{"id":605,"date":"2022-06-19T18:19:39","date_gmt":"2022-06-19T18:19:39","guid":{"rendered":"https:\/\/www.akt.rs\/en\/?p=605"},"modified":"2022-06-19T18:19:39","modified_gmt":"2022-06-19T18:19:39","slug":"variation-of-contracts-the-problems-of-consideration","status":"publish","type":"post","link":"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration","title":{"rendered":"Variation of Contracts \u2013 The Problems of Consideration"},"content":{"rendered":"

No matter how detailed the initial contract, there is always a solid chance that a subsequent change in circumstances might require its variation (amendment). As shown by the COVID-19 crisis, if some form of performance is still possible and desired by the parties, a change of obligations might be necessary. Leaving aside other potentially relevant doctrines in English contract law for (drastically) changed circumstances \u2013 such as frustration \u2013 this AKT blog post examines the situation where parties desire to amend the contract. Following the previous post https:\/\/www.akt.rs\/en\/publication\/formation-of-contracts—the-doctrine-of-consideration<\/a>, it also largely focuses on the re-occurring challenges posed by the doctrine of consideration.<\/p>\n

Formally, every variation needs to fulfil the same conditions for validity as the original contract, including the existence of fresh consideration. If both parties change their performance, there are generally no issues provided that consideration is as initially required \u2013 e.g. not in the past, nor constituted of illegal acts.<\/p>\n

The problems arise if only one party is changing its performance, and the other one is not. It would then appear that the party not changing its performance is either getting \u2018more\u2019 for nothing or \u2018losing\u2019 something it was promised to it without any compensation. This would classically be seen as inadequate consideration \u2013 simply put, why would a party ever agree to just lose something? Or to give more for something it was already promised anyway? To add complexity, these two possible scenarios are differently resolved in English law.<\/p>\n

One situation is where one party promises more money to the other party just to get the same performance that was agreed in the original contract. The leading case of Williams v. Roffey Bros ([1991] 1 QB 1) illustrates this. Contractor (Williams) got into financial trouble and was unlikely to finish contractually agreed services on time. Roffey Bros company agreed to change the contract and pay more money just to make sure everything was done on time \u2013 so Roffey Bros avoid paying penalties to the third party. But after everything was done, Roffey Bros claimed that the change of contract was not valid, because they agreed to pay more for nothing \u2013 they received nothing extra apart from what was already agreed. Somewhat understandably, Williams did not share this formalistic view of the affair and sued to receive the money promised under the altered contract.<\/p>\n

Ultimately, the Court of Appeal upheld the contract variation and in the process launched a new doctrine \u2013 \u2018practical benefit\u2019. In short, the Court held that although Roffey Bros did not receive enlarged contractual commitment from Williams in return for more money, they did receive a practical benefit in the form of avoiding to pay penalties to a third party and this sufficed for the purposes of consideration. The Court essentially aimed to harmonize the law with the prevailing commercial practice in which these arrangements do occur rather regularly. Parties are often willing to pay more money just to get the original performance done and avoid other problems \u2013 such as trying to find another contractor on a short notice.<\/p>\n

But where one party\u2019s performance under contract is to pay money, an agreement to pay less money or to pay in under worse conditions for the other party (e.g. later) without the other party changing its performance in any way is not legally enforceable as a variation of contract. Going back to 17th century Pinnel\u2019s case ([1602] 5 Co. Rep. 117a) the rule (later confirmed in the House of Lords case of Foakes v. Beer [1884] UKHL 1) is that a part-payment can never serve as a satisfaction for the whole payment. Who would accept less money when they have a right to more? However, creditors might actually sometimes be interested to get at least some money from debtors, and may aim to legally bind themselves to a reduced amount. Arguably, there is a case for a \u2018practical benefit\u2019 here \u2013 getting at least some money as opposed to nothing, or perhaps only much later.<\/p>\n

Yet, the English courts have not yielded the original position. In mid-1990s, the Re Selectmove case confirmed that Foakes v. Beer still applies to part-payment situations. Very recently, the Court of Appeal tried to introduce the practical benefit doctrine to part-payment in MWB v. Rock case, but this was not picked up by the Supreme Court in its subsequent decision ([2018] UKSC 24). The law thus remains unchanged, and the difference between two situations might be quite problematic. The best advice for parties would be to (even somewhat artificially) make sure there is an adequate change of consideration when amending \u2013 a simple moving of the date of payment forward, or adding an item to debtor\u2019s new obligation would suffice, even if the item is of minuscule value.<\/p>\n

In light of the current COVID-19 crisis, the next AKT blog post will address the issue when circumstances change so much that contract is discharged by force of law \u2013 or in contract law parlance, frustrated. In the meantime, AKT team remains at disposal for any help or information.<\/p>\n

Velimir Zivkovic<\/p>\n","protected":false},"excerpt":{"rendered":"

No matter how detailed the initial contract, there is always a solid chance that a subsequent change in circumstances might require its variation (amendment). As shown by the COVID-19 crisis, if some form of performance is still possible and desired by the parties, a change of obligations might be necessary. Leaving aside other potentially relevant […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"class_list":["post-605","post","type-post","status-publish","format-standard","hentry","category-publication"],"yoast_head":"\nVariation of Contracts \u2013 The Problems of Consideration - Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Variation of Contracts \u2013 The Problems of Consideration - Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration\" \/>\n<meta property=\"og:site_name\" content=\"Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/advokatskakancelarijatodorovicipartneri\" \/>\n<meta property=\"article:published_time\" content=\"2022-06-19T18:19:39+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.akt.rs\/en\/wp-content\/uploads\/2023\/05\/Protecting-Investments-between-UK-and-Serbia.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1225\" \/>\n\t<meta property=\"og:image:height\" content=\"600\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Advokatska Kancelarija Todorovic\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Advokatska Kancelarija Todorovic\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration\"},\"author\":{\"name\":\"Advokatska Kancelarija Todorovic\",\"@id\":\"https:\/\/www.akt.rs\/en\/#\/schema\/person\/30c3f76a93bd2710cd5d89c6fabbd875\"},\"headline\":\"Variation of Contracts \u2013 The Problems of Consideration\",\"datePublished\":\"2022-06-19T18:19:39+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration\"},\"wordCount\":841,\"publisher\":{\"@id\":\"https:\/\/www.akt.rs\/en\/#organization\"},\"articleSection\":[\"Publications\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration\",\"url\":\"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration\",\"name\":\"Variation of Contracts \u2013 The Problems of Consideration - Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!\",\"isPartOf\":{\"@id\":\"https:\/\/www.akt.rs\/en\/#website\"},\"datePublished\":\"2022-06-19T18:19:39+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.akt.rs\/en\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Variation of Contracts \u2013 The Problems of Consideration\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.akt.rs\/en\/#website\",\"url\":\"https:\/\/www.akt.rs\/en\/\",\"name\":\"Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!\",\"description\":\"Law office in Belgrade\",\"publisher\":{\"@id\":\"https:\/\/www.akt.rs\/en\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.akt.rs\/en\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.akt.rs\/en\/#organization\",\"name\":\"Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!\",\"url\":\"https:\/\/www.akt.rs\/en\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.akt.rs\/en\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.akt.rs\/en\/wp-content\/uploads\/2022\/10\/logo_sr.png\",\"contentUrl\":\"https:\/\/www.akt.rs\/en\/wp-content\/uploads\/2022\/10\/logo_sr.png\",\"width\":243,\"height\":130,\"caption\":\"Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!\"},\"image\":{\"@id\":\"https:\/\/www.akt.rs\/en\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/advokatskakancelarijatodorovicipartneri\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.akt.rs\/en\/#\/schema\/person\/30c3f76a93bd2710cd5d89c6fabbd875\",\"name\":\"Advokatska Kancelarija Todorovic\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Variation of Contracts \u2013 The Problems of Consideration - Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration","og_locale":"en_US","og_type":"article","og_title":"Variation of Contracts \u2013 The Problems of Consideration - Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!","og_url":"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration","og_site_name":"Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!","article_publisher":"https:\/\/www.facebook.com\/advokatskakancelarijatodorovicipartneri","article_published_time":"2022-06-19T18:19:39+00:00","og_image":[{"width":1225,"height":600,"url":"https:\/\/www.akt.rs\/en\/wp-content\/uploads\/2023\/05\/Protecting-Investments-between-UK-and-Serbia.jpg","type":"image\/jpeg"}],"author":"Advokatska Kancelarija Todorovic","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Advokatska Kancelarija Todorovic","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration#article","isPartOf":{"@id":"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration"},"author":{"name":"Advokatska Kancelarija Todorovic","@id":"https:\/\/www.akt.rs\/en\/#\/schema\/person\/30c3f76a93bd2710cd5d89c6fabbd875"},"headline":"Variation of Contracts \u2013 The Problems of Consideration","datePublished":"2022-06-19T18:19:39+00:00","mainEntityOfPage":{"@id":"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration"},"wordCount":841,"publisher":{"@id":"https:\/\/www.akt.rs\/en\/#organization"},"articleSection":["Publications"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration","url":"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration","name":"Variation of Contracts \u2013 The Problems of Consideration - Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!","isPartOf":{"@id":"https:\/\/www.akt.rs\/en\/#website"},"datePublished":"2022-06-19T18:19:39+00:00","breadcrumb":{"@id":"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.akt.rs\/en\/publication\/variation-of-contracts-the-problems-of-consideration#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.akt.rs\/en\/"},{"@type":"ListItem","position":2,"name":"Variation of Contracts \u2013 The Problems of Consideration"}]},{"@type":"WebSite","@id":"https:\/\/www.akt.rs\/en\/#website","url":"https:\/\/www.akt.rs\/en\/","name":"Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!","description":"Law office in Belgrade","publisher":{"@id":"https:\/\/www.akt.rs\/en\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.akt.rs\/en\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.akt.rs\/en\/#organization","name":"Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!","url":"https:\/\/www.akt.rs\/en\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.akt.rs\/en\/#\/schema\/logo\/image\/","url":"https:\/\/www.akt.rs\/en\/wp-content\/uploads\/2022\/10\/logo_sr.png","contentUrl":"https:\/\/www.akt.rs\/en\/wp-content\/uploads\/2022\/10\/logo_sr.png","width":243,"height":130,"caption":"Todorovi\u0107 Law Office in Belgrade | In the deal with solutions!"},"image":{"@id":"https:\/\/www.akt.rs\/en\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/advokatskakancelarijatodorovicipartneri"]},{"@type":"Person","@id":"https:\/\/www.akt.rs\/en\/#\/schema\/person\/30c3f76a93bd2710cd5d89c6fabbd875","name":"Advokatska Kancelarija Todorovic"}]}},"_links":{"self":[{"href":"https:\/\/www.akt.rs\/en\/wp-json\/wp\/v2\/posts\/605","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.akt.rs\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.akt.rs\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.akt.rs\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.akt.rs\/en\/wp-json\/wp\/v2\/comments?post=605"}],"version-history":[{"count":0,"href":"https:\/\/www.akt.rs\/en\/wp-json\/wp\/v2\/posts\/605\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.akt.rs\/en\/wp-json\/wp\/v2\/media?parent=605"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.akt.rs\/en\/wp-json\/wp\/v2\/categories?post=605"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.akt.rs\/en\/wp-json\/wp\/v2\/tags?post=605"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}