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Contract Law - A promise to pay extra under an existing contract with practical benefits
When analyzing scenarios with contract changes to pay extra, an additional test must be applied. Is there a practical benefit for the promisor by promising to pay more? If he does, the practical benefit is considered and the commitment becomes legally obligatory. If a promisor agrees to pay more due to pressure or threats from the promisee, this is considered duress and the promise is not legally binding. Key term: practical benefits. Promising to pay more under an amendment agreement results in a practical benefit for the promisor, compared to the original agreement.
Jen, the owner of a property refurbishing company, has been awarded a contract to repair Nicky’s flats. The contract between Jen and Nicky’s includes a stipulation requiring Jen to pay damages to Nicky if the refurbishment falls behind schedule. Jen hires Riana as a sub-contractor for the carpentry component of the makeover. Riana encounters challenges that may postpone her part of the refurbishment, causing Jen to be concerned about the overall project's timeline. So Jen offers to pay Riana extra to do the task on time. Riana accepts the offer and completes her carpentry job on schedule, motivated by the promise of extra money. This helps Joanna to complete the project on time and avoid paying damages to Nicky. Is Jen obligated by her promise to pay Riana more? The answer is yes. Jen’s promise saved her from paying the penalty to Nicky, which was a practical gain. English law considers practical benefits as consideration for pledges to pay more. Jen’s promise to pay Riana more than stated in the initial contract is legally binding.
When analyzing scenarios with contract changes to pay extra, an additional test must be applied. Is there a practical benefit for the promisor by promising to pay more? If he does, the practical benefit is considered and the commitment becomes legally obligatory. If a promisor agrees to pay more due to pressure or threats from the promisee, this is considered duress and the promise is not legally binding. Key term: practical benefits. Promising to pay more under an amendment agreement results in a practical benefit for the promisor, compared to the original agreement.
Jen, the owner of a property refurbishing company, has been awarded a contract to repair Nicky’s flats. The contract between Jen and Nicky’s includes a stipulation requiring Jen to pay damages to Nicky if the refurbishment falls behind schedule. Jen hires Riana as a sub-contractor for the carpentry component of the makeover. Riana encounters challenges that may postpone her part of the refurbishment, causing Jen to be concerned about the overall project's timeline. So Jen offers to pay Riana extra to do the task on time. Riana accepts the offer and completes her carpentry job on schedule, motivated by the promise of extra money. This helps Joanna to complete the project on time and avoid paying damages to Nicky. Is Jen obligated by her promise to pay Riana more? The answer is yes. Jen’s promise saved her from paying the penalty to Nicky, which was a practical gain. English law considers practical benefits as consideration for pledges to pay more. Jen’s promise to pay Riana more than stated in the initial contract is legally binding.
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