Law of Contract Summary Essay

The next issue that needs to be dealt with is when Cad Co asks for i?? 1200 instead of the original amount of i?? 600. Transfix are reluctant to accept this but they agree, but is this promise binding. It is possible to see that this promise has been made under duress. Duress is a vitiating factor which vitiates the consent that can be present in formation or modification of a contract where the contract or modification has been made under legally unacceptable pressure and involves coercion. In effect it makes the contract or modification in our case voidable. This is seen in cases of Barton v Armstrong[1975] and Williams v Bayley [1886].

In the case we are dealing with we can it is economic duress as illegitimate commercial pressure is exerted by one party on another. In Occidental World-wide Investment Corporation v Skibs A/S Avanti [1976], Lord Kerr identified it as 'such a degree of coercion that the other party was deprived of his free consent and agreement'3, and in Pao On v Lau Yiu Long [1980] Lord Scarman said that claims depend on 'whether the person alleged to have been coerced did or did not protest… did or did not have an alternative course open to him… was independently advised… took steps top avoid it'4.

This has been successfully applied in Atlas Express Ltd v Kafco Ltd [1989]. It states in the case that Cad Co are threatening to tell Mega Ltd that Transfix had conned them into lowering the price for the computers unless Transfix paid double for the software. Here we can see that there is some illegitimacy in the pressure exerted especially as this is related to a positive modification.

The last issue that needs to be dealt with is when Mega Ltd asks for an extra 1000 which Transfix agree to pay in full and final settlement and when Mega Ltd submit a bill for the remaining 1000 they think they should be paid. As the price is increasing this would be called a positive modification. As promissory estoppel only applies to the modification or discharge of an existing contractual obligation (a negative modification) however under common law we will be able to discuss consideration in order to see whether this promise is binding or not. This takes back to the cases of Stilk v Myrick [1809 and William's v Roffey Bros. & Nicholls (Contractors) Ltd [1991]. In the first case a captain had promised to pay more between the sailors if they would sail the ship back to London.

It was held that desertions were generally covered by original terms of the contract, so by sailing the ship to London shorthanded they were not performing anymore than they were already bound to. Consequently, the captain's promise was not supported by any consideration and was unenforceable. Even though it is agreed Transfix would pay an extra i?? 1000 he is not bound to the agreement as the performance of an existing obligation cannot be consideration for a fresh promise as Mega Ltd have done no extra work and also according to the case of William's v Roffey Bros.

& Nicholls (Contractors) Ltd [1991] there was no practical benefit for Transfix so it did not amount to any consideration. In conclusion Transfix are bound to the agreement where they have to pay the reduced price of i?? 4000 and no more are when they requested the extra  2000 on two separate occasions there was no consideration and Mega Ltd's legal rights are suspended until he gives reasonable notice of his intention to resume them which Mega Ltd did not do. Also Transfix will not be bound to pay the extra 600 that Cad Co had asked as it was asked for under duress.


1. Fifoot & Furmston's (2007) Law of Contract (fifteenth edition) Oxford University Press. 2. Poole. J (2008) casebook on contract law (9th edition) Oxford University press 3. Westlaw UK. 4. . 1 Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 Q. B. 1 2 Combe vCombe [1951] 2 K. B. 215 3 Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and The Sibotre) [1976] 1 Lloyd's Rep. 293 4 Pao On v Lau Yiu Long [1979] 3 W. L. R. 435