Theories Of Cause (Consideration) Of Contract In The Serbian Doctrine Of Civil Law After The Adoption Of The Law On Obligations

Concept of Economic duress

Explain about the ‘Theories Of Cause (Consideration) Of Contract In The Serbian Doctrine Of Civil Law After The Adoption Of The Law On Obligations’ ?

To create a binding contract, it is important that all the essentials are fulfilled. According to the general principle of contract law state that offer, acceptance, consideration, free consent and intentional are the basis of a contract. If the consideration is not there, the contract will be treated as void. On the other hand if, the consent is taken by any kind of coercion, duress, fraud or misrepresentation, the contract will be considered to the void contract. Except and until both the parties are “consensus ad idem” on a matter, the contract will be treated as no contract. Both the party must have the same opinion on the same thing in the identical sagacity. Consequently, for a legitimate contract, equally the proposal and acceptance of that proposal must be in agreement with the law.

The consideration is the important part in a contract. The economic adequacy is not an essential matter, but the consideration should be sufficient in the eye of law. This paper attempt to identify the relevance of consideration on the basis of Williams v Roffey Bros. & Nicholls (Contractors) Ltd case. The case decides upon the concept of consideration. This paper attempts to answer the matter of the importance of consideration and its relation in regards to economic duress. The court, in this case, found that consideration an important part of the contract and he factual consideration can be considered as valid and appropriate consideration. Though in different preceding cases, courts found that the doctrine of consideration became obsolete day by day.

In the previous days, a contract that was obtained by unfair pressure or extortion was believed to be annulled by the judges on the basis that the basic important thing consideration was not present there. But in the Williams v Roffey Bros. & Nicholls (Contractors) Ltd  case, the judges also held that monetary duress would be obtainable in that cases as a cure to invalided a contract that was obtained by way of unfair force or the extortion.

Difficulty in commercial communication while constructing or not constructing a contract, have known way to divide so far, a more important doctrine recognized as the principle of financial duress. The principle provides us the fact that the permission of the party to an agreement can be provided, not merely by pointing a firearm at them but by bullying the party economically. Definite requirements, like as anti-trust regulation and customer protection laws, have been reinforced to defend parties as of in going into such agreement. Separately from these requirements, judges are also keeping back contracts go into by unlawful force. D&C Builders v Rees, it was decided that when a person’s permission is obtained by duress, he has the right to avoid the contractual terms.

Concept of consideration

Stilk v Myrick is an important contract law case that was decided by the High Court of England in regards to the consideration. In this judgment, Lord Ellenborough determined that in judicial decision where a human being was obliged to do a responsibility under an obtainable agreement that responsibility cannot be measured as applicable consideration for any fresh agreement. It has been destabilized and overruled by the case of Williams v Roffey Bros & Nicholls (Contractors) Ltd, which recommended that state of affairs previously gripped by consideration could in its place grasp by the principle of financial duress.

In this case, the concept of economic duress was nicely pointed out by the Glidewell LJ. He decided that Williams had given a legally valid consideration although he was just executing a prior responsibility. Williams obtained £3,500 and court claimed that the scheme of promissory estoppel was not correctly argued. The notion of economic duress given responses to Stilk’s problem in the verdict by this judgement. The legitimacy of the contract will depend on the certain matter as per the discussion of the case. For a valid contract, it is obvious that a person employed another person by execution of a contract of employment. But prior to the execution, the employer has the reason to doubt the person may not be able to accomplish the work. The employer promises to pay more. The party gets the actual benefit or disadvantage from that promise, and there must have any kind of economic duress.

The confusion was created by the common people regarding the legal benefits proceeding to these judgments of Williams v Roffey. This case put a question mark on the validity of the concept of the consideration. The court decides that no one have the right to avail any extra benefit from the situation after fulfilment of the obligation. But the principle in the common law provides the loss for this obligation come under the purview of public duty. So it can be mentioned that the factual benefits applied in the behavioural in the case, the concept of consideration need to be amended from its traditional application.

The concept of consideration is very important for a case of contract. The accurate benefit is of utmost importance. The general principle of contract law proclaimed that the consideration needs to be legally satisfactory. The monitory value is not a determinate factor in the case of contract. But the question lies on the necessity of the consideration and its importance in the modern era. In the case of Williams v Roffey Bros & Nicholls (Contractors) Ltd, it was decided that a promise is considered to be an adequate consideration in the ambit of contract law. The previous case of Stilk v Myrick, as discussed earlier the court decides that anyone obliged to do act a responsibility under an obtainable agreement cannot be measured as applicable consideration for any fresh agreement.

Applicability of the doctrine of financial duress and the consideration

Both of this cases decided n he matter of payment more that than the actual promise. But in conclusion, both of this case decided reversely. The judges of the case of William did not accepts the understanding of the verdict of Stilk v Myrick. The confusion was arises because of the huge difference in this two judgements.

The inconsistency of the identical laws helps to contract the theory of consideration and its effectiveness in the modern era.

The principle of consideration is necessary and applicable unquestionably in almost every situation in the aspect of contract law. But in modern time the essence of this doctrine reduces. Other doctrines reduce the importance of this doctrine gradually like the doctrine of economic duress, promissory estoppel, etc. The concept of financial duress is sometimes utilised to modify the application of the doctrine of consideration. The principle was used at the time when the unnecessary pressure was inserted at the time of the creation of the contract. The extortion was given importance at the time of the creation of the contract. That kind of discrepancies can lead to the bad judgements. This kind of circumstances can invalid the concept more. If one party is in the superior position that problem mainly arises. They take the advantage from the contract. Generally in this kind of situation substitute kind of consideration is required which lead to irregularity and unfairness in the judgement.

The matter here declared about the sufficiency and adequacy in the part of the consideration. If it is proved that the benefit is a valid consideration, it is obvious that different judges posses the different opinion in this similar matter. The case of Re Select more Ltd can be taken into consideration. In this specific case, it was decided that the assurance to pay any amount was no considered to be the valid consideration under the general rule of contract. But in the case of Penny v Cole is was stated that part performance or part payment is not a sufficient consideration. In the case of Collier v P & MJ Wright (Holdings) Ltddraws the relationship between the estoppel and consideration concepts. This case also proves the obsoleteness of the principle of consideration in the modern concept.

On the important case of Foakes v. Beer can be discussed in this matter. This is an English contract related verdict, which is applicable the contentious pre-existing responsibility rule in the background of branch payments of the unpaid sum. It considered as the most important case from the on the legal notion of the principle of consideration in a contractual aspect. It recognized the regulation that stops parties from releasing a compulsion by the application of part performance. This case affirms the verdict of   Pinnel’s Case . In this case, the court decides that payment of smaller amount on the due day cannot be lead to any approval of the entire debt.

Courts took different opinion in this matter regarding the applicability of the concept of consideration. The court provides the priority to the legally approved contract under the seal of the court. If the seal of the court is present, it provides hardly any importance to the issue of consideration. In modern aspect, it can be claimed that the tradition doctrine is obsolete or outdated.

After going through the diverse alternatives taken by the courts in this respect, now, an attempt shall be made to evaluate and understand if these options are actually attainable or not. The doctrine of duress in contract provides that if any illegal or unfair pressure is unlawfully put on any individual while he is about to enter into any contract, then, such an agreement cannot be enforced upon him. Thus, if this doctrine of duress is applied on fair and justified conditions, then, generally, it is only the weaker party that gets the protection under the legal terms. However, in a majority of the instances, it is often tough to find out and establish whether duress was actually present or not. For instance, the difference between what can be said to be a commercial pressure and what is economic duress is not yet clear post the decision of Williams v Roffey.

Whatever be the situation, if it is proved that economic duress was present in any given situation, then, such a proof can override consideration and hence, the contract becomes invalid. In maximum situations, efforts are made by the courts to examine the presence of duress before they judge the validity of a contract. Albeit, no strict and stringent guidelines are present in this matter, yet, the doctrine often goes through multiple ambiguities and uncertainties. For instance, the case of Barton v Armstrong, it has been established by the Courts that similar clauses can only make a contract voidable and not void. Thus, there is no doubt regarding the fact that duress will never succeed to become a replacement for the doctrine of consideration.

To override the effects of consideration, the aspects of public policy also exert a great thrust. To derive the benefits, there are various public servants who can actually misuse the concepts. In such instances, although the presence of duress or extortion is likely to be very low, even then, the top-up benefits while the process remains in existence is sure to have a negative effect over the way in which the duties shall be performed. This on the face conflict is not only detrimental for the law but also for the society. Thus, to give a proper justification to the concept of duress, going through some cases is essential. Because, in the present day, our society is largely dependent on various forms of the emerging trade and commerce, hence, it is highly probable that duress will increase at a steady rate. On the contrary, this situation has not yet developed to such an extent that this entire concept can be wiped off totally by the concept of duress.

In simple terms, it can be said that it is very tough to wipe out the concept of consideration totally and establish a way for duress. The feasibility with duress has not yet developed in such a way that it can be considered to be a total replacement of consideration. Above all, the primary role exerted by the concept of duress is totally different from the concept of consideration as far as the legal background is considered. As far as the present scenario is concerned, duress and consideration stand at an equal footing. Duress as its present status stands today is nothing but a simple exception to the doctrine of consideration because it moves in parallel lines with it. Duress is not a valid condition for examining the legality o any contract so long as the situation in today’s world is concerned. In every single matter of contract, the original and traditional concept of consideration is still taken into account to establish the validity. Thus, there is no doubt regarding the fact that the doctrine of duress does not have the same effect as that exerted by the doctrine of consideration in matters related to the contract. Even if in certain circumstances, it overrides the consideration requirement, even then, holding its validity is going to be very difficult because in those circumstances, it is likely to come under the exceptions of consideration and if such a situation arises, then, consideration will be totally removed. Thus, it is very likely that these two shall become contrary to each other.

Conclusion

Upon understanding all the concepts as discussed above, it can be said that the doctrine of duress will not be able to override the doctrine of consideration. The consideration requirement can never be made totally redundant to give way to the requirement under duress. While looking at the changing aspects of commercial transactions, it can be said that the common law principles in this respect will develop gradually so that all the ambiguities that are present regarding the present situation can totally be removed. This will also ensure that the doctrine of duress and the doctrine of consideration will be able to meet the requirements of the law and the society and thus, the jigsaw puzzle that lies will be solved to a great extent. To give a valid jurisprudence in this regard, many more cases have to be decided by the law courts. Because it is well known that the society develops faster than the law, hence, it is essential to understand that the law is likely to go through certain flaws. To achieve a reduced rate of these flaws, there are exceptions that come out every day but those legal principles and doctrines that give a skeletal framework of the law and which is the base of the development of the law can never be overlooked, and they should be allowed to keep running. The reason behind this is that they exercise impact over many operations in which the society is engaged. A similar effect lies over the doctrine of consideration also. If the entire concept is abolished, there will be greater confusions, and hence it is not going to be a wise decision for the legal domain.

References

Atila D, ‘Theories Of Cause (Consideration) Of Contract In The Serbian Doctrine Of Civil Law After The Adoption Of The Law On Obligations’ (2012) 46 Zb rad Prav fak, Novi Sad

Austen-Baker R, Implied Terms In English Contract Law (Edward Elgar 2011)

Beatson J and Friedmann D, Good Faith And Fault In Contract Law (Clarendon Press 1995)

Ceil C, ‘Contractual Free Will: Doctrines Of Economic Duress & Undue Influence’ SSRN Electronic Journal

Chen-Wishart M, Contract Law (Oxford University Press 2005)

DiMatteo L, Commercial Contract Law

‘Duress. What Constitutes Duress. Threat To Do What One Has A Legal Right To Do’ (1928) 42 Harvard Law Review

‘Duress. What Constitutes Duress. Threat To Expose A Third Person To Criminal Prosecution’ (1926) 39 Harvard Law Review

Geest G, Contract Law And Economics (Edward Elgar 2011)

Gordley J, The Enforceability Of Promises In European Contract Law (Cambridge University Press 2001)

Simpson A, ‘The Equitable Doctrine Of Consideration And The Law Of Uses’ (1965) 16 The University of Toronto Law Journal

Swain W, ‘The Changing Nature Of The Doctrine Of Consideration, 1750–1850’ (2005) 26 The Journal of Legal History

Wright, ‘Ought The Doctrine Of Consideration To Be Abolished From The Common Law?’ (1936) 49 Harvard Law Review

Barton v Armstrong [1973] UKPC 2 [1973] UKPC

Collier v P & MJ Wright (Holdings) Ltd [2007] EWCA Civ

Foakes v Beer [1884] UKHL

Penny v Cole (1605) 5 Co Rep

Stilk v Myrick [1809] EWHC KB J

Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ

Sjol.co.uk, ‘Why English Contract Law Should Prohibit Unfair Conduct In Contractual Negotiations By A General ‘Doctrine Of Unconscionability’ – The Student Journal Of Law’ (2015) <https://www.sjol.co.uk/issue-4/why-english-contract-law-should-prohibit-unfair-conduct-in-contractual-negotiations-by-a-general-doctrine-of-unconscionability> accessed 16 August 2015

Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ.

Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ.

Stilk v Myrick [1809] EWHC KB J.

Penny v Cole (1605) 5 Co Rep.

Collier v P & MJ Wright (Holdings) Ltd [2007] EWCA Civ

Foakes v Beer [1884] UKHL.

Penny v Cole (1605) 5 Co Rep.

Mindy Chen-Wishart, Contract Law (Oxford University Press 2005).

Barton v Armstrong [1973] UKPC 2 [1973] UKPC

Sjol.co.uk, ‘Why English Contract Law Should Prohibit Unfair Conduct In Contractual Negotiations By A General ‘Doctrine Of Unconscionability’ – The Student Journal Of Law’ (2015) <https://www.sjol.co.uk/issue-4/why-english-contract-law-should-prohibit-unfair-conduct-in-contractual-negotiations-by-a-general-doctrine-of-unconscionability> accessed 16 August 2015.

James Gordley, The Enforceability Of Promises In European Contract Law(Cambridge University Press 2001).