Chapt 3 "other Requirements"

Question 1

What is consideration?

Answer 1

“The price paid for a promise” (Dunlop v Selfridge)

Essentially you won’t be bound unless you get something in return

Benefit to promisor /Detriment to promisee (currie v misa)

Question 2

Why is consideration necessary?

Answer 2

Otherwise it’s a gift and therefore not legally enforceable

Promise doesn’t need consideration if it’s contained in a deed

Question 3

What is a deed?

Answer 3

A legal document which has indicated that it’s a deed and has been signed, witnessed and delivered

No consideration needed as witnessing etc signals clear intention to be bound

Question 4

Dunlop Pneumatic tyre co ltd v Selfridge and co ltd 1915

2 relevant points of law

Answer 4

Consideration is necessary

“The price paid for a promise”

And

Cannot usually place a burden on a third party

Question 5

Currie v Misa 1875

Answer 5

There must be consideration For contract

Benefit and detriment

Question 6

Types of consideration

2

Answer 6

Executed consideration - performed at time of making contract- found in unilateral contracts

Executory consideration - promise to do something in future (bilateral contracts) -found in bilateral contracts

Question 7

4 rules governing consideration

What cases?

Relevant act?

Answer 7

Must move from promisee (tweddle) but not necessarily to the promisor (Dunlop)

Past consideration not good consideration (re mc cardle) and NVA management
however implied assumpsit (Lampleigh v Braithwait and Pao On)

Need not be adequate (Chapell v nestle 1960)

Must be sufficient (Thomas v Thomas 1842)- not illegal and of value in eyes of law

Contracts (Rights of Third Parties) Act 1999;

*Exception where act done at request of promisor; understood that payment would be made; and payment otherwise legally
recoverable, e.g. Re Casey’s Patents (1892).

Question 8

Re McCardle 1951

Answer 8

Past consideration

If one party voluntarily performs an act, and the other party then makes a promise, the consideration for the promise is said to be in the past. The rule is that past consideration is no consideration, so it is not valid and cannot be used to sue on a contract

Question 9

The doctrine of implied assumpsit

This is the exemption to the rule of past consideration (if service is usually paid for the courts I’ll assume that it is meant to be paid for and enforce a later promise to pay)

Which 3 cases?

Answer 9

Exceptions to past consideration

Lampleigh v Braithwait 1615

Pao On v Lau Yiu Long 1980

Question 10

Cases for consideration must not be past (2)

Answer 10

Re McArdle 1951

NVA Management ltd v Obefemi Martins 2010

If one party voluntarily performs an act, and the other party then makes a promise, the consideration for the promise is said to be in the past. The rule is that past consideration is no consideration, so it is not valid and cannot be used to sue on a cont

Question 11

Lampleigh v Braithwait 1616

Answer 11

B killed someone and asked L to get a pardon from the King

• L did so and incurred and expenses. B tnen promised to pay him £100 but didn’t.

Held- promise WAS enforceable; L acted at Bs request . Court treated the request and later promise as one transaction

Doctrine of implied assumpsit- exception to past consideration

Question 12

Pao On v Lau Yiu Long 1980

Answer 12

Affirmed the principle from Lampleigh as long as:
1. It was performed at the request of one party

2. Understood between them that some reward could be expected

3 a specific promise of payment was later made

Implied assumpsit

Question 13

Consideration need not be adequate

What does this mean?

Which case?

Answer 13

Consideration must be given but the 2 considerations need not be of equal value

It is up to the people making the contract to make a bargain that they are both happy with

Chappel and co v Nestle co ltd 1960

Question 14

Consideration must be sufficient
What does this mean?

What cases?

Answer 14

Some benefit to promisor OR some detriment to promisee- “something of value in the eye of the law” (Thomas v Thomas✅White v Bleuett 1853❌)

Illegal things not valid consideration (Thomas v Thomas 1842)

Not consid to do something you would be doing anyway..

• existing public duties
• existing contractual duties
• existing duties to repay a debt

Question 15

Existing PUBLIC DUTIES in consideration

4 cases

Answer 15

If the law requires you to do it anyway then it won’t be valid consideration (Collins v Godfroy 1831) ❌

If you go above and beyond public duty/ more than was strictly owed- then it CAN be valid consideration
(Glasbrook Bros v Glamorgan CC 1925)✅
Harris v Sheffield united FC 1988- v important
✅
Reading festival ltd v West Yorkshire police authority 2006 ✅

Question 16

Consideration
Existing contractual duties

What is the general rule/position?

3 relevant cases

Answer 16

No fresh consideration, Therefore no requirement to pay BUT if they did extra work then there is fresh consideration

• stilk v myrick 1809 👎
• Hartley v ponsonby 1857👍
• Williams v Roffrey Bros 1990 👍casts doubt on rule.. can enforce if:
• promisor obtained practical benefit or avoided a detriment
• new agreement was entered into absence of Any economic duress

Question 17

Consideration/ existing contractual duties

Hartley v Ponsonby 1857

Answer 17

19 of 36 sailors had deserted

The amount of extra work and dangerous conditions DID constitute a new contract here

👍

Question 18

Consideration/ existing contractual duties

Stilk v Myrick 1802

Answer 18

Sailor was promised extra work by captain if they covered for 2 deserters

Held- they were already contracted to run the ship (even with 2 deserters) so no fresh consideration and no contract

👎

Question 19

Consideration/ existing duties to pay debt

General points? (2)

What 3 cases illustrate this?

Answer 19

If you owe money, you have to pay it back

Paying back part of it will not be valid consideration to forgo the balance

Pinnels case 1602

Foakes v Beer 1884

D and C builders v Rees 1996 (no extra consideration)

Question 20

Promise not to enforce full debts will only be enforceable if debtor gets something in return..
(3 points)

Pinnels case exceptions

Answer 20

• payment before due date at creditors request
• payment at some other place other than where payment is due
• payment using something different as payment

And
1. If 3rd party pays part of debt, the rest cannot be demanded by debtor (Hirachand Pumanchand v Temple 1911)

2. Composition agreement. I.e. Agreeing to pay a fixed % to all creditors. Once this has been agreed, creditors are not entitled to rest of money
3. If amount owed is in dispute
   Amount agreed to be repaid may then be binding

Question 21

Intention to create legal relations
(Social and domestic contracts)

4 cases..

Answer 21

Balfour v Balfour 1919❌(husband/wife)

Jones v Padavatton 1969 ❌(family/close friends)

Merritt v Merritt 1970 ✅(separated spouses)

Simpkins v pays (unfair advantage )✅

Question 22

Family and social agreements

Balfour v Balfour 1919 ❌

Answer 22

Husband living away promised to pay his wife £30 a month

Not legally binding because they were husband and wife

Pol- agreements between husband and wife are generally not binding

Question 23

Family and social agreements

Jones v Padavatton 1969 ❌

Answer 23

Mother offered to pay daughter allowance and then buy her a house if she quit her job and moved to England to study at the bar.

There was no intention to create legal relations.

Pol: Family and close friends also not presume to be binding

Question 24

Family and social agreements

Rebuttable presumptions

Answer 24

Can be rebutted of behaviour of parties shows an intention to be legally bound
1. Separated spouses (Merritt v Merritt 1970)

Also, Simpkins v Pays 1955- unfair disadvantage

Question 25

Family and social agreements

Examples of being legally bound

Merrit v merrrit 1970

Answer 25

Husband promised wife could keep the house if she paid off the mortgage

Husband and wife were separated so there was intention to create legal relations

Question 26

Intention to be legally bound in commercial or business relationships

General rule is..

Answer 26

Rebuttable presumption to be legally bound Edmunds v Lawson 2000

Question 27

Intention to be legally bound in commercial relationships can be rebutted where -
(3)

Answer 27

Adverts are regarded as “mere puffs”

If there is a clause indicating it’s not legally binding ( rose and frank v Compton bros

Letter of comfort-t. The objective is to create a morally binding but not legally binding assurance.

Question 28

Rose and frank v Compton Bros1924

Intention to be legally bound in commercial agreements

Answer 28

Sale of paper tissue contained honourable pledge clause

“This arrangement is not entered into, nor is this memo written as a formal or legal agreement and shall not be subject to legal jurisdiction in the law courts”

Therefore it wasn’t legally binding!!!

Question 29

The promise must move from the promisee

But does not need to be for the benefit of the promisor

Answer 29

Tweddle v Atkinson 1861

Dunlop v Selfridge 1919?

Question 30

How should I explain consideration for exam?

Answer 30

The mere fact of agreement alone does not make a contract. Both parties to the contract must provide consideration if they wish be bound/ sue on the contract.

**This means that each side must promise to give or do something for the other. **

. (Note: if a contract is made by deed, then consideration is not needed.)