Consideration

Question 1

Generally, a promise to perform an _______ ________ ____ by the person making the promise is not _______ consideration

Answer 1

existing contractual duty, valid

Question 2

Exception to the existing contractual duty rule:

Where an existing duty confers a ________ ______ e.g. finishing earlier than promised, this will be valid consideration

Answer 2

practical benefit

Question 3

Exception to the existing contractual duty rule:

Where a duty already owed is to a ______ _____, promise to perform the same duty made to someone else is valid consideration

Answer 3

third party

Question 4

A promise to perform a duty required by _______ is not valid consideration

Answer 4

statute

Question 5

_____ consideration is not usually valid, unless if the act was requested by the promiser and it was impliedly understood ______ would be made

Answer 5

Past, payment

Question 6

What are the three conditions of the implied understanding of payment exception to the past consideration rule?

Answer 6

1) The act constituting the consideration must have been done at the promisor’s request
2) An understanding between the parties that the act would be remunerated; and
3) The payment (or other benefit) must have been legally enforceable had it been promised at the same time that the act was performed.

Question 7

Is a promise by a creditor to accept part payment of a debt as full payment generally enforceable as valid consideration? Why/why not?

Answer 7

No - as the debtor usually provides no consideration in return for the agreement to accept less than the full amount

Question 8

What are the five exceptions to the part payment of a debt rule?

Answer 8

1. Debt disputed in good faith
2. Unliquidated/uncertain claim
3. Payment is by different means, time, or place, or is made earlier
4. Composition with creditors
5. Third party makes the payment

Question 9

What are the three requirements for the principal of promissory estoppel to apply as substitute for consideration?

Answer 9

1. Promisor promises not to rely on existing legal rights
2. Promisee must have detrimentally relied on promise by altering their position
3. Inequitable for promisor to go back on promise

Question 10

What is meant by the maxim that promissory estoppel “is a shield, not a sword”?

Answer 10

It can only be used as a defence, and not as a cause of action/basis of a claim

Question 11

Promissory estoppel has a suspensory effect - what does this mean?

Answer 11

The original rights of the promisor are revived after the conditions that caused the estoppel in the first place no longer exist or after reasonable notice has been given