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Cambridge aw

Journal.

55 2),

July 1996 p. 219 228

Printed

n reat rit in

SHORTER

ARTICLES

IN

DEFEN E OF

FO KES v

BEER

JANET

O'SULLIVAN*

I INTRODUCTION

THIS

paper

aims

to defend what

many

academic

commentators'

regard

as

indefensible-the

rule

in

Foakes

v

Beer.

2

For

almost four hundred

years (since Pinnel's

Case

3

)

English

law

has been clear: the payment of, or promise

to

pay, a

smaller

sum

than

the

amount

due does

not discharge the

debt,

since the

debtor

provides

no

consideration

4

for the creditor's promise to

waive

the

balance-

there

is no

accord

and satisfaction .

The

House

of Lords approved

this

rule, albeit reluctantly

on the

part

of

Lord

Blackburn,

5

in

Foakes

v

Beer.

By

treating

the

release

of

a debt

as

a question

of

consideration,

common

lawyers have

tended to

see

the issue

as

a

tidy

mirror

image

of

the principle

in Stilk

v Myrick:

6

that performance of, or a promise

to peform,

that which one

party

is already

contractually obliged

to

perform

is

not

good consideration for

a

further promise

by the

other

contracting

party

(invariably a promise to pay more than the contract

price).

However,

this apparent symmetry has

recently

been

challenged

by Williams

v

Roffey Bros. Nicholls (Contractors) Ltd,

7

in which

* Fellow of Selwyn College,

Cambridge.

I

should

like to thank

Professor

Gareth

Jones,

Professor

John Spencer and Mr. Tony Weir for their invaluable help. The opinions expressed (and an y

errors) are entirely

my

own.

See e.g.

Treitel,

The

Law

of

Contract,

9th ed.,

p.

116; Adams and Brownsword, (1990) 53 M.L.R.

536; Cheshire,

Fifoot Furmston's Law of

Contract,

12th ed., pp.

94-95.

2

(1884) 9 App.Cas. 605.

1602)

5

Co.Rep.

117a.

I It

is

not

immediately obvious

why the

common

law treats a release of a debt as a promise -

wh t

is

a

creditor promising

when

he

says

you can

keep the

money ?

Yet it seems clear

that

some

check

is

needed

on

the

efficacy

of informal

releases-a

function

which,

at common

law,

is

performed well enough

by the

language and concepts

of

promises and consideration.

(1884) 9 App.Cas. 605, 617-20.

6

(1809)

2

Camp. 317; 6

Esp.

129.

7 1991]

1 Q.B.

1

(hereafter

Roffey ).

In

Roffey

the

defendant

building

contractor

contracted

to

refurbish 27

flats

and sub-contracted the carpentry to Williams.

After

finishing

work on nine of

the

flats,

Williams

got

into financial difficulties because

is

ontract price

was

too low an d

because h failed

to supervise

his

workmen adequately. The defendant then promised to pay him

an extra

£575 on each

completed

flat, Williams

completed

eight

more

flats but the

defendant

paid

only £1,500

extra, whereupon

Williams ceased

work

and sued, recovering,

in

effect, the

balance

of the extra

payments

promised on the

eight completed

flats.

HeinOnline -- 55 Cambridge L.J. 219 1996



The Cambridge

Law

Journal

the

Court of Appeal

decided

that,

in the

absence

of duress or

fraud on

the

part of the promisee, the

practical

benefit

or

avoidance of

disbenefit

obtained

by

the promisor from

performance

of

the

promi-

see's existing

contractual

obligation could

be consideration

for the

promisor's

promise

to

pay

more

than

the

original

contract

price.

Stilk

v.

Myrick

was

reinterpreted

as

an

early example

of economic duress.

The obvious

next question

is: if the practical

benefit to the

promisor from performance

of

an existing

contractual obligation

can

provide

consideration

for a promise

to pay

more, why should the

same

not

apply

to a

promise

to accept

less?

The

debtor

tried

this argument in

Re Selectmove

Ltd., alleging

that

the Inland

Revenue had agreed

to

accept

payment

of

accrued

tax

arrears

by

instalments

and

had

benefited from this

arrangement

by

securing more

of the

arrears

than they would

have

been likely to

achieve

by winding up

the

debtor company. The

Court

of Appeal was

sympathetic,

but

was

nonetheless constrained to

reject

the

debtor's

claim. As

Peter Gibson

L.J. said':

Foakes

v.

Beer was not even referred

to

in

[Roffey]

and

it

is

in my

judgment

impossible,

consistently with the

doctrine

of

precedent,

for this

court

to

extend the principle

of

[Roffey]

to any

circumstance

governed

by

the

principle

of Foakes

v.

Beer. If

that

extension

is

to

be made,

it

must be by the House

of

Lords or,

perhaps

even more

appropriately,

by Parliament

after considera-

tion

by

the Law

Commission.

This paper

aims

to

provide a

small

voice

in favour

of Foakes v.

Beer,

against

the weight

of

judicial

and academic

opinion

which urges

that

this

extension

should

be

made.

I

will

argue

that

there

are

several

reasons

why

the apparently

contradictory positions

of Roffey

and

Foakes v.

Beer

may

be

reconciled,

each

based

on

the

premise that

accepting

less

and

paying

more

are

not

straightforward

mirror

images

of

each other.

Moreover,

if such contradictory

rules

nonetheless

offend

against

the

traditional

symmetry

of

the

law

too fundamentally

to

be accepted,

perhaps it

should be

Roffey, not Foakes v.

Beer, which

should

be reconsidered.

II. RECONCILING

THE

Two APPARENTLY

CONTRADICTORY

PRE E ENTS

A.

Mitigation

How

does performance

of one party's

existing contractual obligation

provide

a practical

benefit

or

obviate

a disbenefit

for the

other

contracting party? In

Roffey

the

promisor

(the main

contractor)

was

8 995 W.L.R. 474.

9 Ibid.

at48

1

[ 99




Foakes

v

Beer

hoping

to

avoid

the

trouble

and expense

of engaging

others to finish

the

sub-contracted carpentry

work

and,

in

particular,

liability

on a

penalty

clause

in

the main building contract

in the

event of late

completion

of

the

flats.

But of

course

such

matters

(assuming

they are

not too

remote'

°

)

could

have

formed part of

the

promisor's

damages

claim

against the sub-contractor.

As

commentators

have

pointed out, I

by treating

the

avoidance of a penalty

clause

(and

the more

general

practical

benefit

derived

from

performance

of

the

contract)

as

something of value

to the promisor,

the

courts

are

adopting a

Holmesian

concept of contract

law,'

2

that

the

duty

to keep

a contract

at common

law

means a prediction that

you

must pay

damages

if you

do not

keep

it and nothing

else .

In

other

words, a promisor

really

is

better

off

having the contract

performed,

because

the

promisee

has

essentially

promised merely

to

pay

damages if

he does not

perform.

The

promisee,

by cutting

his losses '

3

and

performing

when

he

was

free

to breach, thereby

provided

a

benefit

to the promisor.

Yet it may

be that,

in

this

situation,

there

is a genuine

benefit

to

the

promisor, not

dependent

on

a

bald

Holmesian

view

of contractual

obligations.

Ironically,

perhaps what

is behind

the court's

instinct that

the promisor

avoids

a disbenefit when

the

contract

is

performed is

a

recognition

that, generally,

damages are

not

equivalent to

performance

of

a contract.

On

a

breach of

contract,

the

innocent

party

cannot

simply

lie back

and

claim

damages

for the

whole

of

his loss. He

must

mitigate

his loss'a-not,

indeed, an

onerous

requirement, but more

than a negligible

one.

For example,

if

I

am

wrongfully

dismissed

at

the

beginning

of

a fixed term contract

of

employment,

I

must

seek

reasonable alternative employment and if

I

find it

straightaway,

on

the

same

terms

as my

previous employment,

my

damages

will

be

minimal.

So mitigation

is

an important

restriction on

the exact

equivalence

of

damages

and actual

performance.

Yet mitigation

is, of

course,

a

principle that

has

no application

to

debt claims

or, it

would

appear,

in

an action

for

an agreed

sum.

6

It

would be objectionable

(and

highly

irrelevant)

if

a debtor

were

to

argue, for example,

you

can't have

your £100

back, because

you

are

holding a

winning lottery

ticket which

you

could easily

redeem

and be

o

See

below.

See

McKendrick, Contract

Law

2nd

ed.,

p

78;

Coote, Consideration

and Benefit

in Fact

and in

Law (1990-91) 3

Journal

of

Contract

Law 23;

Chen-Wishart,

Consideration:

Practical Benefit

and

the Emperor's

New

Clothes

in Good

Faith and Fault

in

Contract Law

(ed. Beatson

and

Friedmann).

2

O.W. Holmes, The

Common

Law,

1881

p. 298.

3 Purchas L.J.

in Roffey, [1991]

1Q.B. 1, 23.

4 E.g.,

British Westinghouse Co.

v. Underground Electric Rys.

Co.

of

London

[1912]

A.C. 673.

E.g.,

Schiadler v. Northern

Raincoat Co. td

[1960] I

W.L.R.

1038.

6

White

and

Carter

Councils)

td

v.

McGregor

[1962] A.C.

413,

although

cf Treitel

op.

cit.,

pp. 916 8.

L J




The Cambridge

Law Journal

rich enough

not to

need

£100

from me.

The

focus

is not

on:

what

amount

will compensate

this

person for his

loss? ,

but

rather on what

amount does

the

defendant owe the plaintiff? .

The reasonableness

of

the creditor's actions

or inaction

is simply

irrelevant to

the

validity

and

size

of his

claim

against the

debtor.

So

Foakes

v

Beer

situations

simply

do not share this

disbenefit

with

breaches

of ordinary

contractual obligations,

for

example, to

do

work or

perform services.

B

Remoteness of

damage

Another significant reason

why a

damages claim

may not

in

practice

be exactly equivalent

to performance

of the

contract

for

the promisor

lies in

the relatively

restrictive

contractual remoteness

of damage

rules.

For

example

on the facts

of Roffey,

it is

possible

that, if

the

sub-

contractor had

failed to perform,

the loss

flowing from

the enforcement

of the penalty

clause

in the main

contract might

have

been too remote

to

be

claimed

by way of damages. The

penalty

clause

would

need to

have

been

brought to

the

sub-contractor's attention

at the time

of

contracting

(and not at the later

stage when the promise

to pay

additional

money

was negotiated

or

made)

under the

second limb of

Hadley v

Baxendale, since

it

would

presumably

not fall within the

first

limb

of

losses arising

naturally from the

sub-contractor's breach

(by

analogy

with

an

exceptionally

profitable

sub-sale

of

goods).'

8

So

again,

damages and performance

are

not exactly equivalent.

It is undoubtedly true

that

a

similar

limitation

exists,

exceptionally,

in

debt

claims,

in

that

where a

debtor

does

not

pay on time

and

as a

result

the creditor

loses an

opportunity to make exceptionally

profitable

use

of

the

money,

the

debtor will

not

be

compelled

to pay anything

extra

to the creditor

when the

debt

is

ultimately

enforced

(unless

the

debtor knows

at the time

of contracting

that

the

creditor is depending

on

receipt

of the

money

for a specific

purpose

and will

be unable to

fund that

purpose from

other resources).'

9

Yet the

two principles

are

substantively

different. In

a

Roffey

situation, a

promisor

derives a real benefit from

actual performance,

where

any

aspect

of

what

he

would

have

lost

through non-performance

falls foul

of the

remoteness

rule

20

which

is

arguably

sufficient

benefit

to provide

consideration

for

his

additional

promise.

But

it does

not

7

Hadley

v Baxendale

(1854)

9

Exch.

341;

Victoria Laundry

Windsor) Ltd

v

Newman

Industries

Ltd. [1949] 2 K.B.

528.

8

Williams

Bros. v Agius E.

T.

Ltd

[1914] A.C.

510.

9

Wadsworth

v

Lydall [1981]

1

W.L.R.

598.

5 As does

a

contractor

whose subjective

consumer

surplus will

not be recognised

in a damages

award. See

Harris, Ogus

and Phillips, 1979) 95

L.Q.R. 581, and Ruxley

Electronics

and

Constructions

Ltd v Forsyth

[1995] 3 W.L.R.

118.

[19961




Foakes

v

Beer

follow that an

unfortunate

creditor who, fearing that

he will not be

able

to fund

an exceptionally

lucrative

project, agrees

to

accept

less

than he

is

owed,

thereby

obtains a benefit.

Remoteness

is part

and

parcel

of

compensation

limiting the

extent

to which

the

plaintiffs

non-

pecuniary

losses are

converted

into

monetary

damages

payable

by

the

defendant.

Avoiding

these limits by securing complete

performance

from the

promisee

is arguably

beneficial

to the

promisor.

To

allow

this

sort of

reasoning

where

a

creditor

accepts

less so as to

be

able

to

do something

else with the money

simply

will

not

work. In debt

claims,

there

is

no

conversion of

losses

into

compensation,

no

requirement of

some

sensible limits on

the extent

of that

conversion,

but instead the

simple fact of

a debtor with

an obligation

to

repay

an

ascertained

sum

and a

windfall

if he gets to

keep some

of

it. In

addition, any benefit

which the

creditor

derives

from

accepting

less

and

funding

an exceptionally

lucrative

project

clearly does

not move

from

the debtor ,

as it must

if it is

to stand

as consideration.

C Incontrovertible

Benefit

The

most persuasive

criticism of

Foakes v.

Beer

is that

it

ignores

the

obvious

truism

that

creditors simply

would

not agree

to

accept

less

than is

owed to

them

unless

they

saw some benefit

in

doing

so. This

is

commonly expressed

in the maxim:

A

bird

in

the

hand is

worth

two

in the bush.

If a

creditor

is owed

£1,000 which

he knows

will

take

time

and effort

to recover,

and

which

he

may never recover

at

all

if

the debtor is in financial

difficulties,

he

may

well be better off accepting

£800

today.

This is just

like the practical

benefit

obtained

by the

promisor

in

Roffey

so

the

argument

goes,

and

should

be recognised

as such by

the law.

But how

convincing

is this

argument?

In

my

view

there

is, at a

very

fundamental

level, an

important difference

between

these

two

superficially

similar

sorts of

benefit.

First, it is

worth

pointing

out

that

the paradigm example

of

the

bird

in the hand

principle is

the practical

benefit

which

a

creditor

derives

from

receiving

part

payment today

from

a debtor who

is in

financial

difficulties

and

may soon go

bust. Of course

an unsecured

creditor

will

very

often

get less

on

his debtor's

bankruptcy

or insolvency

than the

reduced sum

he accepts,

not

least

because

of

the

prior claims

of secured

creditors and the costs

of the

insolvency itself.

Yet

we

should not

overlook

that, if

the

debtor does

subsequently

go

bust,

payments

made

to a

creditor

shortly before

that

event

are

now

liable

to

be set aside

as preferences .

Where

the

debtor does not

2

See Halson

1990) 106

L.Q.R.

183, 184.

22

Insolvency Act

1986, ss. 239

and

340.

L J




The

Cambridge

Law

Journal

subsequently go bust, what argument can there be for preventing the

creditor recovering

the

balance originally owed

(in the

absence of an

estoppel defence)?

Yet it is

for a more

fundamental

reason

that I urge

the

courts not

to

recognise that any

practical

benefit derived

from

receiving less

money

can

constitute consideration

as

a

matter of

law.

Money

differs

from services

and other assets in that

it

is not just

something

of value

to

the contracting party

entitled to

it it is also the universal

unit

of

measurement

of the value of

everything else.

In other words,

it

is

currency. If we begin to admit for one moment that

less

money is of

benefit to the

recipient,

we are

in severe danger

of

undermining

the

whole basis of

an

exchange-based market

economy

and

its underlying

legal

rules. If we

give

any credence

to the

notion that

a person is

better off with

less

money-better off with £800

than

with a right to

£1,000-we open up

an

enormous and

potentially

overwhelming can

of worms.

For example, the

concept

of

money

being

an

incontrovertible

benefit

is a fundamental one in

the

law

of

restitution.

23

Although the

courts

do

not generally

use this phrase, it certainly reflects

the

truism

that recipients

of

money simply

have

no grounds for denying that

it

was

of value

to them.

They

may, for

example, have other grounds

for

-denying that they are obliged to

repay a

sum

mistakenly

paid

to them,

but

there

is

absolutely

no

question

of

money

being subjectively

devalued . A capitalist legal system

simply cannot

give

credence

to the

claim of

a recipient

of cash that

they

were

better off

without

it .

Anyone

who says money is

of

no value to me is making a

fundamentally irrational

claim-with

money you

can

satisfy

(virtually)

all of your other preferences,

even those

founded

on altruism. The law

must continue to

recognise

this-the same

applies

to any examination

of the

practical benefit deriving from accepting less

than

your

entitlement:

it may be a practical

benefit but

it is

simply

too dangerous

for

the

law

to acknowledge it as a

legal

benefit.

Maybe this explains the apparently odd exception to Pinnel s

Case

that

a debt

is

discharged

if the debtor

provides, at the

creditor's

request, an

item such

as

a hawk or a

rose

in satisfaction

of

the debt,

even if that item is of far less market

value than the

amount

owed.

The

law

is

happy to

give

effect

to the bizarre

values

of the creditor-

if the creditor

values a rose

more

highly

than

£1,000, that is up

to him.

But

what

the

law simply cannot

begin

to concede is that anyone may

value £800

more

than £1,000.

All this

is undoubtedly far removed

from

our

paradigm

example

23 Goff& Jones, The Law of Restitution 4th

ed.,

pp 17 22-26; Birks,

n

Introduction o the

Law

of

Restitution, p

109;

Burrows, The Law of Restitution,p 1

[19961




Foakes v

Beer

of a businessman

calculating that

he

is better off

with

part

of his

money. Yet

it illustrates

the difficulty

in

moving

even

an inch

towards

legal

recognition

of

any benefit

from

acceptance

of

less than the full

amount

of

a debt. Any

move to

overrule Foakes v

Beer will

need

to

draw a

fairly

arbitrary line

to

leave

intact the principle

that

money is

an

incontrovertible

benefit-surely

no

more

acceptable

on

principle

than

the

bright

line Foakes

v Beer

gives us

already?

III. IF ONE UST Go, IT

SHOULD BE

ROFFEY

Although

there are a number

of

arguments

to the effect that Foakesv

Beer may sit relatively

comfortably with Roffey

there

is undoubtedly

force

in

the

view that, for

the

sake

of

clarity,

the treatment

of

a

promise to pay more

and a promise to accept less should once

again

be harmonised.

I

tentatively suggest

that it is

Roffey

which should be

reconsidered. The reasoning

in

Roffey

has

been criticised

most

effec-

tively

by

some

commentators,

24

whilst the result

is

susceptible to

the

basic

objection

that

no one

should be entitled to

more than they

were

promised for

doing less

than

they promised. Moreover,

in

policy

terms, the law of

contract

should surely encourage parties

to

price

their contracts properly in

advance.

Why should

any contractor

bother

to

estimate his price accurately or supervise

his

staff,

2

now

that the

law is willing

to

treat his difficulties

in

performing

his

contractual

obligations

as a sufficient

reason for enforcing

a subsequent

promise

to pay

him more

than

the

contract

price?

In addition, I offer three further

reasons to support

my

tentative

conclusion

that

any harmonisation should favour the orthodoxy

of

Foakes

v

Beer.

A

Clearrules

and

practicalbenefit

Atiyah

has argued that the doctrine of

consideration is

really

nothing more

than an ossified

version

of

the various reasons

(or

considerations )

that

the

courts

once

looked

to,

when

deciding

whether

a

particular

promise should be enforced.

6

.

It is no

doubt

consistent

with this

that the

practical benefit seen

in

Roffey

should

be

perfectly

good consideration. This

views consideration entirely

from the

perspective

of

the

courts,

resolving

contractual disputes

ex

post

facto.

Yet

it

ignores

another

feature of the consideration rules-the

24 Notably

by

Coote

in

Consideration

and

Benefit in Fact

and

Law ,

and

by

Chen-Wishart in

Consideration:

Practical

Benefit

and

the Emperor's New Clothes , above note 11

25 The two reasons

given

in

Roffey

for

the sub-contractor's financial

difficulties; see [1991]

1

Q.B.

1,6.

26Atiyah,

Consideration:

A

Restatement

in

Essays

on Contract

pp.

179,

181-2.

C L J




The CambridgeLaw

Journal

necessity for

them

to

be

clear

and capable

of application

to

a particular

promise

without reference

to whether

or not

the promisor

ultimately

gets

something

which

can

be

characterised

as

a benefit .

In

other

words,

it

is

important

that

contracting

parties

can

arrange their

affairs

from the

moment of promising, with objective

criteria for

predicting

whether

that

promise

is

enforceable

or not.

Roffey

seems

to

suggest

that a promise

to

pay

additional remuneration

is capable of being

binding once

any

practical

benefit is incurred

27

an approach that

imposes

on the

promisor the responsibility

of monitoring the other

party's performance

with a view to guessing when

his promise bites,

yet without the safeguard which unilateral

offerors have

that their

promise will

not bite unless and until the

offeree

completely

performs

what was stipulated.

If

the

Stilk

v.

Myrick rule

seems

harsh,

this is undoubtedly

because

laymen

( men of commerce to

quote Roffey are unlikely to

realise

that

there

is

any problem with

a

promise to

pay

additional remunera-

tion

for performance of an existing

contractual obligation.

They tend

to think,

without

the benefit

of

legal

advice,

that

a

promise

made

seriously

is binding on

them.

The

court in

Roffey

were

obviously

troubled by this.

Yet at least

early

legal advice could have corrected

this

misapprehension

under

the

Stilk v. yrick

doctrine. Now,

even

a

-well

advised

promisor will not know

in advance whether

his promise

binds him. If we

are really concerned that laymen

think they

are

bound

in

any given

case, why

not abandon all legal principles

in

favour of

a

palm

tree

appeal

to

popular

morality

and

business

ethics

to

solve

every

dispute?

We

should

not

overlook

that

contractual

principles

have

another

vital

function that

the

courts never see. For

every one contract

case

that

comes

before the courts,

there

might

perhaps

be a hundred that

are

settled

out of court at

an

early stage

where the

legal

rules are

clear

and easily applicable,

and

maybe

a thousand

that

never

reach dispute

status because clear

legal advice can

be

given

in

advance. This function

may

well be

subverted if the

reasoning

of Roffey takes

hold.

B Estoppel

Perhaps in time,

Roffey

will

come to

be viewed as part

of

a

trend to

offer those who

detrimentally

rely

on

a

gratuitous

promise,

in

the

context of

an

existing contractual

relationship, an intermediate

level

of protection

less than total enforcement of

their contractual

expecta-

tions.

28

There is

an

obvious

analogy with the development

of the so-

7Unless it is accepted

that the mere repetition

of a

promise

to do that which has lre dy

been

promised is itself sufficient

benefit -surely an even more

absurd

proposition, with

an

obvious

risk of

an

infinity of self-supporting

promises.

8

The promisee in Roffey was

not

awarded the

full expectation measure

on

the additional

promise;

see Chen-Wishart, above note

[ 99 ]




Foakes

v

Beer

called

principle

of

promissory estoppel,

which has

already tempered

the harshest aspect

of

the

rule

in

Foakes

v

Beer.

29

It may be that the

court

in Roffey

conscious

of

the problems

of

precedent

involved

in extending estoppel to the creation of a contractual cause

of

action,

3

chose instead to

achieve

an analogous result

by

finding

consideration.

But

if

this extension

is

to be made,

it must surely

be made

overtly

and on a logically defensible basis.

It may well

ultimately be

accepted

that

a

promisee

who was once free

to break his

contract,

but has

performed in reliance on a promise

of

extra remuneration,

should be

given

a

remedy if the

promisor goes

back on his word. However,

if

what we mean is, there is no rational

distinction

between

a promise to

accept

less,

which is relied on,

and a promise to

pay

more, likewise

relied

on, we should say

so.

It would be

unfortunate

if

the Roffey

fiction

were allowed

to

prevail and carry the

whole of

Foakesv Beer

with

it.

After

all,

it

is

not immediately apparent

that

there

is

any

reason to protect a

debtor

who simply

pays less and keeps the

balance.

Before

the

debtor does anything with the

money

that

he has been

allowed

to

retain,

there

is surely

more unfairness in holding the

creditor to his

concession,

particularly if his

circumstances change

in

an

unforeseen way after making

the

concession.

Abolishing

Foakes v

Beer in favour

of

a

rule of

a spurious

kind

of

consideration, derived

from a perceived benefit

to the

creditor,

would

obliterate

the

important

difference between

the

position

of

a debtor who

has

relied on the

concession

and

one

who

has

not.

C.

Economic Duress

The Court

of

Appeal in

Roffey

considered that tilk

v

Myrick

was

correctly

decided, but

treated it

as

an example

of

eighteenth century

public policy. The emphasis now seems to be on the

presence

or

absence

of

economic

duress on

the

part

of

the

promisee-only

in its

absence does the

practical

benefit approach

in

Roffey

apply.

If

Foakes v

Beer

is

brought

into line with

Roffey

a creditor who grants

a

concession

to

his debtor

will be

contractually bound unless

the

concession was

obtained by

economic duress

applied

by

the

debtor.

Yet

this is dangerous, because

there

is

absolutely

no unanimity

about

what economic duress

involves.

For

example

in

Pao

On

v

Lau

Yiu

Long

1

the Privy Council

suggested

that it requires coercion of

the

will -a

proposition

that

has

subsequently

been judicially

doub-

29

E.g. CentralLondon Property

Trust Ltd v High Trees House Ltd

[1947] K.B. 130

o

ee

Russell L J n Roffey [1991]

1

Q B

1

17: . .

I

would

have

welcomed the development of

argument

if it

could have

been

properly raised in this court, that

here was an

estoppel ..

31

[1980]

A C

614.

L J




228

The

Cambridge Law

Journal

[1996]

ted

32

and

much

criticised.

33

The

emphasis

is

now

on

whether

a

particular

threat

was illegitimate ,

but

the courts

are still

no

nearer

to

clarifying

the

meaning

of this

adjective.

In

particular, when

is it

illegitimate

to

threaten

to breach

a

contract?

3

4

Does

the good

faith

or

motive

of

the party

making

the

threat

matter?

35

f

Roffey

replaces

Foakes

v

Beer it

becomes

even

more

vital

to

know to

what lengths

a debtor

can

go

in trying

to

persuade

a creditor

to accept a

lesser sum.

Resolution

of

this issue

is undoubtedly

one

of

the

challenges

facing

English

law

in

the

next

decade,

but until

it

is

satisfactorily resolved,

are we really

ready to abandon

Foakesv

Beer

IV.

CONCLUSION

Before

all the

rules

of

consideration

are

consigned

to

the dustbin

of

history in

favour

of a tortured

appeal to

practical benefit

and

the

true intentions

of the

parties ,

it is

perhaps

worth

pausing

to consider

whether

the

old

doctrine has

anything

of relevance

to commend

it

at

the

end of the

twentieth

century. f

this paper

has

raised

one

or two

telling

arguments

to

that

effect,

without necessarily

acquitting

Foakes

v

Beer

totally,

it will have served

its

limited

purpose.

32

See The Evia

Luck

No. 2)

[1992] 2

A.C. 152,

166.

31E.g..

Atiyah,

1982)

98

L.Q.R.

197;

cf

Treitel,

The

Law

of

Contract,

9th

ed.,

pp

375-6, citing the

test

of

coercion

of

will

without objection.

3

E.g.

Kerr

J. in The

Siboen

and

The Sibotre

[1976]

1 Lloyd's

Rep.

293,

335,

rejecting

as

much

too

wide

counsel's

submission

that any

threat

to

breach

a contract

can

amount

to economic

duress;

Griffiths

L.J.

in B

S Contracts

and

Design Ltd

v Victor Green

Publications

Ltd

[1984]

I.C.R.

419,

425:

The

law

on economic

pressure

... is in the

course of

development

and it is

clear that

many difficult

decisions

lie ahead

for

the courts

it is

certainly

not

on

every

occasion

where

one

of

the parties unwillingly

agrees

to a

variation

that the law

would

consider

that

they had

acted

by reason of duress ;

and

Kerr L.J. [1984]

I.C.R.

419, 428:

... a

threat

to

break

a

contract

...

can, but

by no means

always will,

constitute duress .

Birks,

An

Introduction to the

Law of

Restitution, p

183.

(2) o'sullivan - in defence of foakes

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