19-Essential Requirements(2) Consideration, privity, intention to create legal relations

Question 1

Definition of consideration comes from which 2 sources?

Answer 1

1) Currie v Misa (1875)

2) Sir Fred Pollock-Dunlop v Selfridge Ltd. (1915)

Question 2

Currie v Misa (1875)

Sir Fred Pollock-Dunlop v Selfridge Ltd (1915)

Answer 2

Provide definition of consideration

Question 3

What is the definition given by Sir Fred Pollock in Dunlop v Selfridge Ltd. (1915) for ‘consideration’?

Answer 3

• An act or forbearance of 1 party or a promise
• in exchange for the promise of the other
• which is thus enforceable.

Question 4

Executed consideration

Answer 4

An act in return for a promise

Question 5

An act in return for a promise

Answer 5

Executed consideration

Question 6

Executory consideration

Answer 6

A promise for a promise

Question 7

A promise for a promise

Answer 7

Executory consideration

Question 8

What are the 5 rules of consideration?

Answer 8

1) Consideration need not be adequate but must be sufficient
2) past consideration is not good consideration
3) consideration must move from the promisee
4) performing existing duty cannot be consideration for a new contract
5) a promise to accept part-payment of a pre-existing debt in place of whole debt is not consideration

Question 9

1) CONSIDERATION MUST BE SUFFICIENT

What case for adequacy regarding the first rule in consideration given above?

Answer 9

Chappell v Nestle Ltd (1960)

Facts: even the choc bar wrappers would have been adequate consideration.

Question 10

Chappell v Nestle Ltd (1960)

Answer 10

Principle of adequacy regarding the first rule in consideration.

Facts: even the choc bar wrappers would have been adequate consideration.

Question 11

1) CONSIDERATION MUST BE SUFFICIENT

What case for sufficiency regarding the first rule in consideration given above?

Answer 11

White v Bleutt (1853)

Facts: Natural love from creditor (father) does not count as consideration. Son had to pay loan back to late father’s estate.

Question 12

White v Bleutt (1853)

Answer 12

Principle: sufficiency regarding the first rule of consideration.

Facts: Natural love from creditor (father) does not count as consideration. Son had to pay loan back to late father’s estate.

Question 13

2) PAST CONSIDERATION IS NO CONSIDERATION

What case to demonstrate this principle for the 2nd rule of consideration as noted above?

Answer 13

Re McArdle (1951)

Facts: Estate of house that C carried out work on offered C money in retrospect but this could not be consideration as the work was already done.

Question 14

Re McArdle (1951)

Answer 14

Principle: past consideration is no consideration (2nd rule of consideration)

Facts: Estate of house that C carried out work on offered C money in retrospect but this could not be consideration as the work was already done.

Question 15

What case contrasts with the case of Re McArdle (1951) in that past consideration can sometimes be consideration?

For what reason?

Answer 15

Re Casey’s Patent (1892)

Facts: C worked on patents for company. Company later promised 1/3 share in parents, but it was implied he would receive money for doing the work so C was entitled to claim.

Reason: company made an express request for a particular task unlike Re McArdle (1951)

Question 16

Re Casey’s Patent (1892)

Answer 16

Example of: contrast with Re McArdle (1951) for rule 2 of consideration.

Facts: C worked on patents for company. Company later promised 1/3 share in parents, but it was implied he would receive money for doing the work so C was entitled to claim.

Question 17

CONSIDERATION MUST MOVE FROM THE PROMISEE

What does it mean?

What case for this?

Answer 17

Meaning: parties cannot sue or be sued under contract without first providing consideration.

Tweddle v Atkinson (1861)

Facts: Both fathers of young couple agreed to pay money to them. Woman’s father died before payment. Husband tried to sue estate but he provided no consideration so claim not allowed.

Question 18

Tweddle v Atkinson (1861)

Answer 18

Principle: Consideration must move from the promisee.

Facts: Both fathers of young couple agreed to pay money to them. Woman’s father died before payment. Husband tried to sue estate but he provided no consideration so claim not allowed.

Question 19

PERFORMING AN EXISTING DUTY CANNOT BE CONSIDERATION

In what 3 ways is can this occur?

Answer 19

1) public duty-police etc.
2) existing contract with promisor
3) a promise to make payment of existing debt

Question 20

PERFORMING AN EXISTING DUTY IS NOT CONSIDERATION

What is the case for under public duty?

Answer 20

Collins v Godefroy (1831)

Facts: A D in court offered to pay policeman or attend court as he required him. Policeman was already under obligation to do so, therefore payment was not consideration.

Question 21

Collins v Godefroy (1831)

What principle regarding rules of consideration?

What circumstance makes consideration not valid?

Answer 21

Principle: PERFORMING AN EXISTING DUTY IS NOT CONSIDERATION

Example of: as under public duty

Facts: A D in court offered to pay policeman or attend court as he required him. Policeman was already under obligation to do so, therefore payment was not consideration.

Question 22

PERFORMING AN EXISTING DURY CANNOT BE CONSIDERATION

Example of existing contract.

Answer 22

Stilk v Myrick (1809)

Facts: When 2 sailors deserted on trip. Others including C picked up work with promise of surplus wages split between them. However, no consideration as per-existing contract.

Question 23

Stilk v Myrick (1809)

Answer 23

Principle: PERFORMING AN EXISTING DUTY CANNOT BE CONSIDERATION

Example of: under existing contract.

Facts: When 2 sailors deserted on trip. Others including C picked up work with promise of surplus wages split between them. However, no consideration as per-existing contract.

Question 24

PERFORMING AN EXISTING DUTY CANNOT BE CONSIDERATION

Under what circumstances can an existing contract be regarded as consideration for new contract?

Answer 24

Hartley v Ponsonby (1857)

Facts: Similar to Stilk v Myrick (1809) but this time many more sailors deserted meant that remaining sailors picked up much greater workload with promise of extra pay.

Question 25

Hartley v Ponsonby (1857)

Principle?

Facts.

Answer 25

Principle: PERFORMING EXISTING DUTY CANNOT BE CONSIDERATION

Example of: when an existing contract can be consideration, in contrast with Stilk v Myrick (1809)

Facts: Similar to Stilk v Myrick (1809) but this time many more sailors deserted meant that remaining sailors picked up much greater workload with promise of extra pay.

Question 26

What case is a modern version of Stilk v Myrick (1809)?

Answer 26

Williams v Roffey Bros Nicholas Ltd (1990)

Facts: carpet fitter ran out of money whilst doing carpets for D. D promised extra £10k to get work done as D had clients waiting to move in. D attempted not to pay £10k but claim was allowed.

Question 27

Williams v Roffey Bros Ltd (1990)

What principle is this regarding rules of consideration?

What is this case a modern example of?

Answer 27

Principle: PERFORMING PRE EXISTING DUTY CANNOT BE CONSODERATION

Example of: modern version of Stilk v Myrick (1809)

Facts: carpet fitter ran out of money whilst doing carpets for D. D promised extra £10k to get work done as D had clients waiting to move in. D attempted not to pay £10k but claim was allowed.

Question 28

WHERE THERE IS ACCEPTANCE OF PART PAYMENT OF A DEBT

What case to demonstrate the 5th rule of consideration as given above?

Answer 28

Foakes v Beer (1884)

Facts: A lender asks for the interest (she was entitled to) on a loan despite previously agreeing she wouldn’t ch at he interest.

Question 29

Foakes v Beer (1884)

Answer 29

Principle: WHERE THERE IS ACCEPTANCE OF PART PAYMENT OF A DEBT

Facts: A lender sued for interest on a loan despite previously agreeing she would not charge it.

Question 30

The 5th rule of consideration is A PROMISE TO ACCEPT PART PAYMENT OF AN EXISTING DEBT IN PLACE OF THE WHOLE DEBT IS NOT CONSIDERATION.

What does this mean?

Answer 30

That after the agreement is made and the lender agrees to accept a lesser amount then the lendee is still obliged to pay the full amount.

Question 31

What case contrasts with the findings in Foakes v Beer (1884)?

Answer 31

Central London Properties v High Trees (1947)

Facts: Half rent on building lease to be paid during the war.

Question 32

Central London Properties v High Trees (1947)

What case findings does this contrast with?

What principle is this for?

Answer 32

Foakes v Beer (1884)

Facts of High Trees: Half rent on building lease to be paid during the war.

Principle: Part payment of existing debt is not consideration, except for promissory estoppel as in above case.

Question 33

What exception to the 5th rule of consideration did the case of High Trees (1947) find?

Answer 33

Promissory estoppel.

Question 34

What is promissory estoppel.

Answer 34

A voluntary acceptance by both parties to a contract which prevents either party from going back on a promise.

Question 35

What case demonstrates a successful use of promissory estoppel?

Answer 35

London Property v High Trees (1947)

Question 36

What case findings are in contrast with High Trees (1947) in that promissory estoppel was not found?

Answer 36

Re Selectmove (1995)

Facts: company owing money to Inland Revenue, which, having made agreement to accept payment in installations asked for all debt at once and was succesful.

Question 37

Re Selectmove (1995)

The findings in this case contrasts with the findings in which other case regarding promissory estoppel?

Answer 37

Central London Property v High Trees (1947)

Facts: company owing money to Inland Revenue, which, having made agreement to accept payment in installations asked for all debt at once and was succesful.

Question 38

What are the limitations to promissory estoppel?

Answer 38

1) Modified existing obligations rather than new contract
2) Promisee must accept any detriment on their part
3) Suspends but does not extinguish rights of promisor-High Trees (1947)
4) Cannot be made when either party is under pressure, otherwise it is not equitable-D and C Builders v Rees (1965)