Consideration

Question 1

Offer + Acceptance + Consideration =

Answer 1

Legally enforceable agreement

Question 2

Consideration is …

Answer 2

The common law test of enforceability for simple contracts. (Those not contained in the deed.)

Question 3

Currie v Misa

Answer 3

“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”

Question 4

Executory

Answer 4

Mutual exchange of promises.

Question 5

Executed

Answer 5

Promise in exchange for performance of an act.

Question 6

Past consideration

Answer 6

Service provided before the promise was rewarded.

Question 7

Roscorla v Thomas & McArdle

Answer 7

Past consideration is no consideration.

Question 8

Requested performance exception (case)

Answer 8

Lampleigh v Braithwait. As an act had come at the promisors request = valid consideration.

Question 9

Re Casey’s Patents

Answer 9

Both parties must have understood that payment was to follow performance of requested act.

Question 10

Requested performance exception: Lord Sharman in Pao On v Lau Yiu Long [1980]

Answer 10

1. Has the act had been done at the promisors request? (Lampleigh v Braithwait).
2. Would both parties have understood that the act was to be remunerated? (Re Casey’s Patents).
3. Would the payment or conferment of a benefit have been enforceable if promised in advance?

Question 11

Consideration must move from the promisee

Answer 11

Only a party who had provided consideration can enforce the promise.

Question 12

Tweddle v Atkinson

Answer 12

The plaintiff could not enforce the promise. The plaintiff was a third party to the agreement.

Question 13

Adequacy of consideration

Answer 13

The court is not concerned with the adequacy of consideration.

Question 14

Adequacy

Answer 14

How it relates to the value of what is being bargained for.

Question 15

Thomas v Thomas

Answer 15

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)

Question 16

Chappell & Co Ltd v Nestle Co Ltd [1960]

Answer 16

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.

Question 17

White v Bluett [1853]

Answer 17

Father promised to pay off son’s debt if the son stopped complaining.

No economic value = insufficient.

Question 18

Sufficiency of consideration

Answer 18

Consideration must be sufficient but need not be adequate

Question 19

Sufficiency

Answer 19

Is what’s promised legally recognisable/ enforceable as consideration.

Question 20

Performance of an existing duty

Answer 20

Generally regarded as insufficient consideration. Reason: doing no more than existing obligations require. In law, there is no additional detriment suffered or benefit conferred.

Question 21

Performance of existing duties:

Answer 21

1. Performance of an existing public duty.
2. Performance of an existing contractual duty.
3. Part-payment of a debt.

Question 22

Performance of an existing public duty (case)

Answer 22

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.

Question 23

Glassbrook v Glamorgan CC [1925]

Answer 23

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.

Question 24

WARD v BYHAM [1956]

Answer 24

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.

Question 25

Problems with the decision in WARD v BYHAM [1956]

Answer 25

Did the “consideration” have any economic value?

Could it be argued that this was a case of “invented” consideration?

Question 26

Performance of an existing contractual duty between the parties

Answer 26

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.

Question 27

Stilk v Myrick

Answer 27

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.

Question 28

Hartley v Ponsonby [1857]

Answer 28

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.

Question 29

Williams v Coffey [1990]

Answer 29

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.

Question 30

What were the benefits received/ disbenefits avoided? (Williams v Roffey)

Answer 30

• 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.

Question 31

Williams v Roffey. The “Glidewell criteria”:

Answer 31

(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.

Question 32

Stilk v Myrick & Williams v Roffey

Answer 32

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.

Question 33

Performance of an existing duty owed to a third party

Answer 33

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?

Question 34

Shadwell v Shadwell

Answer 34

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.

Question 35

Scotson v Pegg [1861]

Answer 35

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.

Question 36

New Zealand Shipping Co v Satterthwaite

Answer 36

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).