Topic 8 Variation of contracts

• what is Variation, provide a case

  When parties decide to perform part of the contract differently to how they originally agreed to.

  
  

  MWB v. Rock Advertising Ltd C entered a licensing agreement to use D's premises using an anti-oral variation clause to exclude variation of contract terms by oral agreements. D ran into financial trouble. C agreed on the phone to accepted installments and decrease in inital sums to be paid later. C claimed D breached the original contract and removed D and wanted damages. C's claim was dismissed. The oral terms were binding despite the anti-oral clause
• Methods of variation of a contract (6)

  • Agreement in another contract to vary the contract
  • Novation (replacing the old contract with a new one)
  • Can be done by deed
  • Can be done using consideration
  • Promissory estoppel
  • Absent of duress (unless affirmed)
• What is an Agreement in another contract to vary the contract?

  Agreement is signed to vary certain specifications and conditions to be incorporated in the inital contract.
• What is Novation ? what are the positives and negatives?

  Replacing the old contract with a new valid one

  • Advantages are variation of a written contract then replacing terms make it simpler since it is in one document
  • The issue of consideration is not a problem because it ceases to give up benefit/detriment in the original contract
• What are Deeds and what are their limitation periods?

  A specialised form of contract (specialities) which are not simple contracts and must be executed on paper with signatures and witnesses and a seal (not always required. The limitation period tends to be 6-12 years
• Promissory Estoppel


  • Prevents a person from going back on their words or conduct when it is unjust or inequitable to do so
  • It is temporary and ends when reasonable notice is given
• Duress


  • A defence to allege duress to invalidate any contract
  • It commonly occurs in the context of variation where there is a price increase/decrease
• Limitation Periods for breach of contracts

  • Defamation- 1 year
  • Shipwrecks/incidents- 2 years
  • Injury- 3 years
  • Everything else- 6 years
  • Deeds/action on specialty- 12 years
• what was the concept in Pinnels case and why was it unsucessful?

  • 
    
  • Accord and satisfaction is Where a different sum was agreed to discharge a debt
  • The Debtor completed their own accord and promise
  • However, there was no discharge of obligation because there needs to be separate consideration and not accord and satisfaction on its own (Robe, Hawk or Horse)
• What is Promissory Estoppel and when does it end?

  • Prevents a person from going back on their word or conduct when it is unjust or inequitable. The promise must first be acted upon and suspends the rights of the promisor
  • It is temporary and usually ends when reasonable notice is given or when the circumstances which led to promissory estoppel ceases to exist
• What are the 2 Types of Estoppel?

  • Estoppel by representation is when one party makes false representation of fact and the other party acts on it
  • Promissory estoppel allows a promise intende dto be binding and acted upon to be enforceable even without consideration.
• Promissory estoppel operates as a shield, blocking actions on pre-existing obligations when there has been a fresh promise unsupported by consideration, but it cannot be used aggressively to enforce standalone non-bargain promises
• Issues with estoppel


  • The precise requirements and effects of promissory estoppel in English law are unclear
  • Inequity, detrimental reliance, clarity of promise, and duration of estoppel are key considerations
  • The exact effect of promissory estoppel varies case by case, but it can result in the extinguishment of particular legal rights under certain circumstances
  • Parties may, however, be held to waive or suspend their rights under an existing contract, through the equitable doctrine of promissory estoppel
• What is Duress in a contract?

  • Undue pressure which undermines a person's consent to a contract
  • This can include threats of violence, severe economic harm and as a result, the contract is voidable
• What are the 3 stages of Pressure Evaluation to determine if there is duress

  1. Assess from perspectives of pressured party and party exerting pressure

  2. Consider wrongfulness and impact on genuine freedom of choice

  3. Evaluate legitimacy of pressure and effect on party autonomy
• What are the 3 Types of Duress

  • Duress of the person
  • Duress of goods
  • Economic duress
• Duress of the person. Prove a case example. 


  Threats against a person, including violence or harm, are considered illegitimate and grounds for voiding a contract

  
  

  Barton v. Armstrong- agreed to buy out Armstrongs interest in a company. Barton declared it void under duress because of threats of death. It suceeded because it was a sufficient threat. It does not need to be the primary factor but must be the cause
• What is the Duress of goods and provide a case example

  • Detention of, or threat of destruction/damage to, goods

  ‘Universe Sentinel’

  Case where there was an industrial dispute. Union was in dispute with the universe sentinel for workers’ wages. The Universe Sentinel docked and was blacklisted so workers refused to refuel and maintain it. The universe sentinel negotiates and agrees to a donation to the welfare fund. The owner agreed to pay but refused to pay in the end. A case is brought, and the defence was duress to goods. (exercised power over property) so there was no voluntary consent).
• What is Economic duress and provide a case example.

  • Threats to breach a contract for financial gain but not lose out financially, but the situation as such that there is not alternative to enter the contract without making it financially unfavourable.

  1. The ‘Atlantic Baron’

  2. Atlas Express v. Kafco.
• Economic duress - Atlantic Baron case


  • Contract to build ship for fixed price in Dollars but workers paid in Won, so exchange rate fluctuations reduced profit so an extra 10% was added. North Ocean Shupping had people to charer upon receiving but after 8 months sues for duress
  • Threat to breach contract was illegitimate as it was more beneficial for the other party to give in than refuse and release the contract so it was voidable. However, it was brought too late
• Economic duress - Atlas Express v. Kafco


  • Atlas Express presented Kafco with a new contract requiring minimum payment per carton, even if only 1 carton was transported
  • Kafco agreed due to threat of profit losses and future deals being threatened. They had no other alternatives because they couldnt breach a contract with their customers. Atlas sought payment but they refused and was sucessful because there was duress so voidable.
• Legitimacy of the Pressure


  • Courts consider whether the pressure exerted is legitimate or illegitimate, including bad faith renegotiation, exploitation, and prior unlawful behavior
• Causation in economic duress

  • The threat to breach a contract must be a significant cause in inducing the victim to enter into a new transaction
  • The victim must show they would not have entered the transaction "but for" the threat
• No Reasonable Alternative


  • The victim must demonstrate that there was no reasonable alternative available to them
  • Courts consider immediacy and severity of consequences in determining reasonableness of alternatives
• Lawful act duress


  Threats to perform lawful acts that may still amount to duress if made in bad faith or for illegitimate purposes
• Undue Influence


  Situations where one party exerts excessive influence over another, leading to the other party's actions or decisions being unduly influenced
• Actual Undue Influence


  Direct evidence of one party exercising undue influence over another, resulting in a voidable contract
• Presumed Undue Influence


  • Circumstances suggest undue influence, court infers it based on relationship between parties and nature of transaction
  • Presumption can be rebutted by demonstrating influenced party's full understanding and voluntary consent
• What was the principle and facts established in Stilk v Myrick?

  Case was related to 12 deserters of a ship and the captain promised an addition £5 per month to fufil duties. It was never given because there was no fresh consideration so could not vary the contract since they were already contractually binded to sail.
• What was the principle and fact established in Williams v. Roffey?

  Building subcontract via carpentry to Roffey brothers to renovate a block of flats for housing. Fixed price was agreed upon, but Williams works too slowly which caused delays the project further and pay liquidated damages. So Roffey brothers agrees to a bonus to complete faster per flat. However, Roffey argued that there was no consideration because they were carrying out their contracted agreement. There was consideration because otherwise Roffey would of had to find other contractors which may have delayed schedule
• Which case does Foakes and beer relates to ?

  Pinnel, extra consideration is needed to vary a contract

  Beer loaned money to Foakes but didnt pay it back. Courts ordered it to be paid with interest. They decide to pay installments in return to not take Foakes to court. Beer did for the interest and won because there was no fresh consideration
• What is the the LP and facts of Central London Property Trust v. High Trees House ?

  LP: Established Promissory Estoppel, once a promise is made and relied upon it cannot be disengaged without agreement.

  CLPT granted a lease to HTH. Due to WW2, there was an underoccupancy so agreed to reduce rent between 1940-1945. CLPT wanted rent from the last 2 quarters of 1945 but Courts ruled no because they cannot go back on their promise
• What was the principle established in Combe v Combe?

  LP: Promissory estoppel is a shield not a sword and can only be brought as a defendce

  During divorce, Husband promised to pay £100 per year as maintenance. She later claimed for arrears for what was owed but failed because there was no consideration. She did not apply for maintenance and that was the promise and the husband did not request that she did not apply for maintenance.
• What was the LP and the facts in D & C Builders v. Rees?

  LP: for a binding agreement, there needs to be consideration, lesser sum does not equal satisfaction and if duress would invalidate agreements

  Builders were contracted to build. Ree refused to pay and builders needed money so Ree offered a lump sum or nothing. They accepted out of fear and afterwards sued for the rest. Courts agreed and stated that there was no satisfaction and there was duress.
• What was the LP and the facts in Collier v. P & M J Wright (Holdings) Ltd?

  LP: Paying a lesser sum is satisfactory if Promissory estoppel applies.

  Collier owed debts with 2 other people. Wright told collier to pay 1/3 of the debt. Other 2 went bankrupt so Wright wanted everything. It was unsuccessful because right told him that he wanted 1/3 from him and it would be inequitable for them to go back
• What three elements need to be proven to determine if there is Duress?

  1. Threat is illegitmate and coerce the innocent party
  2. One factor affecting the decision
  3. Duress would make the contract void (never happened)
• What are the 3 different natures and effects of Duress

  1. Legitimacy of pressue
  2. Causation
  3. No reasonable Alterative
• What was the facts and LP in Hartley v Ponsonby?

  LP: if there is an extra consideration then it can vary the contract

  Ship was unmanned and therefore the captain offered higher pay. This was agreed but afterwards refused to pay. Claimed there was no consideration. However, unlike in other cases, they were not involved in an emergency at sea and was in port due to insufficient crew so the Plaintiff had a right to refuse to sail.