Monday 5 May 2025
Dear Subscriber,
I hope you had a great weekend! Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.
Question: Sophie is looking to buy a second-hand car from Speedy Motors Ltd. The salesperson tells her, “This car has never been in an accident and is in excellent condition.” Relying on this statement, Sophie purchases the car for £12,000. Two weeks later, Sophie discovers that the car was previously involved in a major accident and had undergone substantial repairs, which significantly reduce its market value. Sophie wants to know if she can bring a claim against Speedy Motors Ltd. Which of the following best describes the legal principles Sophie must establish to succeed in a claim?
A. Sophie must show that Speedy Motors intentionally lied to her and that she has suffered emotional distress as a result.
B. Sophie must prove that Speedy Motors made a false statement of fact, which induced her to enter into the contract, regardless of whether Speedy Motors knew it was false.
C. Sophie can only claim redress if the false statement was included in the written sale contract, not if it was made verbally.
D. Sophie can only claim if she relied on her own independent inspection of the car and found the statement to be false.
E. Sophie has no claim because statements made by salespeople are always treated as mere sales talk or opinions.
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Answer and feedback to last week’s question: BuildRight Ltd., a construction company, hires Leo, a subcontractor, to refurbish several apartments for a fixed price of £50,000. Midway through the project, Leo struggles financially and is at risk of not completing the work on time, which would cause BuildRight Ltd. to incur penalty charges under their main contract. To avoid delay, BuildRight Ltd. offers Leo an additional £10,000 if he completes the refurbishment on time. Leo accepts and continues working. After finishing the work on time, BuildRight Ltd. refuses to pay the extra £10,000, arguing that Leo was merely performing his original contractual obligations. Leo considers legal action to recover the additional payment. Can Leo successfully claim the additional £10,000?
A. No, because performing an existing contractual duty can never amount to valid consideration for a new promise.
B. Yes, because Leo provided a practical benefit to BuildRight Ltd. by completing the work on time and helping them avoid penalty charges, which can amount to valid consideration.
C. No, because any modification to a contract must be supported by entirely new work beyond the original obligations.
D. Yes, but only if Leo can prove that BuildRight Ltd. acted in bad faith by promising to pay without any intention of honoring it.
E. No, because under the rule in Stilk v Myrick (1809), no additional payment can be enforced if the contractor merely does what they were already contractually obliged to do.
Correct Answer: B. Yes, because Leo provided a practical benefit to BuildRight Ltd. by completing the work on time and helping them avoid penalty charges, which can amount to valid consideration. In Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991], the Court of Appeal confirmed that performance of an existing contractual duty can amount to valid consideration if the party promising the extra payment obtains a practical benefit or avoids a disbenefit as a result. In this scenario:
- Leo’s continued work helped BuildRight Ltd. avoid penalty charges,
- Completing the apartments on time provided BuildRight Ltd. with a commercial advantage,
- Thus, BuildRight Ltd. gained a practical benefit by securing timely performance.
As a result, Leo’s claim for the additional £10,000 would likely succeed. Why the Other Options Are Incorrect:
- Option A is incorrect because Williams v Roffey Bros modified the strict approach in Stilk v Myrick, recognizing that a practical benefit can constitute valid consideration.
- Option C is incorrect because entirely new work is not strictly necessary—the focus is on whether a practical benefit was gained.
- Option D is incorrect because proving bad faith is not necessary for Leo to enforce the promise if there is valid consideration based on practical benefit.
- Option E is incorrect because while Stilk v Myrick imposed strict limits, Williams v Roffey developed the law to recognize that practical benefits can justify the enforceability of such agreements.
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Dr Ioannis Glinavos
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