Co2: Consideration & Promissory Estoppel (rev notes) Flashcards
Consideration - definition
= Currie v Misa (1875) : either benefit or profit to one party, or detriment to / resp undertaken by the other
valuable consideration = “some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other”
2 reasons to have consideration
Evidential value = so that a contract doesn’t form too easily / off random promises, ensures that both parties are serious about the agreement (like a formality)
Principle of reciprocity (symbolically, bcs consideration need not be adequate)
= makes sure that only ± bilateral bargains are enforced (where both parties get smth out of it)
Consideration of trivial value
is still valid consideration = Chappell v Nestle (1960) (HL)
Promise not to complain
is not valid consideration bcs complaining not a right / smth one is entitled to do, so not relinquishing a benefit = White v Bluett (1853)
Withdrawing threat to be a nuisance & promising to proceed rapidly
= sufficient consideration bcs both benefit the other party = Pitt v PHH Asset Management Ltd (1994)
Forbearing one’s legal rights (eg quitting smoking)
= valid consideration = Hamer v Sidway (1891)
Promise to perform an existing legal duty
= valid consideration as long as performance will benefit the promisee = Ward v Byham (1956) (CA), confirmed in Williams v Williams (1957)
Public authority doing something beyond what it is obliged to do by statute
= valid consideration = Glasbrook Ltd v Glamorgan CC (1925) (HL)
Police owes the general public a general duty to prevent violence & disorder, but lawful to charge for extra protection
following Glasbrook
= Michael v Chief Constable of South Wales police (2015) (SC) per Lord Toulson at [30]-[31]
Promise to pay more for performance of existing contractual duties (more for same)
is not enforceable (due to lack of consideration) = Stilk v Myrick (1809) (HL)
UNLESS it confers a ‘practical benefit’ on the promisor = Williams v Roffrey Brothers (1990) (CA)
A promise to do something that one is already bound (to a 3P) to do
is valid, there is sufficient consideration (as long as benefits promisee) = Shadwell v Shadwell (1860) (CA)
Act done prior to a promise can be valid consideration IF
- the act has been done at the promisor’s request
- the parties understood it was to be rewarded by the promisor (money or other benefit)
- the payment would have been enforceable had it been promised in advance
= Lord Scarman in Pau On v Lau Yiu Long
Promise to accept less than one is entitled to under pre-existing contract (same for less)
= not binding for want of consideration = Foakes v Beer (1884) (HL)
=> Upheld in Re Selectmove : CA refused to extend Williams v Roffey Brothers to part payment of debt cases
Past consideration
is generally not valid consideration = Roscola v Thomas (1843), upheld by CA in Re McArdle (1951) (CA)
Past performance
is generally not valid consideration = Eastwood v Keynton (1840) (CA)
courts can be flexible abt past consideration
may not always take “a strictly chronological view of the sequence of events”, fine if the relevant events are ‘part of the same overall transaction’ (K) = Classic Maritime Inc v Lion Diversified Holdings [2009] (HC)
Past consideration - exception
= An act requested by the promisor with the understanding that it will be rewarded is valid consideration even if it were performed prior to the promise for reward being given = Lampleigh v Braithwait (1615), more recently brought back in Pau On v Lau Yiu Long (1980) (HL)
More for same (2)
Stilk v Myick = paying more for same performance : not valid consideration
Williams v Roffrey Brothers: paying more for same performance BUT promisor derived a practical benefit = avoiding penalty for late completion, ensuring continued performance (applies also to S v M), not having to find someone else (applies also to S v M)
Same for less (3)
Foakes v Beer: debt case – promise to accept less than entitled to under the contract not binding for want of consideration
In re Selectmove : also debt case – promise to accept payment in instalments (so delayed) rather than lump sum by due date not binding for want of consideration
=> CA unwilling to extend Williams v Roffrey Brothers ‘practical benefit’ analysis to debt cases
/!\ also MWB case : rescheduling debt (rent), also less for same, but court found consideration => puzzling – but mb can be reconciled bcs practical benefit of not having to find another tenant (≠ Selectmove = tax case)
Chen Wishart’s unilateral contract analysis
stick a unilateral contract (new payment / reduced performance / whatever the change) on top of existing bilateral contract => the unilateral contract becomes binding upon performance
=> in MWB, tenants have in fact paid some money back = performed (in part) offer cannot be withdrawn once performance has begun
=> ≠in Foakes : debtor hadn’t done anything to accept new offer = the unilateral contract was not yet binding
3 requirements to rely on promissory estoppel
(i) Clear promise / repº by A to B not to enforce strict legal rights against B
(ii) B has relied on that promise / it has influenced B’s conduct
(iii) It would be inequitable for A to be allowed to go back on the promise
Requirements compensate for lack of consideration
(i) clarity makes up for evidentiary function of consideration,
(ii) reliance shows that promise is taken seriously / intended to be binding, and
(iii) inequity sets aside promises which should be enforced from those which shouldn’t (infringing on ppl’s autonomy only to prevent them from doing smth bad)
2 possible effects of promissory estoppel
suspensive = A can no longer go back on promise unless gives reasonable notice
- accepted effect of promissory estoppel (see Halson / eg Hughes v. Metropolitan Railway)
- moderates effect of the doctrine : not fully protecting unilateral promises
extinctive = A can no longer enforce right he promised not to
- /!\ not generally accepted, case establishing possibility of it = Collier v Wright (Holdings) Ltd only abt triability of promissory estoppel point so not a solid authority
Pe is not a cause of action on its own
= Combe v Combe [1951] (CA) , confirmed in Baird Textile Holdings v Marks and Spencer plc [2001] (CA)
BUT can be used to assist a cause of action : Baird Textile Holdings
= Functioning of equity: not helping ppl do things, but refusing to give the support / powers of the court to a wrongdoer
