Dear colleagues,

By way of a follow-up to our lively discussion on this case last November, the UK Supreme Court gave judgment in Rock Advertising v MWB Business Exchange this morning.  The Supreme Court decided the issue solely on the basis that parties cannot orally vary a contract if it contains a No Oral Modification clause (the Court of Appeal had held, in effect, that No Oral Modification clauses had no legal effect: party autonomy meant that it was open to the parties to modify their agreement at any time and in any way, regardless of what that agreement said). 

Because this issue was sufficient to dispose of the appeal, the bench did not decide the issue of whether a practical benefit is good consideration.  Lord Sumption, who delivered the leading judgment, did however make the following observations about the issue (para [18]), which could be read as raising doubts about whether Williams v Roffey is compatible with Foakes v Beer:

“That makes it unnecessary to deal with consideration. It is also, I think, undesirable to do so. The issue is a difficult one. The only consideration which MWB can be said to have been given for accepting a less advantageous schedule of payments was (i) the prospect that the payments were more likely to be made if they were loaded onto the back end of the contract term, and (ii) the fact that MWB would be less likely to have the premises left vacant on its hands while it sought a new licensee. These were both expectations of practical value, but neither was a contractual entitlement. In Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1, the Court of Appeal held that an expectation of commercial advantage was good consideration. The problem about this was that practical expectation of benefit was the very thing which the House of Lords held not to be adequate consideration in Foakes v Beer (1884) 9 App Cas 605: see in particular p 622 per Lord Blackburn. There are arguable points of distinction, although the arguments are somewhat forced. A differently constituted Court of Appeal made these points in In re Selectmove Ltd [1995] 1 WLR 474, and declined to follow Williams v Roffey. The reality is that any decision on this point is likely to involve a re-examination of the decision in Foakes v Beer. It is probably ripe for re-examination. But if it is to be overruled or its effect substantially modified, it should be before an enlarged panel of the court and in a case where the decision would be more than obiter dictum.”

The judgment is available here:

https://www.supremecourt.uk/cases/docs/uksc-2016-0152-judgment.pdf

Best wishes,

Arvind

Dear Colleagues:

Has anyone heard whether MWB v Rock Advertising [2016] EWCA Civ 553 is going to the Supreme Court? I find it shocking the ease with which the court of appeal disregards Foakes v Beer and its earlier decision in Selectmove.  I also find it odd the reverence that the court (and UK commentators) seem to have for Williams v Roffey Bros. For the reasons given in M Roberts, “The Practical Benefit Doctrine Marches On” (2017) 80 MLR 339 it seems clear that Williams is bad law that is inconsistent with the traditional requirements of consideration (move from, bargained for, coterminous with) and ultimately destructive of the idea of a contractual obligation that is binding on the party subject to it.

First, vicarious liability now the law of contract. Oh well.

Sincerely,

Jason Neyers
Professor of Law
Faculty of Law
Western University
Law Building Rm 26
e. jneyers@uwo.ca
t. 519.661.2111 (x88435)