Legal Judgment

Legal Judgment

Introduction

The decision in Williams v Roffey [1990] 1 All ER 512 had identified the correct ratio of Foakes v Beer, namely that the performance of an existing contractual obligation cannot be consideration for a fresh contractual agreement unless a practical benefit can be identified attaching to the other party to original contract (www.thestudentroom.co.uk). The second part of this principle had always been present in the decision in Pinnel's Case (1602) 5 Co Rep 117a, in that it was there recognised that the payment of “a horse, hawk or robe etc” might be of practical benefit instead of a monetary payment (www.thestudentroom.co.uk).

What had Happened

Lancelot Zute owned a large piece of land in Derbyshire known as the Montgomery estate. Mr.. Zute had been a life-long member of the Communist Party and had always had a deep interest in environmental issues and Celtic mythology. In 1976 he had founded the Grail Community, a religious organisation devoted to rediscovering the ancient truths of the Celtic druids. One of the core beliefs of the Community was that the concept of private property was alien to nature. Mr. Zute had one surviving relative, a merchant banker called Hector Robbins. As Mr. Zute approached his 83rd birthday, Mr. Robbins became increasingly hopeful of inheriting the Montgomery estate within the next few years.

Denis King had been at university with Mr. Robbins but his subsequent career had been fairly disastrous. By 1997 his business was failing and his marriage was breaking up. Having met up again at a reunion dinner, Mr. Robbins agreed to loan Mr. King £37,000, to be paid back at a rate of interest over the next three years. The loan cleared Mr.. King's other debts but he was forced to work long hours to generate enough income to make the interest payments on ...