Consideration Flashcards
What is consideration
Consideration is traditionally recognised as a benefit to the promisor or a detriment to the promisee and is symbolic of the exchange element of a contract.
Rules of consideration
MISC
Must move from promisee
In the present, not the past
Sufficient, but not adequate
Can’t be performing pre-existing duty
What are the two types of modification promises?
Promise to pay more
Promise to pay less
Promisee
Promisee is the person receiving the promise
Promisor
The person making the promise
M of MISC + Relevant case
(Consideration) Must move from the promisee;
Basically, Consideration must be provided by the promisee, and not a third party.
Combe v Combe;
Divorced couple; Husband promises to pay £100 every month to wife. She doesn’t bother claiming. Years later, she claims. However, as there was no consideration on her end to claim the money, the promise was withdrawn.
I of MISC + Relevant case
In the present, Consideration must
not be in the past.
If the consideration is given before the promise is made then it
cannot be said to have been given in support of the promise. The
promise is not enforceable.
Re McArdle
A promise to reimburse a relative for
work already done to a house was unenforceable.
S of MISC + Relevant case
Sufficient, but not adequate.
To be enforceable, the consideration given in exchange for a promise must be ‘sufficient’ – recognised as being of value in the eyes of the law.
Chappell v Nestlé [1960] AC 87 consideration in the form of chocolate bar wrappers was held to be ‘sufficient’ consideration despite the fact that they were of virtually no economic value and were simply discarded.
C of MISC + Relevant case
Cant’ be performing pre-existing duty.
Performance of Legal/moral duties OR contractual duties that are already required or promised is generally held not to be valid consideration.
Legal/moral duties:
Collins v Godefroy
Promise was made to pay to
Collins per day for attending a trial as a witness but because he was
already subpoenaed to give evidence, he was obliged by law to do so and
was not doing anything more than he was already obligated to do = no
consideration, not enforceable
Contractual duties:
Stilk v Myrick
Two men abandon ship while sailing. Captain offers those two mens wages to the rest of the crew if they managed to sail back to London. They managed, but were never paid; Sailing to London was a pre-existing duty as that was already the plan and therefore they couldn’t be paid.
Promise to pay more - How can the PECD Rule established in Stilk v Myrick be avoided (1)?
By finding fresh or additional consideration in the act.
Such as, going above and beyond the contractual duty.
Hartley v Ponsonby.
Basically the exact same as Stilk v Myrick. However, as way more sailors deserted, the ship was in an un-seaworthy state and therefore dangerous. The sailors that were denied the extra pay got it because fresh condition had been found in the desertion of the sailors.
Promise to pay more - How can the PECD Rule established in Stilk v Myrick be avoided (2)?
A ‘practical benefit’ to the promisor may support the finding of
consideration.
Williams v Roffey Bros
Williams is contracted to do work, and if he manages to do it within a certain time frame is given bonus. He does so, no pay is given. Turns out the promisor would have avoided a penalty of finishing work late that they had sub-contracted to Williams. Therefore by avoiding the penalty, this is a practical benefit and new consideration.
What’s the starting point on modifications to promise to pay less?
The starting point is Pinnel’s case.
Part payment of a debt cannot be satisfaction of the whole.
Rule on modifications to promise to pay less
The part-payment of a debt is not sufficient consideration to support a promise to discharge the entire debt.
Foakes v Beer
Beer loaned Foakes money. He couldn’t pay. She received a judgement from the court in her favour to recover the amount. She entered an agreement to receive the money monthly from Foakes. Foakes paid the full amount but not the amount with interest that the judgement included, and therefore the respondents promise not to enforce the origional judgement was not binding as foakes had not provided good consideration.
In what circumstance CAN a part payment be supported by consideration?
A promise to discharge a debt may be supported by consideration if
something different or a new element is given in exchange.
Sibree v Tripp
“A man may give, in satisfaction of a debt of £100, a horse of the value of £5, but not £5”.
3 Steps to apply in a PQ regarding paying more:
- Application of PECD rule (Stilk v Myrick)
- Any additional consideration? (Hartley v Ponsonby)
- Is there a practical benefit? Does the rule apply? (Williams v Roffey)
