Chapter 2: Consideration Flashcards
What does consideration mean?
The price for which the promise of the other is bought
What is executory consideration?
Parties make promises to each other to perform something in the future after the contract has been formed
What is executed consideration?
At the time of formation, the consideration has already been performed
What are the three main rules governing consideration?
It must not be past unless there was a prior act or service that was provided by the promisee at the promisor’s request and it was always understood that that act/service would be rewarded which must be legally enforceable had it been promised in advance, it must move from the promisee and the consideration must have an identifiable value, however low it is
What is the general principle regarding providing consideration where the same is already the subject of another contract?
Not sufficient unless the parties are exceeding their existing obligations
What are the requirements of factual consideration?
- Must be a contract to do work/supply services in return for payment
- Before the obligations have been performed completely, there is reason to doubt whether one party is going to complete their side of the bargain
- The other party then promises an additional payment/benefit to ensure the work is done on time not as a result of economic duress or fraud
- A benefit is subsequently obtained or a disbenefit is obviated
Are obligations under a public duty good consideration?
No unless that person went beyond their public duty
Can existing obligations to a third party be the basis of good consideration?
Yes but there is a risk of double liability
Is part payment of a debt good consideration?
Promising to pay part of their debt in return for a release from liability for the remainder is not good consideration unless the creditor introduces a new element for repayment or where a third party agrees with the creditor to pay part of the debt in full satisfaction of the debtor’s obligations or the creditor receives another practical benefit
What are the principles of promissory estoppel?
It doesn’t give a party the right to sue (as no consideration has been provided) but it can stop the promisor going back on their [clear and equivocal] promise that they would not enforce their full strict legal rights which the promisee has relied on so that it is inequitable to allow the promisor to go back on their promise
Does promissory estoppel suspend or extinguish legal rights?
It is to suspend rights until a term specified or be resumed after giving reasonable notice of their intention. Sometimes a past right might be extinguished. In exceptional cases, rights might also be extinguished due to impossibility or equitable considerations.
