Consideration Flashcards
1 - 9: THE BASICS OF CONSIDERATION
- What is Consideration?
The idea of exchange or bargain is the essence of a contract.
- What is the defintion of consideratiion acccording to Currie v Misa? (Common Law)
‘A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to one party or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other.’
- What is the Definition according to Dunlop v Selfridge (1915)
‘An act or forbearance of the one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.’
- What is the difference between exectued and executory consideration?
Where the promise has been performed, the contract (or the consideration) is said to be ‘executed’.
Where the promise is yet to be performed, the contract (or the consideration) is said to be ‘executory’.
- What must Consideration be in relation to sufficency?
Consideration must be ‘Sufficient’ though it need not be ‘Adequate’
Consideration must be sufficient it must be something of value in the eye of the law aka legal sufficiency, does not refer to economical value or physical value
- What happened in Chappell v Nestle?
Chappell v Nestle (1960) – key authority – nestle required that if people wanted to buy a certain record people had to send to nestle 3 empty chocolate wrappers and some money in exchange for the records. The question was this whter the empty chocolates were sufficient for consideration as the record itself was much higher in value than the wrappers as they had no value. C held that the empty chocolate wrappers were good consideration as that is what they demanded
What happened in White v Bluett?
White v Bluett (1853) – outlier case – a father and a son were involeded, the son found out the father was distributing his walth in an inappropriate way he complained, father said if son stops complaining then he will be free of his debt owed to his father, the issue was what consideration that the son furnished to be forgiven of the debt. Courts of law, said that son did not have the right to complain and so this could not be consideration
- What is the rule for past consideration?
Past consideration is no consideration
If A renders a service to B, with no promise of payment given by B, the service is gratuitous.
If B afterwards makes a promise to pay, B’s subsequent promise of payment is gratuitous and is not enforceable because the consideration for it is past.
What happened in Re McArdle?
Re McArdle (1951) – a sibling who lived in a house decided that they would refurbish it, went ahead, 2 years later they got their siblings to agree to contribute to the refurbishment to the house, sibling wanted to enforce this promise to pay, court said no as you cannot use a past action to enforce a contract
10 -16: THE EXCEPTIONS
- What are the common law exceptions to past consideration according to Pao On v Lau Yiu Long (1980).
An act done before the giving of a promise to make payment or to confer some other benefit can sometimes be consideration for the promise.
i. The act must have been done at the promisors’ request:
ii. the parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit:
iii. and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance.
Act must have been performed at the request of promisor – Lampleigh v Braithwaite (1615) – braithwrate killed a person and asked lampleugh to help him secure a pardon from a king, got the pardon, and offered to paid him 100.
The court said that this was suffiencent consideration
Expectation of payment or conferment of some other benefit – Re Casey’s Patents (1892) – c manages patents the owners promised to give him a share, court said yes there was an expectation of payment even when it wasn’t explicity agreed - see Lord Justice Bowen.
- What is the statutory exception to the past consideration rule?
Statutory exception
Sec 27 Bills of Exchange Act 1882
‘valuable consideration for a bill of exchange may be constituted by …(b) an antecedent debt or liability’
- Which party must consideration move from?
Consideration must move from the promisee
Only the parties to the bargain are able to enforce it. According to the doctrine of privity
Tweddle v Atkinson (1861) marriage was happening the brides father promised to give them a gift of £100 was able to enforce it
A party cannot sued/be sued under a contract unless he/she has provided consideration - except where the Contract (Rights of Third Parties) Act 1999 applies.
- What are the rules and exceptions to Performance of a Public Duty?
This will not amount to consideration
Collins v Godefroy (1831) – witness was attending in court, promised to be paid this was a public duty and so was already expected to be there, so there was no consideration.
Unless something extra is provided
Glasbrook Bros v Glamorgan County Council (1925) - a strike was happening, police were promised to be paid to stay on the premises of the strike they went beyond their public duty to protect the public and so they gave consideration and were able to claim the money
Section 25(1) of Police Act 1996
- What are the rules and exceptions for an Existing Contractual Obligations Owed to a Third Party?
This will amount to consideration.
Shadwell v Shadwell (1860) - uncle/nephew was already in a contractual obligation to get married, uncle said they would give nephew money when they get married, they get married uncle dies, nephew wanted to get the money.
The court accepted that this was valid consideration as that is what the uncle initially wanted even thought it was argued that nephew was doing what was already contracted in the previous contract.
also see: New Zealand Shipping Co Ltd v Satterthwaite, The Eurymedon (1975)
- What are the rules and exceptions for an Existing Contractual Obligation to the Same Party?
This will not amount to consideration
Stilk v Myrick (1809) - voyage crew was supposed to sail back to England 2 people deserted the captain said that they would be paid f they sailed back to England, the
Unless something extra is provided
Hartley v Ponsonby (1857) - similar to the last case voyage again, 17 out of 36 crewmen deserted the remaining crew men were willing to continue the journey it became more dangerous it was argued that they were already doing what they were contracted to do
Or
There is a ‘practical benefit’ provided and no improper pressure (duress) is applied
Williams v Roffey Bros & Nicholls (1991) - promise to complete a block of flats, the carpenters said that they provided a benefit
