Of course nominal consideration would work, but parties just do what seems sensible, without much, if any, regard to the legal niceties. For the law to impose wholly unnecessary
obstacles to the enforcement of the obligations they undertake is just wrong. In many cases and as a matter of fact, it is actually hard to provide nominal consideration and clients look at you oddly if you suggest the wholesale distribution of peppercorns.
Catharine’s concerns are both valid and exactly correct.
As I have said before, the attitude expressed by Lord Sumption in
MWB and by rules like that in Foakes v. Beer — if Williams v. Roffey isn’t held to have displaced it — amounts to the courts applauding when a party says, “Ha! Ha!, fooled you! Did you really believe I would do what I said I would? More
fool you!” How is anyone or anything benefitted by that attitude?
Angela Swan
From: Catherine Valcke [mailto:c.valcke@utoronto.ca]
Sent: May-23-18 9:07 AM
To: MacMillan, Catharine <catharine.macmillan@kcl.ac.uk>
Cc: David McLauchlan <david.mclauchlan@vuw.ac.nz>; Adam Kramer <akramer@3vb.com>; obligations@uwo.ca
Subject: Re: MWB v Rock Advertising
Good morning all,
I’m afraid i don t see the contract renegotiation issue. As far as i can tell, it has always been possible (and easy) to make “unilateral” contract modifications binding through nominal consideration...
University of Toronto
To build on the point made by David in his penultimate paragraph, it is most unfortunate that the Supreme Court refrained from an examination, even in obiter
dicta, of practical benefit consideration and its relationship to the decision in
Foakes v Beer. To defer such an examination to a later case is unlikely to be of much assistance to the many parties attempting to renegotiate contracts in the economically challenging times currently facing parties in the UK in the runup to
Brexit.
Catharine
Professor Catharine MacMillan
The Dickson Poon School of Law
King's College London
Strand
London WC2R 2LS
tel: +44 (0) 20 7848-5930
FSA Thursdays 2-5 during term
Adam, in principle the answer to all three of your questions ought in brief to be “not binding“.
Another question: What if the clause says “Any variation OR RESCISSION of this contract must be in writing and signed on behalf of both parties“ and the parties subsequently purport to mutually rescind the contract by tearing up the promisor’s
copy of the contract?
A possible exam question might be:
“As Lord Sumption pointed out, ‘The starting point is that the effect of the rule applied by the Court of Appeal in the present case is to override the parties’ intentions’ and ‘The reasons advanced in the case law for disregarding [NOM
clauses] are entirely conceptual’.”
But perhaps this is too easy! Both propositions, in my view, are wrong. For example, if contracting parties enter into a variation that is intended to be binding but does not comply with a NOM clause it is the refusal to enforce the variation
that overrides the parties’ intention. Moreover, this is to sanction potentially fraudulent behaviour on the part of the promisor. The clause ought simply to be a factor to be weighed in determining whether the variation was in fact intended to be binding.
Why must we always have to resort to estoppel to do justice in deserving cases when the principles of the law of contract are sufficiently flexible to do the job. It is this fascination with compartmentalisation that makes the law of contract needlessly impenetrable
for many students.
An esteemed colleague asked me last week “is this decision barking or what?” I could only reply that it surely represents the lowest point in the UKSC’s exposition of the principles of the law of contract. The previous holder was perhaps
The New Flamenco?
As for Lord Sumption’s frolic into the law concerning entire agreement clauses, his Lordship’s dismissal of Brikom Investments is unconvincing because all three members of the CA held that the promise in question was enforceable as a collateral
contract.
David McLauchlan
Professor of Law, Victoria Univ of Wellington
Professorial Fellow, The Univ of Melbourne
Hon Professor, The Univ of Queensland
I haven’t had time to fully think this through but my initial thoughts are questions:
-
What if the parties enter into a contract promising that the contract can never be varied, in writing or orally or otherwise?
-
What if the parties enter into a contract promising never to enter into a further contract with each other?
-
What if the parties enter into a contract promising no oral variation but also promising never to advance an estoppel argument in relation to the terms of the contract, waiver, forbearance or similar?
Discuss.
Adam
Adam Kramer
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