Chapter 5 Outline answers to end-of-chapter questions

Consideration and promissory estoppel

1. Sisko promised £1000 to an app designer called Raj, for creating an app for Sisko’s business. This promise was made after Sisko approached Raj and asked her to create the app. At the time no payment was discussed. Is the later promise of £1000 enforceable?

For your introduction to this short question, identify the relevant issues of past consideration and previous requests and that these issues will be addressed in turn to determine if the promise of payment is likely to be enforceable.

The starting point for the main body is the role of consideration i.e. the traditional common law requirement for a contract to represent an exchange of value and that for a promise to be enforceable, consideration in return is required. On this, define consideration using the authority of Lord Dunedin in Dunlop v Selfridge [1915], citing Sir Fredrick Pollock.

The point is that for Sisko’s promise to be enforceable, something of value must have been given or promised by Raj in return.

Now turn to the key issue of past consideration and explain the principle with reference to the case of Re McArdle [1951]. Acknowledge that the principle is well established and featured in cases such as Harford and Gardiner’s Case (1587) but was applied authoritatively in Eastwood v Kenyon (1840) and Roscorla v Thomas [1842].

Apply the past consideration rule - Sisko would argue that at the time he made the promise, Raj did not provide anything of value in return. The service provided by her was in the past, before the promise was made.

Now turn to the way around the past consideration rule based on an implied promise from a previous request. Explain this with reference to Lampleigh v Braithwaite (1615) and re Casey’s Patents [1892], including the point from Bowen LJ on how the request can be an implied promise of payment. This should be followed by a summary of the requirements from Lord Scarman in Pao On v Lau Yiu Long [1980].

Apply the principles to the previous request by Sisko. Objectively, does it appear there was an understanding of payment? It appears that Raj is in the business of writing apps and therefore would expect to be paid, and Sisko ought to have known that. Alternatively, is she a friend? Or, has she done such work previously for Sisko as a favour? If so, it is less likely that payment was implied. On the facts presented, it seems likely that the promise will be enforceable.

2. Jon bought a hair salon and planned a grand opening for 7th May. He was worried that his decorator Dani might not complete the painting work in time for the grand opening so he promised her an extra £500 to complete the work as agreed. Dani completed the work on time but was never paid the extra money. Can Dani enforce the promise of the extra £500?

For your introduction, identify the issue raised as performance of an existing contractual duty and whether it can amount to consideration to enforce the promise to vary the contract.

The starting point for the main body is the role of consideration i.e. the traditional common law requirement for a contract to represent an exchange of value and that for a promise to be enforceable, consideration in return is required. On this, define consideration using the authority of Lord Dunedin in Dunlop v Selfridge [1915] citing Sir Fredrick Pollock.

Now turn to the traditional rule from Stilk v Myrick (1809) and then mention the position when the contractual duty is exceeded (Hartley v Ponsonby (1857)).

You can apply this to the facts as a principle that Jon would rely on to argue that he is under no obligation pay the £500.

The next point is the main one, the key case of Williams v Roffey [1990] - address the basic facts to assist with your detailed account of the rule, the requirements and the reasoning. The reasoning should include the four ways in which a practical benefit was provided as well as explain how and why the development was achieved i.e. the policy basis of Stilk v Myrick and the commercial pragmatism of reflecting the parties’ apparent intentions.

Explain how the reasoning supports a wide approach to ‘practical benefit’ with reference to Simon Container v EMBA [1998] and Teare J in Horwood v Land of Leather [2010].

Now apply the requirements from Williams v Roffey – these appear to be satisfied. In doing so, identify the practical benefit gained by Dani agreeing to complete the work as agreed.

Conclude with reference to the likely obligation to pay Dani. 

3. Is the rule from Foakes v Beer ‘ripe for re-examination’ as Lord Sumption suggested?

For your introduction, acknowledge that the statement by Lord Sumption is from the Supreme Court case of Rock Advertising Ltd v MWB Business Exchange Services Ltd [2018]. Also, explain your approach – that it is necessary to explain and evaluate the traditional rule from the House of Lords case of Foakes v Beer (1884), along with the modern developments in the doctrine of consideration.

Begin the main body with the facts, decision and rule from Foakes v Beer. Then provide a summary of the key points from the reasoning of the lead judgment by Lord Selbourne LC, i.e. the reliance on Pinnel’s Case (1602) and how it was framed in terms of consideration.

Now, provide some evaluation by explaining the key points from the judgment delivered by Lord Blackburn which recognised the benefit gained by the creditor. But also explain the use of the strict rule from Foakes v Beer with reference to D&C Builders v Rees [1966] and then criticise the protection provided by the requirement of sufficient consideration.

Next, explain the significance of the Court of Appeal case of Williams v Roffey [1990] – the recognition of consideration from a practical benefit and the main reasoning. In particular, address the commercial pragmatism of reflecting the parties’ intentions and the role of duress as a means to protect the promisor.

Continue with the limits acknowledged by the Court of Appeal case of Re, Selectmove [1995] along with their reasoning, and the resulting distinction based on the type of promise.

At this stage, you can extend your evaluation by criticising the distinction resulting from the cases and by suggesting that ideally, the approach from Williams v Roffey should apply to all variations.

Complete the main body by summarising the relevant points made in Rock Advertising and why the Supreme Court did not correct the position. This is an opportunity to refer to some of the recent opinions from the further reading list.

Finally, provide your conclusion as to why Foakes v Beer is ‘ripe for re-examination.’

4. Should the principle of promissory estoppel be expanded so that it can be a cause of action?

Introduce your answer by acknowledging the consideration rule and the fact that the doctrine of promissory estoppel provides a limited exception to the common law position. Explain your approach – that the question concerns one requirement for the exception to apply and that it is necessary to address the development of the main requirements to assess whether a change to one is desirable.

Your main body can start by explaining the key case of Central London Property Trust v High Trees House Ltd [1947]. Include the requirements from Denning J and mention the loose and vulnerable legal basis for the exception.

Now briefly explain the further requirements developed by subsequent cases: WJ Alan & Co Ltd v El Nasr Export & Import Co [1972]; Combe v Combe [1951]; D&C Builders v Rees [1966].

Next, provide the detail on the basis for the requirement from Combe v Combe [1951] as the basis for Denning LJ limiting the exception to a defence. Expand on this with a brief reference to Williams v Roffey as an example i.e. why Williams could not rely on promissory estoppel.

Now provide some evaluation on the impact of expanding the promissory estoppel to a cause of action. This is mainly in the context of the potential uncertainty with the resulting relationship between the consideration rule and the exception. Contrast this with the fact that the fairness underpinning the exception i.e. reliance on the promise should remain relevant even if bringing the action, but also, that the traditional proprietary estoppel principle can be used as a cause of action so why limit promissory estoppel?

Finally conclude with reference to the question. Could it be said that promissory estoppel is now well established as an exception? If so then does that mean that the task of the cautious development has now been achieved to allow for some expansion when necessary?