Chapter 8: Consideration and Intention to Create Legal Relations Flashcards
What is the definition of consideration?
A return recognised in law which is given in exchange for the promise. Gay Choon Ing
What are the 3 requirements that constitutes a good consideration?
1) Benefit-Detriment Analysis
2) Exchange (of promise)
3) Value
What is the definition of Benefit-Detriment Analysis>
Law only requires either a benefit conferred or a detriment suffered by a party to constitute consideration.
What is the definition of exchange?
The idea of exchange indicates that the law will only enforce bargains as opposed to gifts.
Thus, gratuitous promises, that is promises to confer some thing or service for nothing in return, are generally not enforceable
What are the 3 conditions for valid exchange?
1) Consideration must be requested for by the promisor
2) Consideration must not be past (Pao On)
3) Consideration must move from the promisee but need not move to to the promisor
What are the 3 conditions for the exemption of “Consideration must not be past”?
1) The act was done at the promisor’s request
2) There was an understanding between the parties, at the time the request was made, that the act would be paid for;
3) Such payment would be enforceable if it had been promised in advance
What are 6 ways for a consideration to be sufficient?
1) Nominal Value
2) Forbearance
3) Going beyond existing public duty
4) Existing contractual duty owed to third party
5) Going beyond existing contractual duty owed to promisor
6) Practical Benefits (In Return for promise for More)
What are 3 ways for a consideration to be INSUFFICIENT?
1) Intangibles and Moral Obligations
2) Existing Contractual Duty owed to promisor (In Return for promise for more)
3) In return for a promise for less
What is the definition of Promissory Estoppel?
Promissory estoppel prevents a person from going back on his promise even though the promise is not supported by consideration.
What are the 5 conditions for Promissory Estoppel?
1) Promise must be clear and unequivocal
2) Promisee must have acted on reliance of the promise
3) It would be inequitable to go back on the promise
4) It must be used as a shield, and not a sword.
5) Is it supensory, not extinctive
What are 2 ways for Intention to Create Legal Relations?
1) Social and Domestic Agreements
2) Business and Commercial Agreements
What is an exception for Social and Domestic Agreements, that they do intend to create legal relations?
1) The certainty of the terms of the agreement
2) The actual reliance placed on the agreement
What are 3 exceptions that Business and Commercial Agreements do not intend to create legal relations?
1) Honour Clauses: Expressly stated intention not to create legal relations.
2) “Subject to contract” Clause
3) Letters of Comfort: Depends on the intention as evidenced by the surrounding circumstances and the text of the letter.
