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The law of obligationsThe law of obligationsConsideration

ACCA · Question 04 · The law of obligations

Section A

Zephyr Ltd, a wind turbine manufacturer, promises to pay a £5,000 bonus to an independent contractor, Bolt, if Bolt completes the installation of a turbine by Friday. Bolt is already contractually bound to Zephyr Ltd to complete the installation by Friday for £20,000. Bolt completes the work on time, but Zephyr Ltd refuses to pay the £5,000 bonus.

Under the rule in Williams v Roffey Bros, in which of the following circumstances would Bolt be entitled to the bonus?

Answer options:

A.

If Bolt suffered a detriment in completing the work on time.

B.

If Zephyr Ltd obtained a practical benefit from Bolt completing the work on time.

C.

If Bolt had threatened to stop work unless the bonus was paid.

D.

Bolt is never entitled to the bonus as he is only performing an existing contractual duty.

How to approach this question

Identify the legal issue: consideration and existing contractual duties. Apply the exception established in Williams v Roffey Bros regarding practical benefit.

Full Answer

B.If Zephyr Ltd obtained a practical benefit from Bolt completing the work on time.✓ Correct
The general rule (Stilk v Myrick) is that performing an existing contractual duty is not valid consideration for a new promise. However, Williams v Roffey Bros established that if the promisor gains a 'practical benefit' (e.g., avoiding a penalty clause to a third party) and there is no duress, the promise is binding.

Common mistakes

Applying the strict rule in Stilk v Myrick without considering the modern exception of practical benefit.
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