Chapt 3 "other Requirements" Flashcards
What is consideration?
“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)
Why is consideration necessary?
Otherwise it’s a gift and therefore not legally enforceable
Promise doesn’t need consideration if it’s contained in a deed
What is a deed?
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
Dunlop Pneumatic tyre co ltd v Selfridge and co ltd 1915
2 relevant points of law
Consideration is necessary
“The price paid for a promise”
And
Cannot usually place a burden on a third party
Currie v Misa 1875
There must be consideration For contract
Benefit and detriment
Types of consideration
2
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
4 rules governing consideration
What cases?
Relevant act?
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).
Re McCardle 1951
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
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?
Exceptions to past consideration
Lampleigh v Braithwait 1615
Pao On v Lau Yiu Long 1980
Cases for consideration must not be past (2)
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
Lampleigh v Braithwait 1616
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
Pao On v Lau Yiu Long 1980
Affirmed the principle from Lampleigh as long as:
1. It was performed at the request of one party
- Understood between them that some reward could be expected
3 a specific promise of payment was later made
Implied assumpsit
Consideration need not be adequate
What does this mean?
Which case?
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
Consideration must be sufficient
What does this mean?
What cases?
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
Existing PUBLIC DUTIES in consideration
4 cases
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 ✅
Consideration
Existing contractual duties
What is the general rule/position?
3 relevant cases
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
Consideration/ existing contractual duties
Hartley v Ponsonby 1857
19 of 36 sailors had deserted
The amount of extra work and dangerous conditions DID constitute a new contract here
👍
Consideration/ existing contractual duties
Stilk v Myrick 1802
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
👎
Consideration/ existing duties to pay debt
General points? (2)
What 3 cases illustrate this?
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)
Promise not to enforce full debts will only be enforceable if debtor gets something in return..
(3 points)
Pinnels case exceptions
- 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)
- 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
- If amount owed is in dispute
Amount agreed to be repaid may then be binding
Intention to create legal relations
(Social and domestic contracts)
4 cases..
Balfour v Balfour 1919❌(husband/wife)
Jones v Padavatton 1969 ❌(family/close friends)
Merritt v Merritt 1970 ✅(separated spouses)
Simpkins v pays (unfair advantage )✅
Family and social agreements
Balfour v Balfour 1919 ❌
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
Family and social agreements
Jones v Padavatton 1969 ❌
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
Family and social agreements
Rebuttable presumptions
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
Family and social agreements
Examples of being legally bound
Merrit v merrrit 1970
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
Intention to be legally bound in commercial or business relationships
General rule is..
Rebuttable presumption to be legally bound Edmunds v Lawson 2000
Intention to be legally bound in commercial relationships can be rebutted where -
(3)
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.
Rose and frank v Compton Bros1924
Intention to be legally bound in commercial agreements
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!!!
The promise must move from the promisee
But does not need to be for the benefit of the promisor
Tweddle v Atkinson 1861
Dunlop v Selfridge 1919?
How should I explain consideration for exam?
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.)
