Consideration Flashcards
What is consideration?
It is a concept of exchange - in order to enforce a promise, you must show you are getting something in return for that promise
‘an act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bough, and the promise thus given for value is enforceable’
What is executory consideration?
It is where contracting parties make promises to each other to perform something in the future after the contract has been formed.
What is executed consideration?
It is where, at the time of formation of the contract, the consideration has already been performed.
Are executory consideration and executed consideration both valid forms of communication?
Yes
What is meant by consideration must not be past?
It means that is not generally possible to use an act that has already taken place prior to the promise to pay as consideration
What are the exceptions to the rule that consideration must not be past?
Possible to use a prior act or service as consideration if it was provided by the promisee at the promisor’s request and it was always understood that payment would be made for that service
Three conditions therefore:
- act must have been done at promisor’s request
- parties must have understood that the act was to be rewarded either by a payment or the conferment of some other benefit (expressly or impliedly agreed)
- payment or conferment of other benefits must have been legally enforceable had it been promised in advance
What is meant by consideration must move from the promisee?
A party who has not provided consideration may not bring an action to enforce
Does consideration have to be adequate?
No - as long as the agreement is freely reached the inadequacy of the price is immaterial.
Does consideration have to be sufficient?
Yes in terms that it must have some value in the eyes of the law. Can be of very low value such a £1
If a party is already contractually bound to party A to do something, will agreeing with Party A again to do that thing be good consideration?
No - there is no additional benefit being exchanged
In Williams v Roffey Bros and Nichol, what conditions were laid out for an obligation in an existing contract between the parties being good consideration?
i) if A has entered into a contract with B to do work for, or to supply goods or services to B in return for payment by B
ii) at some stage before A has completely performed his obligations under the contract B has reason to doubt whether A will or will be able to complete his side of the bargain
iii) B thereupon promises A an additional payment in return for A’s promise to perform his contractual obligations on time
iv) as a result of giving his promise, B obtains in practice a benefit or obviates a disbenefit
v) B’s promise is not given as a result of economic duress or fraud on the part of A
Will existing obligations under a public duty be considered good consideration?
No - carrying out a public duty imposed by the law will not amount to consideration
Will existing obligations owed to a third party be considered good consideration?
Yes - the promisee obtains the benefit of a direct obligation which they can then enforce
Will part payment of a debt be considered good consideration?
No - the debtor remains liable even where the creditor has agreed to release them from further liability
What exceptions are there to the rule that part payment of a debt cannot be good consideration?
- If a new element is introduced to the payment eg changing payment time or place
- if payment of a lesser sum is made by a third party
