consideration Flashcards
key principles, existing obligations & promissory estoppel
Define consideration
In order to be able to enforce a promise made to you, you must be able to show that you agreed to provide something in return for that promise.
Define executory and executed consideration.
executory= where contracting parties make promises to each other to perform something in the future after the contract has been formed.
executed= at the time of the formation of the contract, the consideration has already been performed.
What are the main rules (4) of consideration?
Consideration must:
- not be past
- move from promisee
- need not be adequate
- be sufficient
What are the exceptions to the past consideration rule?
Where some prior act or service was provided by the promise at the promisor’s request, and it was always understood that payment would be made for that act or service.
Requirements:
- act must have been done at promisor’s request
- parties understood that act would be rewarded by consideration
- consideration must have been legally enforceable and promised in advance
What does ‘consideration must move from promisee’ mean?
This means that a party who has not provided consideration may not bring an action to enforce a contract.
What does it mean for consideration to be ‘sufficient’?
Consideration must have some value ‘in the eyes of the law’.
- it can be as small as the parties like it to be.
Can an obligation from an existing contract be good consideration?
No, if there is no new obligation
Explain Williams v Roffey.
Although no new obligation was in this case, court considered that promise provided practical benefit for promisor.
Are obligations under a public duty good consideration?
- carrying out merely a public duty does not amount to sufficient consideration
- but if person went above public duty, it is sufficient consideration
Can an existing contract with a third party be a good consideration?
The performance of the pre-existing duty owed to a third party will be regarded as sufficient consideration for a promise given by the promisor.
Can payment of debt be good consideration?
No, because they’re doing something they’re already obliged to do.
- debtor remains liable even where the creditor has agreed to release them from further liability.
- Simply paying a smaller sum than that owed will not be sufficient consideration.
What did Foakes v Beer establish about debt payments?
- Part-payment of a debt will not be a good consideration to discharge the whole debt.
- This is because consideration has not been exchanged between the parties.
- The creditor has received nothing in return for their promise to accept less than their full legal rights.
Define promissory estoppel.
Equity prevents, or ‘estops’, the promisor from going back on their promise in situations where the promise has relied on it.
What did the High Trees case establish?
A promise was made which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made and which was, in fact, so acted on, then the promise would be binding.
Can a party issue a claim based on promissory estoppel?
No, it can be used as a shield not a sword, can be used as defence not cause of action.
