Consideration Flashcards
Offer + Acceptance + Consideration =
Legally enforceable agreement
Consideration is …
The common law test of enforceability for simple contracts. (Those not contained in the deed.)
Currie v Misa
“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”
Executory
Mutual exchange of promises.
Executed
Promise in exchange for performance of an act.
Past consideration
Service provided before the promise was rewarded.
Roscorla v Thomas & McArdle
Past consideration is no consideration.
Requested performance exception (case)
Lampleigh v Braithwait. As an act had come at the promisors request = valid consideration.
Re Casey’s Patents
Both parties must have understood that payment was to follow performance of requested act.
Requested performance exception: Lord Sharman in Pao On v Lau Yiu Long [1980]
- Has the act had been done at the promisors request? (Lampleigh v Braithwait).
- Would both parties have understood that the act was to be remunerated? (Re Casey’s Patents).
- Would the payment or conferment of a benefit have been enforceable if promised in advance?
Consideration must move from the promisee
Only a party who had provided consideration can enforce the promise.
Tweddle v Atkinson
The plaintiff could not enforce the promise. The plaintiff was a third party to the agreement.
Adequacy of consideration
The court is not concerned with the adequacy of consideration.
Adequacy
How it relates to the value of what is being bargained for.
Thomas v Thomas
Husband promised wife that she could live in house after his death.
Executors of his estate agreed to accept £1 a year rent
The promise of payment was sufficient consideration (although not adequate)
Chappell & Co Ltd v Nestle Co Ltd [1960]
Defendants, ran a promotion offering records in exchange for payment and three chocolate wrappers.
Did the wrappers form part of the consideration?
House of Lords: the wrappers (although of minimal value) were sufficient to form part of the consideration.
White v Bluett [1853]
Father promised to pay off son’s debt if the son stopped complaining.
No economic value = insufficient.
Sufficiency of consideration
Consideration must be sufficient but need not be adequate
Sufficiency
Is what’s promised legally recognisable/ enforceable as consideration.
Performance of an existing duty
Generally regarded as insufficient consideration. Reason: doing no more than existing obligations require. In law, there is no additional detriment suffered or benefit conferred.
Performance of existing duties:
- Performance of an existing public duty.
- Performance of an existing contractual duty.
- Part-payment of a debt.
Performance of an existing public duty (case)
Performance of a duty / obligation that is already required of a person by law.
COLLINS v GODEFROY (1831)
Defendant promised to pay the Claimant for giving defendant’s trial.The Claimant had already been summoned by the court to give evidence.
Insufficient consideration, the claimant was doing no more than the law required.
Glassbrook v Glamorgan CC [1925]
Promise of payment in exchange for additional police protection.
Held:
The police had exceeded their existing public duty.
This was sufficient consideration to support the promise of additional payment.
WARD v BYHAM [1956]
Promise of £1 per month to ensure that a child was:
“Well looked after and happy”
Again, by exceeding a public duty this was sufficient consideration.
Problems with the decision in WARD v BYHAM [1956]
Did the “consideration” have any economic value?
Could it be argued that this was a case of “invented” consideration?
Performance of an existing contractual duty between the parties
What if there is already existing contractual duty between the parties?
Can the performance of that duty be sufficient consideration?
Usually this arises in the context of a renegotiation of the contract.
Stilk v Myrick
The promise of additional payment was not enforceable.
The crew had not provided any consideration in exchange for the captain’s promise.
Performance of an existing contractual obligation = insufficient consideration.
The crew was simply performing the obligations as required by their contract.
Hartley v Ponsonby [1857]
The promise of additional payment was enforceable.
The crew had exceeded their contractual duty, which was their consideration to support the captain’s promise.
Exceeded their duty as the conditions were dangerous.
Williams v Coffey [1990]
If the performance of an existing contractual duty confers a practical benefit on the other party, this can constitute valid consideration.
By performing their existing contractual duty, Williams had conferred a practical benefit to Roffey. The benefit to Roffey was the consideration to support the promise of additional payment.
What were the benefits received/ disbenefits avoided? (Williams v Roffey)
- Roffey avoided the time and expense of finding other contractors to complete the work.
- The work was completed onetime.
- Roffey avoided the operation of the penalty clause.
Williams v Roffey. The “Glidewell criteria”:
(i) If A has entered into a contract with B to do work for, or supply goods and services to B in return for payment by B; and
(ii) If, before A has completely performed his obligations, B has reason to doubt whether A will be able to do so; and
(iii) B promises A an additional payment in return for A’s undertaking to meet the completion date; and
(iv) As a result, B obtains a benefit or avoids a disbenefit; and
(v) There is no duress or fraud on the part of A; then
(vi)The benefit to B constitutes valuable consideration.
Stilk v Myrick & Williams v Roffey
Stilk - Performance of an existing duty = insufficient consideration.
Williams v Roffey - Performance of an existing duty may be sufficient consideration = if promisor receives a practical benefit/ avoids a dis benefit.
Performance of an existing duty owed to a third party
The promisee is already under an existing duty to perform an act to a 3rd party. Can performance of that duty or act be sufficient as consideration?
Shadwell v Shadwell
By marrying his Fiancé the nephew had provided consideration to support the uncle’s promise of payment.
The court analysed the consideration in terms of benefit / detriment.
Scotson v Pegg [1861]
Scotson had suffered a detriment in delivering the coal which conferred a benefit to Pegg.
Detriment?
Scotson could have decided not to deliver and breached their contract with X.
New Zealand Shipping Co v Satterthwaite
The defendants, dockers, unloaded goods from a ship, which they were already contractually bound to do in a contract with a third party. This act was held to be good consideration for a promise given by the claimant to exempt the defendants from liability for damaging the goods. (There was a clause excluding liability of the carriers if the cargo was damaged).
