Chapter 11: Consideration

Question 1

define consideration

Answer 1

something of value in the eyes of the law which flows from promisee (but not necessarily to the promisor) in exchange for the promisor’s promise

Question 2

define gratuitous promise

Answer 2

a promise made without consideration; generally unenforceable

A seal can act as an alternative to consideration (makes the promise a deed; formalizes agreement)

Question 3

steps in determining consideration

Answer 3

1. ID promise that is argued to be binding
2. ID promisor: who made the promise?
3. ID promissee: who is the promise to?
4. ID price/consideration: what did the promisor request as the price for which the promise is bought?

Question 4

consideration in unilateral and bilateral contracts

Answer 4

Unilateral: normal consideration
Bilateral: promise exchanged for promse, acts as consideration

Question 5

Re Boutillier Estates Ratios

reneged donation to Dalhousie University

Answer 5

1. Consideration has to flow/move from the promisee (the person to whom the promise is made)
2. Consideration exists if there is either a benefit to the maker of the promise or a loss, trouble or inconvenience to, or a change or obligation resting upon, the party to whom the promise is made
3. A promise to pay unsupported by consideration is not enforceable even if there has been reliance on that promise
4. However, there can be consideration in these cases if
   the acts done in reliance of a promise have been requested (expressly or implied) by the promisor OR
   In the absence of an express/implied promise, the promisor has participated in the acts performed by the promisee, inducing the promisee to act in some way
5. Charity is not meant to be enforcable

Question 6

Combe v Combe Ratio

consideration between husband and wife?

Answer 6

In a unilateral contract, in order for forbearance (refusing to sue) on the part of the promisee to be consideration, it must be requested (express or implied) or otherwise intended by the other party/promisor

Question 7

Royal Bank of Canada v Kiska Ratios

Answer 7

1. Consideration can be found in the detriment, inconvenience or act of forbearance suffered by one party if at the request (express or implied) of the Promisor
2. A request to act or forbear will be implied if the Promisor “sought to accomplish it.”
3. Although consideration “must move from the Promisee”, it need not move to the Promisor, it can be directed to a third party. Benefit can go to someone else
4. Shows us that any reasonable amount of time of forbearance will suffice as valid consideration (even 1 day)
5. Exception to consideration: Sealing a document properly (not decorative) turns agreement into a deed (no consideration needed)

Question 8

Earn v Kohut Ratios

Past Consideration

Answer 8

1. Generally, past consideration is no consideration
2. Exception: even if an act [such as forbearance] has occurred before a promise is made, it may be sufficient consideration for the later promise IF: (all 3 features must be present)
   * The act was done at the promisor’s request
   * The parties understood that the act was to be remunerated (rewarded) either by a payment or the conferment of some other benefit
   * The payment or benefit would have been legally enforceable had it been promised in advance (not illegal, not giving away certain rights if this is not allowed, etc.)

Question 9

B(DC) v Arkin

Compormise/Settlment Agreements: kid stole at Zellers, mom could be sued

Answer 9

1. It is a general rule that a promise to forbear is good consideration, even if that claim is doubtful, unless:
   * The forbearing party knows its claim is invalid;
   * deliberately conceals information that would defeat the claim.
   * Or does not seriously intend to pursue the claim.
2. If a claim is known by a party to be invalid, then a promise made on that basis is not valid.
3. forbearance from suing is okay, even if that claim is doubtful. It is only not sufficient consideration when you believe it to be invalid.

Question 10

Stilk v Myrick Ratio

offer to sailors to pay them more when some desert reneged

Answer 10

1. The promise to perform an antecedent or pre-existing duty is not valid consideration. To be enforceable, promises to pay more require fresh consideration.
2. If a new element is added to a pre-existing contractual duty, there must be new consideration for the new contract to be binding (cannot be something they were already contracted to do)

Question 11

Gilbert Steel v University Construction Ratio

Price for steel went up 3 times

Answer 11

A promise to do what one is already contractually bound to do is not valid consideration for a promise to pay more. In other words, fresh consideration is required to support a promise to pay more.

Question 12

Williams v Roffey Bros Ratio

contractor who failed to get apartments on time

Answer 12

A promise to perform a pre-existing obligation can amount to good consideration for the promise to pay more in the form of a practical benefit (expectation of an advantage or avoiding a disadvantage/disbenefit) to the promisor so long as the promise is not given under duress or fraud

If these qualifications not met, then Stilk v Myrick and Gilbert Steel apply (no contract, fresh consideration needed)

Question 13

Ward v Byham

11E: Preexsting legal duty; mother and father agreement for raising kid

Answer 13

A promise to perform or performing an existing legal duty can be good consideration if the Promisor receives the practical benefit (performing an act that exceeds the legal duty) that they have stipulated or requested from the Promisee.

Question 14

Foakes v Beer (Paying Less than Is Due)

11F: Paying Less Than Is Due

Answer 14

1. Payment of a lesser sum of money for a greater sum of money is not adequate consideration because in paying less, it is not the whole satisfaction of the greater (Pinnel’s case).
2. Silence does not mean someone is promising to accept less/anything new or different
3. Accord and Satisfaction - both parties have to agree to lesser amount to be valid

Question 15

Greater Fredericton Airport Authority v Nav Canada (Modernization of Consideration)

Answer 15

Fredericton Airport wants to lengthen runway, Nav Canada refuses to move equipment, but will gladly accept new equipment if airport pays (in violation of agreement)

Is post-contractual variation unsupported by fresh consideration enforceable?

Change from traditional consideration rules: a variation of a contract unsupported by fresh consideration remains enforceable if it was not procured under economic duress (para 7)

If duress present: fresh consideration required to be enforceable

keep in mind, this is one case out of the NB Court of Appeal (limited weight)