Consideration and promissory estoppel

This case has to do with Consideration and promissory estoppel. Was there consideration between the parties, and if not, could Spangles Nightclub go back on their word? Also, the issue of whether the contract had been breached because of the late payments made by DJ Rawk. The first thing that needs to be addressed, is that there was a contract between both parties, that DJ Rawk would pay 300 every Friday for 12 months; therefore, this means that there was consideration here. DJ Rawk would use the facilities at Spangles Nightclub, and they would in turn receive payment. After experiencing some difficulties, DJ Rawk was only able to pay some of that money for following 3 weeks.

Following that, DJ Rawk and Spangles Nightclub re-formed their contract, and Spangles Nightclub agreed that DJ Rawk should only pay 150 for the summer vacation. The question that must be asked here is: were spangles nightclub entitled to claim the full amount after the summer vacation? This issue that must be looked at here, is whether there was an existing contractual duty between the two parties, and if the original agreement is still enforceable. In Stilk v. Myrich1, it was said that the sailors could not claim the extra money promised by their captain, because they were already bound to their agreement to carry out their duties.

Although it can be said that in this case, DJ Rawk was already under a contract, to pay 300 pounds, and provided no other consideration to Spangles Nightclub, there were other things to consider here. For example, did Spangles nightclub receive a benefit from this new contract? Assuming they were not under duress to accept the new offer to DJ Rawk, the answer is no. Spangles nightclub was under no penalty clause, nor were they under duress to provide the services for DJ Rawk in exchange for money.

In Williams v. Roffey2, it was decided that the carpenter, the promissee, was able to claim the extra amount that the promisor had agreed to pay due to the carpenter's financial difficulties; even though there was nothing new given in return. This case differed from Stilk v. Myrich, simply because the promisors incurred many benefits from this new contract, ie. They were under a penalty clause if the carpenter was not able to complete the flats on time; it also saved them the trouble of having to look for another carpenter. In this case, however, there was no such benefit provided for Spangles Nightclub.

Assuming that DJ Rawk provided no new consideration, and no benefit provided to Spangles Nightclub, the next issue that has to be looked at is the issue of promissory estoppel. Was Spangles Nightclub able to go back on their position? Also, had DJ Rawk relied upon this new contract? In Central London Property Trust v. High Trees3, the decision was that London Properties were able to claim the original amount under the contract, after the war years had ended.

Therefore, they were able to claim the original sum mainly because the conditions that led them to change their legal position had ceased to exist. It could be concluded the same way here that the summer vacation has been over, and DJ Rawk was not in financial difficulties anymore. Therefore, Spangles Nightclub were able to claim the original amount due. However, they would not be able to claim the full amount during the course of the summer vacation, since the promise under the new agreement had been made , acted upon, and relied upon by DJ Rawk.

There was a clear indication made by Spangles Nightclub that they intended to relax the terms. Another issue that has to be looked at here, is that Spangles Nightclub would have to give sufficient notice beforehand, if they were to claim the rest of the money after the summer vacation had ended. In Tool Metal Manufacturing v. Tungsten4, it was decided that the first claim to compensation failed because the plaintiffs had not given sufficient notice to terminate the suspension of the new agreement. If Spangles Nightclub would give sufficient notice, it could be said that they are able to claim the amount under the original contract, only after the summer vacation.

However, it could be argued that DJ Rawk had not changed his legal position from the time of the promise. He had already paid 150 pounds before the new contact was made. In EA Ajayi v. Nigeria Ltd5. It was argued that the defendants could not use promissory estoppel as a defence, because they had not altered their legal position from the time the new promise was made; in that case, the plaintiffs had agreed to "withhold installements due on the lorries as long as they were withdrawn from active service." However, the lorries were already withdrawn from active service before the plaintiffs had made this statement.

When P wished to claim the full amount, it was ruled the defendants could not rely on promissory estoppel because they had not changed their legal position. Therefore, it could be said that in this case, promissory estoppel cannot be used, because DJ Rawk had already paid 150 pounds before the new contract was made, which allowed him to pay 150 pounds for the length of the summer vacation. Spangles Nightclub then, has the right to ask for the full amount, from the time of the summer vacation as well.

One last thing to look at is the late payments made by DJ Rawk to Spangles Nightclub, and the effect this has on the contact. If it were a condition that the payments be made on time, then Spangles nightclub would have the right to repudiate the contract. But if it were only a warrantee that the payments had to be made on time, then Spangles Nightclub would only be able to sue for damages.

In Hong Kong Shipping v. Kawasaki6, it was decided that if there were serious effects to the breach of the contract, then the contract would be repudiated. However, the intention of the parties also has o be looked at. Here, the payments were already made late, and Spangles nightclub had done nothing. This means, if it were a condition that the payments be made on time, Spangles nightclub would not be able to repudiate the contract, simply because they hadn't done so from the start. By not repudiating, they accepted the payments, and therefore, changed their legal position. However, if the term were an innominate term, or a warrantee, then they would be able to sue for damages.