Consideration Flashcards
Introduction to consideration
The English courts have developed tests to assess the enforceability of agreement. The principal one is the requirement of consideration. The doctrine of consideration requires that both sides to the agreement bring something to the bargain. Consideration is defined in the case of Currie as “a valuable consideration in the sense of the law, may consist either in 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”. Lush J. Sometimes said that consideration requires benefit and detriment.
Rules of consideration
- Past consideration is not good consideration
- Consideration must move from the promisee
- Consideration need not be adequate but must be sufficient
- Performance of existing duties
- Part payment of debt
Past consideration is not good consideration meaning
Consideration must be given at the time of the contract. It is not usually good consideration when it is an act that has taken place prior to the contract.
Past consideration is not good consideration recent case and facts
A recent example of this is the case of Re McArdle – in this case, McArdle left a house to his sons and daughters. One of the sons was living in the house and he and his wife carried out various improvements to it. His wife got the siblings to sign a document agreeing to contribute to the costs of the work. However, this payment was never made. The court held that the promise came after the improvements had been completed thus the promise was not binding.
Past consideration old case and facts
Thomas. Here the defendant sold the claimant a horse and after the sale was completed, told the claimant that the horse was sound and free from any vice. This wasn’t true and the claimant sued. The court held that the promise was unenforceable because it was made after the sale.
Exception to past consideration rule
If this is something which is preceded by a request from the party, it may still be valid
Exception to past consideration rule case and facts
Lampleigh, where the defendant had asked the plaintiff to pardon for him in relation to criminal offence he had committed. After the plaintiff had made considerable efforts to do this, the defendant promised him £100 for his trouble. It was held this promise was enforceable. Even though the promise was given after the pardon was granted, the consideration was preceded by a request. Therefore it was valid.
Consideration must move from the promisee
Consideration must move from one party to another. If there is a third party that would like to get the benefit without paying any detriment, this is not consideration and would not be supported by the court
Consideration must move from the promisee case and facts
Tweedle v Atkinson - A couple were getting married, and both their fathers entered into an agreement that they would give the couple some money. The bride’s father died without paying and the groom’s father later died thus he was unable to sue. The groom tried to bring an action against the executor of the will. The court rules that a promisee cannot bring an action unless the consideration for the promised move from him.
Adequacy meaning
Adequacy means that the question of whether what is provided by way of consideration corresponds in value to what it is being given for.
Sufficient meaning
The sense that what is being offered in exchange is recognised by the courts as being in law capable of amounting to consideration.
Sufficiency case
Thomas – Claimant was a widow. Her husband said she should be allowed to live in the house for the rest of her life and then the property would pass to their sons. The executor agreed she could stay in the house for a rent of £1 per year and if she kept the house in good repair. Executor tries to evict the widow and argued there was lack of consideration for the promise. Court held that this was good consideration, even though the payment of £1 could in now way be regarded as anything approaching a commercial rent for the property.
Adequacy case
Chappel v Nestle – Nestle promised to send a record to anyone who sent in a postal order 1s 6d and 3 nestle chocolate wrappers. The copywrite owners wanted more royalties. They had originally agreed consideration of 4d per record based on market-value sales, but Nestle would get more than that. Lord Somerville found: “A contracting party can stipulate for what consideration he chooses. A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn”
Performance of existing duties
Existing duties could be legal or contractual.
Legal duty
Where a person is doing something that is a duty imposed on them by law, there is reluctance to allow this to be the basis of consideration