Consideration Flashcards
What are the 4 requirements for consideration?
1) Must not be past (unless past act at request of promissor and understood payment would be made)
2) Must move from the promisee
3) Need not be adequate
4) Must be sufficient
When can existing obligations be used as consideration?
- Where A agrees to exceed their existing obligations.
- A already doing something for B and decides to also do it for C
- Practical benefit (i.e contract rearranged to avoid breach of a contract with a 3rd party, rearranges so that contract will be performed on time).
When are promises to pay less good consideration?
Where debtor promises to pay part of debt in return for release from the remainder of their liability = not good consideration. However, if, at creditor’s request, some new element is introduced (payment at different time, place), this = benefit and is good consideration.
What is promissory estoppel?
An equitable exception to the rule that someone must have paid consideration before they can enforce a contract.
Often applies to agreement that part-payment of debt without fresh consideration will discharge the debt.
What are the requirements for promissory estoppel?
1) Acts as a shield to claim, not a sword to bring claim
2) Promise by A not to enforce his strict legal rights against B
3) B changes his position in reliance on the promise
4) It would be inequitable to allow A to go back on his promise (e.g acts to detriment / economic struggle / pressure).
