Chapter 5: Consideration Flashcards

Question

What is '**consideration must move from the promisee but need not move to the promisor**' | 3 cases

Answer 1

Combined with Privity of Contract * Traditionally, promisor provides the promise, promisee provides consideration * This rule is an exception, that the promisor provides the promise, but the consideration conducted by the promisee, **doesn't necessarily need to go to the promisor** (can confer benefit to a third party, even though they are not part of the contract) 1. Currie v Misa 2. Tweddle v Atkinson 3. Price v Easton

Answer 2

1. Performance of an existing **Duty under a Contract with a Third Party** 2. Performance of existing **Duty imposed by law** 3. Performance of an existing **duty under contract with same contracting party**

Answer 3

* Performance of an existing contractual duty owed to a Third Party is good consideration

Answer 4

**Shadwell v Shadwell** * Facts - C was already under a contract to marry the fiance. Uncle promised to pay C £150 after he was married. * Held - although the C was already under a contract to marry the fiance. There is valid consideration, as he **provided consideration for the uncle's (third party) promise** which is recognized as **good consideration**. 1. The Eurymedon 2. Jones v Waite 3. Scotson v Pegg 3. Pau On v Lau Yui Long - A **promise to perform** as opposed to actually performing is **also good consideraion** ## Footnote Treitel mentioned these cases are examples of '**invented consideration**'

Answer 5

**General rule** * Performance of duty owed by law or promise to perfrom legal duty **does not amount to consideration** Seen in **Collins v Godefroy** * Facts - Collins was subpoenaed to attend and give evidence as a witness and attended for 6 days. He sued for the alleged sum he had been promised attendance per day * Held - If the duty imposed by law than a promise to provide remuneration, is **not supported by consideration**. (he was obligated by the law to attend, and there should not be any need for consideration)

Answer 6

1. **Ward v Byham** - Mother taking care of daughter. There was sufficient considerationas the mother did what the father had stated as the conditions 2. **William v William** - There was sufficient consideration to a promise **so long as there is nothing in the transaction which is contrary to public interest** 3. **Glasbrook Bros v Glamorgan County Council** - Even though police were bound to provide protection against the possibility of violence in a coal mine strike, if they **provided any additional protection or they do go beyond their scope of duty**, then that would be sufficient consideration

Answer 7

**Positive modification** - performance of an existing duty under contract with same contracting party **Negative modification** - Part paryment of debts

Answer 8

Performance of an Existing Duty under Contract **would Not amount to sufficient consideration** to enforce a new promise for extra payments

Answer 9

Stilk v Myrick * Facts - Claimants agreed with defendant to sail to Baltic and back for £5 a month. When the boat arrived, 2 seamen left and could not find any subsittute. The master said they were to share the remaining wages. Didn't pay in the end * Held - **No valid consideration**. Existing contractual obligation could never be good consideration for a fresh promise, to pay more, from the person that it was owed to 2 different reports for the reasons for the decision 1. The Espinasee Report - it is contrary to Policy to allow these promises to be enforced. This can lead to **Economic Duress / Pressure**. 2. The Campbell Report - cannot enforce due to the **lack of consideration**

Answer 10

Hartley v Ponsonby * Facts - 17/36 crew abandoned ship. Only 4 or 5 able seamen. Voyage became very dangerous to continue, master of the ship promised additional wages to continue the voyage * Held - Valid consideration. They went **over and beyond their existing duty**. Hanson v Royden * C was promoted from able seaman to second man, and therefore performed additional tasks **over and beyond his contractural duty**. Valid consideration for the extra pay Williams v Roffey Brothers

Answer 11

Facts 1. Defendants were main contractors, had sub-contractors that were carpentry works to the Claimant for £20,000. Claimant made a bad bargain, price was unreasonbaly low 2. Claimant ran into financial difficulty after doing part of the work, and was important that he completed it in time, if not there would be a penalty clause fopr late delivery. 3. D called for a meeting with Claimants to disccuss and agreed to pay £530 more per flat 4. claimant finished 8 more flats and the D did not pay the promise Held 1. Glidewell LJ: took a **pragmatic approach**; the court **widened the meaning of consideration**. Although Stilk v Myrick was good law and unenforceable, this case showed that the promisee had provided consideration as the promisor had recevied **practical benefits** even though they were strcitly perfroming their existing contractual duty. And that the addtiional sum **was not due to economical duress or fraud**. ## Footnote This case shows **PRACTICAL BENEFIT**

Answer 12

Where parties will gain an **advantage arising out of the continuing relationship** with the bargain will not fail for consideration What amounts to practical benefit 1. C continued the work and **did not breach the contract** 2. D were spared of engaging new workers/equipment 3. **Avoided the penalty clause** for delaying 4. A **positive modification** was formalised/made 5. D were able to utilize the additional sum to **complete what was not possible before**

Answer 13

Re Selectmove has entrenched this rule/principle

Answer 14

1. Pao on v Lau Yiu Long [1979] Privy Council 2. The Sibeon & The Sibotre [1976] 3. The Universe Sentinel [1983] HL 4. Atlas Express v Kafco - the relevance of the absence of protest 5. The Atlantic Baron [1979] – lack of any other practical choices

Answer 15

Part payment of debts is a **negative modification**, an **agreement to take a lesser sum** than what was supposed to receive (i.e. promise to not sue after taking the part payment) General rule * Payment of a smaller sum on the due date is not satisfaction for the debt of the larger amount (**cannot be good consideration**)

Answer 16

**Pinnel's case**, reafrrimed in; **Foakes v Beer**

Answer 17

Facts 1. Pinnel sued Cole, in an action of debt upon a bond, for the sum of £8 10s. 2. The defendant, Cole, argued he had, at Pinnel's request, **tendered £5 2s 6d one month before the debt was due**, and the plaintiff had accepted in full satisfaction for the debt Held 1. Lord Coke - '**Payment of a lesser sum on the day in satisfaction of a greater sum, cannot be any satisfaction of the whole**...but the gift of a horse, hawk, or robe etc. in satisfaction is good. For it shall be intended that a hawk, horse, or robe, etc. might be more beneficial to the plaintiff than the money’ 2. As the lesser sum was paid earlier, at the request of the promisor, it is good consideration ## Footnote This case reinforces the general rule, althought the decision was good consideration.

Answer 18

Facts 1. Appellant, Foakes owed the respondent, Beer, a sum of £2,090 19s after a court judgment 2. Beer agreed that she would not take any action against Foakes for the amount owed if he would sign an agreement promising to pay an initial sum of £500 and pay £150 twice yearly until the whole amount was paid back 3. Foakes was in financial difficulty and, with the help of his solicitor, drew up an agreement for Beer to waive any interest on the amount owed and she signed it. Foakes paid back the principal but not the interest Held 1. She was entitled to sue for the interest owing. 2. The respondent’s promise not to enforce the judgment was not binding as **Dr. Foakes had not provided any consideration**. 3. **Payment of less than is due on or after the date for payment will never provide consideration** for a promise to forgo the balance

Answer 19

1. Payment at an **earlier date** 2. Payment at a **different place as requested by the creditor** 3. **Payment by a Third Party** – **Hirachand Punamchand v Temple**: The Father paid the Son’s debt. The creditor accepted the Fathers terms and it had the effect of extinguishing the Son’s debt. The Creditors were not allowed to sue for the balance owing as it would then mean that the Creditors had committed fraud on the Father. 4. **Additional consideration** - A gift of a horse, a hawk or a robe

Answer 20

**No**, this was shown in Re Selectmove * Says that **practical benefit** (Williams v Roffey Brothers) **can’t be used in the context of negative modification**, no matter how much benefit there is And was also discussed in **MWB Business Exchange Ltd v Rock Advertising Ltd [2016] CA**, and **MWB Business Exchange v Rock Advertising (2018) SC** 1. First case was given by COA that the **subsequent agreement did confer practical benefit**, that there was consideration. 2. However, the second case, held by the UKSC, stated that they **did not even look at the promise** as it consideration **cannot be varried orally (No oral modification)**. And UKSC said this was a** ‘difficult’ and important case reserved for the an enlarged panel of Justices** when it formed the ratio decidendi of a case

Answer 21

It is based on the principle of equity. A principle that allows the plaintiff to recover damages, even if the promise was not made with formal consideration. And the promisee relied on the promise by the promisor

Answer 22

1. The rule 2. Requirements 3. Consequence

Answer 23

When a representor, makes a promise to the representee. **Intending that the representee will rely on the promise to their detriment** . According to promissory estoppel, they **can’t go back on their word even if it causes detriment/injustice to the representee**

Answer 24

Hughes v Metropolitan Railway Co. (1877) Central London Property Trust Ltd v High Trees House Ltd, (1947) CA

Answer 25

Facts 1. Landlord gave 6 months’ notice to tenant requiring him to carry out certain repairs. Landlord told Hughes that he **didn’t have to fulfil the repair obligation within 6 months** 2. Tenant responded by asking landlord whether he wishes to purchase his interest in premises for 3000 3. Negotiations followed for purchase of lease, but when negs broke down, **landlord forfeited the lease as tenant had not carried out repairs within six months of original notice** Held 1. HOL held that **tenant is entitled to equitable relief against forfeiture**, the running of the **6 month period was suspended** during negotiations to purchase lease and did not recommence until negs had broken down

Answer 26

Facts 1. The Plaintiffs, Central London Property let a block of flats in London to the High Trees (the defendants) on a 99-year lease at an annual rent of £2,500 2. WWII erupted and tenancy rates were reduced substantially. **CLP agreed to reduce rent to £1250** 3. When the war ended people came back to rent 4. **CLP demanded that they pay the full mount** Held 1. **Full rental was recoverable** Obiter 1. Denning J mentioned that the **agreement was intended to be temporary** and ceased to operate in 1945 2. Therefore the plaintiffs were entitled to the full £2,500 from 1945 onwards

Answer 27

1. There must be a **clear and unequivocal or representation that the existing legal rights** will **not be fully enforced** 2. There must be **reliance on the part of the promisee on the promise of the promisor**. This requirement means that the promise must have in some way influenced the conduct of the party to whom it was made 3. Must be **inequitable for the promisor to go back on his word**. The judge is not obliged to apply Promissory Estoppel **automatically the moment there is a promise** which modifies the existing contract which has been relied upon 4. The obligations would **normally arise in the context of a contractual relationship**, but this is not essential - **Durham Fancy Goods v Michael Jackson Fancy Goods (1968)** 5. This doctrine can **only be used a shield** and not as a sword 6. The **promisee must not have acted inequitably** in order to rely on the doctrine. **'He who comes to equity must come with clean hands'**

Answer 28

Suspensory 1. When there is a **continuing obligation** 2. Then promisee has the ability to have some time to perform by **suspending it temporarily** 3. Then when the time comes, **upon given reasonable notice**, then can **continue the obligation afterwards** Extinctive 1. If it is a one-off debt 2. Then the **entire right to claim is extinguished** 3. **Ajayi v Briscoe (1964) Lord Hodson** - ‘the promise only becomes final and irrevocable if the promisee cannot resume his position’

Answer 29

* Tool Metal Manufacturing Co. Ltd v Tungsten Electric Co. Ltd (1955) HL * Central London Property Trust Ltd v High Trees House Ltd * Hughes v Metropolitan Railway (1877)

Answer 30

* Collier v P & MJ Wright (Holdings) Ltd (2007) * Evans v Amicus Healthcare Ltd. & Others [2003]