Consideration

Question 1

Types of consideration?

Answer 1

Executory consideration – when parties make promises to perform something in future after contract has been formed.
- Sale of goods, delivery some time after.
Executed consideration – where at time of contract consideration has already been performed.

Question 2

Rules for consideration?

Answer 2

1.Must not be past - EXCEPTION - where it was previously understood, and done at promisors request, understood the act was rewarded by payment or benefit.
2.Consideration must move from promisee- Must be a party to contract

3.Consideration need not be adequate
- Courts don’t interfere with a free bargain.
- Chappel v Nestle co – wrappers were adequate
4.Must be sufficient
- Some value in eyes of law – could be £1

Question 3

Rule on existing obligations for consideration?

Answer 3

• If a party is already contractually bound to do something then agreeing to do that thing is not good consideration for a new contract.
• EXCEPTIONS - Williams v Roffey Bros – practical benefit received by Roffey as the avoidance of late completion payment.

Obligations under a public duty - giving info for police is more.

Existing obligations to third party
- Its acceptance as the party offering to do so is putting themselves at risk of double liability.

Part payment of a debt - - EXCEPTIONS – MWB business exchange v rock advertising – benefit arising from keeping tenant. Maybe providing cash instead of another means.

Question 4

What is promissory estoppel?

Answer 4

Allows a promise to be enforced despite not being supported by consideration. Seeks to protect a party that has relied on such a promise

• CLP Trust v High Trees – landlord sought full rent when they had agreed lower rate – BUT PROMISSORY ESTOPPEL – tenant could rely on this to pay the reduced rent for those years. Even if there are no considerations, provided the promisee has relied upon the promise

Acts a shield not sword
clear and unequivocal promise
a change of position in reliance on that promise - INFLUENCED CONDUCT OF A PARTY - DOES not need to be determinantal
Inequitable to go back on promise