Consideration

Question 1

Define consideration

Answer 1

What passes from one party to another as a part of a contract

Question 2

Providing there is no misrepresentation by either party, the courts do not concern themselves with what?

Answer 2

The adequacy of the consideration

Question 3

Case for courts do not concern themselves with the adequacy of the consideration provided there is not misrepresentation by either party?

Answer 3

Thomas v Thomas (1842)

Question 4

Facts of Thomas v Thomas (1842).

Answer 4

Husband died and it was agreed his wife could stay in the family home provided she paid a rent of £1 a year.
Counted as ‘consideration’ despite the fact it was below market rate

Question 5

What are the 3 elements for consideration to be valid?

Answer 5

1. real (something which exists)
2. tangible (definite and not just a vague promise)
3. of some value (even is this is nominal)

Question 6

Case for consideration can be of nominal value.

Answer 6

Chappell & Co. v Nestle (1960)

Question 7

Facts of Chappell & Co. v Nestle (1960).

Answer 7

Nestle had a promotion whereby you got a vinyl if you sent in 3 empty chocolate wrappers and a postal order.
Court said that, even though Nestle just threw the wrappers away, they had value as they represented chocolate bars bought

Question 8

Past consideration

Answer 8

Where one party carries out an act voluntarily, then the second party later agrees to compensate them for this

Question 9

General rule about past consideration.

Answer 9

Not valid and cannot be enforced in court

Question 10

Case for general rule of past consideration.

Answer 10

Re McArdle (1951)

Question 11

Facts of Re McArdle (1951).

Answer 11

Family members redecorated a home and the other family member later promised to contribute to the costs of redecoration but never did.
No breach of contract as it is past consideration.

Question 12

2 exceptions to general rule of past consideration.

Answer 12

1. Requested service in the first place
2. Promise of future payment was implied

Question 13

Case for 2 exception of general rule of past consideration.

Answer 13

Lampleigh v Braithwaite (1615)

Question 14

Facts of Lampleigh v Braithwaite (1615).

Answer 14

B to be hung for murder and requested friend L to obtain a pardon from the king.
L did.
B then promised to pay L to pay £100 but never did.
Court said this was breach of contract as B had requested the service and payment was implied given the matter was so important to him.

Question 15

Case for part payment.

Answer 15

Pinnel’s case (1602)

Question 16

Principle from Pinnel’s case (1602).

Answer 16

Established that if a creditor agrees to reduce a debtor’s debt, they are free to later go back on this and say they want the full amount.
Logic is that the agreement to reduce the debt is not a valid contract as the debtor is not providing any consideration.

Question 17

2 exceptions to part payment.

Answer 17

1. Promissory estoppel
2. If the debtor had agreed to pay earlier on in cash instead of cheque (because here the debtor is offering consideration)

Question 18

Promissory estoppel.

Answer 18

Where the debtor relied on the promise

Question 19

Case for promissory estoppel.

Answer 19

Central London Property Trust Ltd v High Trees House Ltd (1947)

Question 20

Facts of Central London Property Trust Ltd v High Trees House Ltd (1947).

Answer 20

Lord Denning introduced the idea of promissory estoppel by saying that, after WW2, a landlord could no claim rents he had reduced during the war.

Question 21

Case where they did not allow promissory estoppel.

Answer 21

Re Selectmove (1995)

Question 22

Facts of Re Selectmove (1995).

Answer 22

Inland revenue agreed a company could pay its tax debt in instalments but then demanded payment in full.
Court said they had this right. (did not allow promissory estoppel)

Question 23

General rule for an existing duty.

Answer 23

Where someone is already obliged to perform a duty as part of a first contract, that duty cannot be consideration for a second contract.

Question 24

Case for general rule of an existing duty.

Answer 24

Stilk v Myrick (1809)

Question 25

Facts of Stilk v Myrick (1809).

Answer 25

2 crewmen deserted leaving 18 on a ship and the captain said he would divide their waged between the other men if they covered for them.
Captain reneged (went back on) on deal and court said his promised was not a contract as sailors were expected to cover for colleagues already.

Question 26

2 exceptions for an existing duty.

Answer 26

1. Where what is given is more than originally expected. (Hartley)
2. Where performing the existing duty gives the other party a ‘benefit’ (Williams)

Question 27

Facts of Hartley v Ponsonby (1857).

Answer 27

Sailors had to do more work than expected as so many other crew members had deserted-were entitled to extra payment.

Question 28

Facts of Williams v Roffet Bros & Nichols (Contractors) Ltd (1990).

Answer 28

Building company agreed to pay roofers more money than originally agreed so they could get the job done on time.
Second agreement was deemed a valid contract as the building company was receiving a benefit-they would not be charged by the client for late completion

Question 29

Cases for exceptions of an existing duty.

Answer 29

Hartley v Ponsonby (1857)

Williams v Roffet Bros & Nichols (Contractors) Ltd (1990)