area. But Williams v Roffey seems to be some sort of oblique attack on consideration, I think , and Foakes v Beer. The second prong of attack, I think is through the doctrine of promissory estoppel, famously and unseated by a Mister Justice Denning in High Trees. And that's an equitable defense to a claim for the debt came for the outstanding sum owned. As we have establishedall the elements of promissory estoppel, then perhaps that will provide you with a defense when the creditor comes to sue the debtor, for the outstanding balance owed. But again, there's a question as to how High Trees can fit with Foakes v Beer, because High Trees is a first instance decision. And it's just not realistic to think that in the house of laws in Foakes v Beer their lordships, weren't aware of, or forgot about an equitable doctrine. So promissory estoppel really can extinguish the debts. That looks like it's a direct attack again on the outcome in cases such as Foakes v Beer. So High Trees is a controversial doctrine. And then finally, the last attack that you have to think about is in MWB v Rock. So, the recent decision in MWB v Rock, where the Supreme court unfortunately ducks the issue of consideration. So Supreme court didn't really deal with it. Apart from by saying that Williams v Roffey and Foakes v Beer are difficult to fit together and maybe it's time to revisit the principal in Foakes v Beer. But the court of appeal decision did come close to saying that where the creditor actually receives a part payment of the debt, that might extinguish the debt. Well, though, in that case, perhaps there was some practical benefit in not having the property standing empty for a period of time. But if MWB v Rock is right, then it doesn't leave much room for Foakes v Beer. But that also seems to be contrary to the earlier court of appeal decision in Re Selectmove, as I explained in the chapter. So basically, this area is difficult. I think I say in the chapter that, the law in this area is a mess. And I think if you're dealing with this in, let's say a problem question or an essay, it's important to deal with, you know, the positive law as best you can. And to bear in mind that Foakes v Beer is still a leading House of Lord’s decision, which has not been overruled. And so, you need to assess the subsequent cases, such as Williams v Roffey, MWB v Rock and High Trees, in light of what the House of Lords said in Foakes v Beer.