Chapter 3 Consideration Flashcards
What are the types of consideration.
- Executory Consideration
- Executed Consideration
- Past Consideration
Describe Executory Consideration
Executory consideration referred to consideration which is yet to be performed.
Executory consideration is good consideration and it is held in court
Describe Executed Consideration
Executed consideration is consideration which has been performed.
Executed consideration is good consideration and it is held in court
Describe past consideration
Past consideration is defined as an act that was performed before the promises were given.
[Doing something without the promise of the other party]
What are the three requirements for past consideration
[Pao On’s Three Requirements]
- Act was done at the promisor’s request
- Both parties understood that the act would be remunerated in monetary value or some other benefit
- Contract has to be enforceable had it been promised in advance
What are the general rules regarding consideration
The general rules regarding consideration is
1: Consideration need not be adequate but must be sufficient
2: Consideration must move from promisee but need not move to promisor
Define the case study revolving around Sufficient Consideration
The case study is on Chappell & Co V Nestle .
Nestle was offering records of a dance tune to people that gave them 3 chocolate wrappers.
The royalty belonged to Chappell & Co. As a result Nestle had to buy records from Chappell and give it away to its customers.
Court held that the consideration of three chocolate bars were sufficient. Hence, consideration is valid.
What are the types of sufficient consideration?
- Monetary value
- Items of monetary value is good consideration - Forbearance to sue
- Giving away a benefit of avoiding a lawsuit acts as a gapped price or compensation for the promise - Performance of contractual obligations to third party
Case study: Eurymedon
Even though the defendant’s already owed a contractual obligation to the third party to unload the cargo. The plaintiff’s party had made a separate offer to the defendant for unloading his cargo.
Therefore, the act of unloading still formed good consideration for the contract with the plaintiff. Hence, plaintiff’s promise is enforceable.
What is the exception to forbearance to sue?
Legal action must be enforceable and not frivolous
Claimant has an honest belief that he is able to succeed in the claim
What are the types of insufficient consideration
[POICD]
- Moral Obligations & Motives
- Vague or insubstantial consideration
- Performance of Existing Duty to the Public
- Performance of Existing Contractual Duty
- Part payment of debt
Describe how moral obligations are insufficient consideration.
A preexisting moral obligation owed to a promisor would not be a sufficient consideration in the eyes of the law.
Describe how vague consideration is insufficient consideration
If the consideration is too vague or insubstantial, it would not be sufficient consideration and promise not enforceable
Describe how performance of existing public duty is insufficient consideration
Are there any exceptions to this case?
Name the case study
If promisor is already under public duty to perform an act. That same act cannot serve as sufficient consideration.
Exception: If promisee did more than what was required of them, then the court will decide it is sufficient consideration
Glassbrook bros v Glamorgan City
The manager of a coal mine sought additional policemen to guard his coal mine.
The police force already stated that a stationary force is sufficient. However, manager still insisted of having a secondary force to guard the mine.
Court held that this constituted sufficient consideration because the police force did more than what was required of them.
Describe how performance of existing contractual duty does not serve as fresh consideration
State the relevant case study, what are the relevant details?
If the promisee is already under an existing contractual duty to performa an act, that same act cannot provide sufficient consideration for the fresh promise.
Case study: Still V Myrick, there was no consideration provided because the remaining sailors were sufficient to complete the voyage.
Therefore since the remaining sailors failed to do anything more than required of them.
What is the case study that is an exception to Still V Myrick?
The exception would be Hartley V Ponsoby
Where the number of sailors who had abandoned the ship was so large that those that stayed behind were not sufficient, such that they had to do more than what was required of them.
