greece

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(see Case 1). Vito will then be able to establish the promise by any available evidence in the unlikely event that the court took the view that the promise was not made in the course of Company’s business. In Case 10(a), if the payment is made in the course of his employment to prevent him from leaving, then the promise is non-gratuitous as Company will receive the benefit of Vito continuing to work for them, and therefore it need not be established in writing. Even if Vito threatened to leave, the variations would not be challenged on the grounds of economic duress.

england

The status of the promise in Case 10(a) is not clear in English law, but the promise in Case 10(b), on the facts as stated, is unenforceable.

Under the traditional approach to contractual variations, the first promise to pay Vito a higher wage is unenforceable because, inter alia, in so far as Vito is doing anything in return for the promise, it is only that which he is already contractually obliged to do. On the traditional approach to consideration, doing that which you have a legal obligation to do is not consideration.

But as noted in the previous answer, the ‘pre-existing legal duty’ rule was overturned in Williams v. Roffey Bros. & Nichols (Contractors) Ltd,32 and replaced by a rule holding that the consideration requirement can be satisfied by the performance of a pre-existing legal duty so long as the promisee receives a ‘practical benefit’. It is not clear, however, whether the Williams ruling would be extended to the facts of Case 10(a) (there are no cases directly in point). The first difficulty is that whether or not Vito continuing to work is a practical benefit to Company, it is not clear that Vito had promised to continue to work ‘in exchange’ for Company’s promise of higher pay. On the facts, it appears that Vito did nothing; he was merely informed of the promise to pay more. This difficulty is avoided if it is found that Vito had in fact agreed to work in exchange for the offer of higher pay.

The second problem is how to find a practical benefit accruing to Company without at the same time finding that Vito implicitly or explicitly threatened to breach his contract. A threat to breach in these circumstances, given that Vito was capable of performing the contract, would amount to duress, as explained in the previous answer. Yet it seems clear

32 [1991] 1 QB 1.

that Company is getting a benefit only if there is a risk of Vito breaching. The question, then – a difficult one – is whether the mere risk of such breach amounts to an implicit threat of breach. In theory, at least, there is a distinction between the risk of breach and making a threat to breach. Thinking about making a threat to breach, or simply thinking about quitting full stop (either of which Vito might have been doing at the relevant time) is not the same as making a threat to breach. Thus, a court might reason, first, that Company received a practical benefit from its promise because the chance of Vito going elsewhere was reduced (presumably it will be costly if Vito quits) and, second, there was no duress because Vito had not threatened to quit, explicitly or implicitly.

In the end, I think the distinctions being drawn here are sufficiently fine that external considerations are likely to play a role in the court’s reasoning. In particular, Vito’s reliance, though strictly speaking irrelevant, would, it is suggested, sway a court towards upholding the contract. But the result cannot be predicted with certainty.

The second promise, to pay Vito a thankyou bonus on his retirement, is unenforceable for lack of consideration (see Case 1). Vito did not do or promise to do anything in return for the extra money. Although there are no cases directly analogous, the orthodox rules would appear to apply fairly clearly to these facts.

In respect of either promise, whether or not Vito relies is strictly irrelevant, because, as explained in regard to Case 1, while detrimental reliance can sometimes be used to give force to a promise that is raised in defence against a claim by the promisor, it cannot be used to found a cause of action on a promise. That said, it is possible, as ever, that a sympathetic court might be able to find ordinary consideration for these promises, and such sympathy is more likely in a case where the promisee has relied. In respect of the second promise, the court might try to argue that Vito had, for example, agreed not to compete in the future or had agreed to retire early. The courts’ general willingness to enforce such promises is seen in the enforceability of retirement payments that are made conditional on the employee not competing in future against the employer.33 The noncompetition clause is held to be consideration for the promise, although it seems clear that the clause is a condition of the payment, not the reason for it. As Atiyah observes, the ‘pension is not offered in exchange for the employee remaining inactive’.34

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ireland

Taking the circumstances of Case 10(a) first – Company’s promise to pay a large sum during Vito’s term of employment because he received an offer of alternative employment – the question of whether the company is obliged to keep this promise again depends on whether the Irish courts would follow the traditional approach of Stilck v. Myrick35 or the new approach in the Williams36 case, as described in Case 9 above. Following the traditional approach, the discharge of his existing contractual duty by Vito would not constitute sufficient consideration for Company’s promise and it would not be obliged to keep the promise. However, applying the Williams approach one could say that Company would derive a benefit by securing Vito’s continuing performance of his contract as opposed to losing him to a competitor, and that this would suffice to provide consideration for Company’s promise. There is no issue of duress here as there is no threat by Vito to break his existing contract. One way around this problem would be for the parties to discharge the present contract by agreement and to make a new contract incorporating the promise by Company to pay the extra large sum. The agreement to discharge raises no difficulty as regards consideration, for in such a case each party agrees to release his rights under the contract in consideration of a similar release by the other. It seems likely that an Irish court would uphold such an approach.

Turning then to Case 10(b) (Company’s promise of a ‘golden handshake’ payment as thanks for services rendered), in general Irish law follows the English approach and holds that a promise is not binding if the sole consideration is past services previously rendered by the promisee. Such a promise will be binding only if some consideration other than the past service has been provided by the promisee, such as his giving up rights which are outstanding under the original contract, or his promising or performing some other act or forbearance not due from him under the original contract. In the present case none of these elements appear to be present and Company would not be obliged to keep the promise of the golden handshake payment. In another case the additional consideration might consist of some small undertaking by the retiring employee, such as to retire early or not to compete with the company after his retirement. There is no Irish authority on the point but this is the accepted view among Irish lawyers.