Consderation

Question 1

consideration

Answer 1

each party of a contract must give something or promise to give something of value (Currie v Misa)

must be present for any valid contract

this is because law is concerned with bargains, not gifts

eg. money, goods, services

Question 2

executed consideration

Answer 2

consideration in a contract which has been completed/performed

Question 3

executory consideration

Answer 3

consideration in a contract which has not yet been completed/performed

Question 4

rules of consideration

Answer 4

(1) consideration need not be adequate but must be sufficient
(2) past consideration is not good consideration
(3) consideration must move from the promise
(4) performing an existing contractual duty is not consideration for new contract
(5) promise to accept part payment of a pre-existing debt in place of the whole debt is not consideration
(6) promise to perform a duty which the law already demands be carried out is not consideration

Question 5

(1) consideration need not be adequate but must be sufficient

Answer 5

adequate = matter for parties to decide; whether they are satisfied with the bargain (Thomas v Thomas)

sufficient = legal term. what is promised must: be real, be tangible, have some actual value (Chappel v Nestle)

Question 6

(2) past consideration is not good consideration

Answer 6

past consideration = something already done at the time the agreement is made

not normally valid (Re McArdle)

UNLESS, A requests performance from B before contract comes into existence & common understanding that there will be contract and there will be payment (Lampleigh v Braithewaite)

Question 7

(3) consideration must move from the promise

Answer 7

person cannot sue or be sued under a contract unless they have provided consideration for it (Tweedle v Atkinson)

Question 8

(4) performing an existing contractual duty is not consideration for new contract

Answer 8

doing something you are already bound to do is not sufficient (Stilk v Myrick)

UNLESS they have done more than was identified in the contract (Hartley v Ponsonby)

UNLESS party making the promise to pay extra receives an extra benefit (Williams v Roffey Bros)

Question 9

(5) promise to accept part payment of a pre-existing debt in place of the whole debt is not consideration

Answer 9

rule from Pinnel’s Case 1602

creditor can claim the remainder of a debt even if the creditor has afreed with the debtor that the part payment will clear it

Foakes v Beer
D&C Builders & Rees

Question 10

exceptions to rule in Pinnels case

Answer 10

law has appreciated the rule is harsh

(1)
- if debtor agrees to pay a smaller amount on a date earlier than originally, the debtor has provided consideration for new agreement
- the repayment of the debt on the due day in diff place at creditors request
- creditor agrees to accept something other than money for whole debt (doesn’t have to be comparable in value, just adequate)

(2) X owes money to Y, Z (third party) agrees to pay part of sum on behalf of X in full/final settlement, Y cannot sue X for the balance (Hirachand Punamchand v Temple)

(3) Doctine of Promissory estoppel
- obiter statement in High Trees
- the promisor promises to vary the contract for the others benefit and they rely on that promise to vary, they cannot go back on the promise
- person can only rely on PE if they have acted morally (D&C Builders v Rees)
- BUT court can ignore PE if creditor can claim the whole debt (Selectmore)

Question 11

(6) promise to perform a duty which the law already demands be carried out is not consideration

Answer 11

duty imposed by law is not sufficient (Collins v Godefroy)

UNLESS they go beyond their legal duty (Glasbrook Bros v GCC)