Unit 22 Forming a Contract 2

I Pre- reading activity

1 Making contracts is a part of our ordinary way of life today. What situations would you
define as the contractual ones?
2 Do you think an oral contract between good friends would be sufficient in buying a house?

2 Reading for gist

Skim the following William v Roffey Bros (1991) case and decide whether these statements
are true or false:

1 The case Williams v Roffey Bros (1991) may serve as a proof that the performance of
contractual obligation cannot be deemed as consideration.
2 The total price for carpentry work contracted with Williams, including the interim payment,
was ₤20,000.
3 An additional ₤557 for each of 27 flats completed was agreed by Roffey and Williams in
April 1986.
4 The opinion of trial judge was that failure to pay extra money for each completed flat did
not entitle Williams to terminate the contract.
5 The question arose, whether performance of an existing contractual duty can be taken as
consideration for the promise of an additional amount.
6 The original contract for ₤20,000 was regarded as „severable“ by implying a term of
interim payments.
7 According to the Court of Appeal „the doctrine of substantial performance“ entitled
Williams to further payment of ₤575 for each flat, less some deductions, despite the fact that
he had only „substantially“ completed 8 more flats.
8 Roffey´s couterclaim for damages for breach of contract by Williams (for ceasing work)
was successful.
9 Contract by deed, called also „specialised contract“, takes the form of a deed imposing
greater legal obligations on the signatories than a simple contract.
10 One of the main differences between a contract by deed and a simple contract under hand
is that claims for damages are possible up to 12 years in the latter and 6 years in the former.
11 At present, when contracters usually do not have their private seals, the contract by deed is
indicated by the words, e.g. by the phrase „signed as deed“.

3 Close reading
Read the article closely and answer the following questions:

1 Who was the plaintiff in Williams v Roffey Bros (1991)?

2 What was the subject-matter of a contract?
3 When did Roffey Bros contracted the work with Williams?
4 What was the price for carpentry work?
5 What was, according to the trial judge, an implied term of the contract?
6 How many flats had been substantially completed at the time when Williams paid
₤16,200?
7 What agreement did Roffey make about additional payment for each flat?
8 Why did Williams cease the work?
9 In favour of whom was the ruling of the trial judge?
10 What else was Williams entitled to?
11 Why was the case of great relevance?

4 Text

Williams v Roffey Bros & Nicholls (Contractors) Ltd [1990] 2 WLR 1153

Roffey had a contract to refurbish a block of flats in London. In January 1986 it contracted
with Williams to carry out carpentry work in 27 flats for a total price of £20,000. The trial
judge found that it was an implied term that interim payments would be made.
At a time when Williams had done some work on all the flats, and substantially completed 9,
Williams had been paid £16,200 but was in financial difficulty. In April 1986 Roffey agreed
to pay an additional £575 for each flat completed. By the end of May 1986 Williams had
substantially completed further 8 flats, but had been paid only £1,500 more. Williams then
ceased work. The trial judge appears to have found that, if Roffey was legally obliged to pay
the extra amounts as agreed, it had failed to do so, and that this failure was a breach of
contract by Roffey entitling Williams to terminate the contract.
The trial judge held that Williams was entitled to 8 x £575 - £4,600 under the April 1986
promise, less some small deduction for defective or incomplete items. He was also entitled to
a “reasonable proportion” of the balance outstanding of the original price of £20,000. The
Court of Appeal dismissed the appeal.
Note:
1 The case has great relevance to the question of whether a promise to perform an existing
contractual duty can be consideration for the promise of an additional amount.
2 The trial judge in effect regarded the original contract for £20,000 as ‘severable’ by
implying a term that Roffey would make interim payments, at reasonable intervals, related to
work done.
3 The trial judge treated Roffey as having broken this implied term to such an extent that
William was justified in terminating the contract. Roffey’s counter-claim for damages for
breach of contract by Williams (for ceasing work) therefore failed. Williams did not claim
damages for being deprived of the contract to do all the work.
4 The later contract for extra payment was clearly severable.
The Court of Appeal accepted that the ‘doctrine of substantial performance’ as exemplified in
Hoenig v Isaacs [1952] 2 All ER 176 applied to each severable payment, in that although
Williams had only ‘substantially’ completed 8 more flats, he was entitled to of £575 for each,
less deduction for defective and incomplete items.

5 Legal brief

Contract by deed
Also called a `specialty contract'. This type of contract takes the form of a deed, and therefore
imposes greater legal obligations on the signatories than a simple contract. For example, in
most cases claims for damages against a contract by deed can be entered up to 12 years from
the date of coming into effect; this term is 6 years in the case of a simple conttract under hand.
Contracts by deed have historically been authenticated using a seal; however, this has become
something of a formality recently. In any event, many contractees don't have private seals. In
many cases the fact that the contract is to be treated as a deed is indicated by the form of
words of the contract. For example, the Law of Property Miscellaneous Provision Act 1989
indicates that a contract will be treated as a deed if it is clear that that is the intent of the
signatories. Land transfers should contain the phrase `signed as deed'.

6 Exercises

When doing the exercises always consider the CONTEXT of this unit!

1 Match the following columns:

1 specialty a transfer 1 binding a incapacity

2 claimed b payment 2 contractual b wording
3 land c judge 3 authorized c form
4 carpentry d difficulty 4 required d requirement
5 interim e duty 5 standard e period
6 financial f damages 6 defective f contract
7 trial g work 7 limitation g capacity
8 contractual h clause 8 mental h contract
9 reasonable i contract 9 execution i contract
10 penalty j proportion 10 implied j acts

2 Find synonyms to the words used in the preceding text and RS:

nouns verbs adjectives

term to refurbish total

signatory to carry out implied
seal to enter up to interim
damages to authenticate substantial
carpentry to terminate additional
contractee to be entitled severable
balance to render unenforceable recognised
intent to set aside void
capacity to require contracting
authority to fail simple
behaviour to enforce formal
effect to promise standard
deed to sign voidable
occurence to determine
wording
deffect

3 Use the following words to fill in the gaps; be careful, one expression is redundant:

specialty, breach, carpentry, clause, to refurbish, payment, seal, contractee, interim, to claim,
implied, to terminate, to cease
1 Roffey et al. were a building firm that made a contract to ........ a block of flats.
2 In their contract a penalty ......... for late completion was included.
3 The ........ work was sub-contracted to Williams for ₤20,000.
4 After a certain time Williams became late with work and .......... extra money for the work.
5 The trial judge found that .......... payments were an .......... term of a contract.
6 Although Williams later substantially completed further flats, he was not paid agreed
money, so he ............ work.
7 Failure to pay extra money was a ........ of contract entitling Williams to ........... the contract.
8 ............. contract is a type of contract taking the form of a deed.
9 Contracts by deed have historically been authenticated using a ........... .
10 The main reason to use special wording for contracts treated as a deed is lack of private
seals of .............. .

limitation, void, defective, binding, consideration, writing, lapse, enforceable, unenforceable,

capacity, seal, to treat

1 A ...........contract is typically made between the parties having contractual .......... .

2 A perfect contract must be ........... and recognizable by the court.
3 Unlike simple contracts, those whose subject-matter is sale of land, must be made in ......... .
4 A contract by deed does not require ...........and it is often affixed with a ........... .
5 In case that contract is defective, it is said to be .........., voidable or .................. .
6 ........... of time may cause a contract unenforceable, but .............. period is different for
various types of contract.
7 Despite some defects, the parties may ................ the contract as fully binding.

4 Create word families:

verb noun adjective

capacity
to authorize
effective
requirement
to execute
standard

to limit

to terminate

5 Fill in the proper prepositions:

Contract form required ... law, parties ... the capacity to contract, to make a contract ...
writing, to be implied ... conduct, contract ... guarantee, to be affixed ... a seal, lapse ... time,
to bring an action ...a deed, to set the contract ..., to bar a cintract ... being raised, to do work
... the flats, to carry ... the work, to enter ... claims ... damages, to be entitled ... a sum, to sub-
contract work ... Williams, to pay money ... the completion of work

7 Practise your translation skills

1 Zákonom požadovaná forma je predpokladom právnej záväznosti zmluvy.

2 Zmluvu môže uzatvoriť aj poverená osoba, oprávnená konať v mene zmluvnej strany.

3 Platná zmluva nemusí byť bezpodmienečne v písomnej podobe.

4 S výnimkou zmluvy o predaji pozemku a niektorých iných typov zmlúv, je aj ústna dohoda
súdne vynútiteľná.

5 Zmluvy vo forme právnej listiny nevyžadujú protiplnenie.

6 Ak sa v zmluve vyskytne právna chyba, môže sa zmluva stať neplatnou, zrušiteľnou alebo
nevynútiteľnou.

7 Právne listiny musia byť opatrené pečiatkou napr. v prípade, že jedna zo zmluvných strán
je s.r.o.

8 Zmluva je zrušiteľná aj vtedy, ak jedna zo zmluvných strán nespĺňa podmienku plnoletosti.

9 Nezákonný predmet zmluvy môže byť prekážkou jej platnosti.

10 Aj platná zmluva sa môže stať nevynútiteľnou z dôvodu premlčania nároku.

11 Zmluva vo forme verejnej listiny, t.j. pod pečaťou, kladie na podpisujúce strany väčšie
právne záväzky.

12 Ak zmluvná podmienka nie je vyjadrená explicitne, hovoríme o implicitnej, teda

konkludentnej podmienke.

13 Sudca uznal oprávnenosť ukončenia zmluvy zo strany Williamsa z dôvodu jej porušenia
druhou zmluvnou stranou.

14 Sudca rozhodol, že Williams má nárok na priebežné platby ( splátky).

15 Vzniká otázka, či splnenie existujúceho zmluvného záväzku zakladá nárok na vyplatenie

dodatočnej odmeny.
16 Prípad Williams v Roffey Bros sa stal precedensom pre aplikáciu “doktríny podstatného
plnenia“ .

17 Zmluva o dielo obsahuje aj klauzulu/ustanovenie o zmluvnej pokute v prípade omeškania.

18 Zmluvné strany sa po prerokovaní dohodli na nových platobných podmienkach.

8 Subject-matter comprehension check

Use as much new vocabulary and information from the seminar and RS as possible to discuss:

1 Main characteristic features of a binding contract

2 Types of contracts, as to their validity. Compare them
3 Differences between simple contract and contract by deed
4 Legal requirements for a contract under seal
5 Statutory time period for bringing an action for a breach of contract
6 Implied terms of contract
7 Some examples of contracts that should be made in writing
8 Doctrine of substantial performance
9 Penalty clause in a contract for performing work

9 Write a short opinion to the following question

Do you find the two-year warranty period, as guaranteed by the EU legislation, reasonable?