Consideration Flashcards
Definition of consideration
A benefit to the promisor or a detriment to the promisee (ie who is trying to enforce the promise),
which is given in return for the promise
and which is given or incurred by (“moves from”) the person seeking to enforce the promise.
Describe the Privity Rule
a person is not a party to the contract (third-party) cannot sue on a contract to which they are not party and have not provided consideration.
What was held in the case Dunlop v Selfridge?
Claim dismissed as Dunlop is not a party to and had not provided consideration for, the dealers contract with the defendant.
A person can only enforce a contract if they have an interest in the contract.
What are three exceptions to Privity + cases
-An agency can provide consideration on behalf of a 3rd party - Scruttons
-There is an implied collateral contract between the promise and the 3rd party - Shanklin Pier v Detel
-The promisee can sue on behalf of the third party
What are the Contracts Act 1999 statutory exceptions?
A person who is not a party to the contract can enforce it if:
-S1(1)(a) the contract expresses that he may
-S1(1)(b) it confers a benefit on the 3rd party
Consideration is still required but it need not be supplied by the claimant/third party.
What does consideration must be in return for the promise mean? + case
The benefit, if not counter promised by the promisee, must have been requested by the promisor.
Combe v Combe - no consideration for this promise as the husband had not requested she make such a claim
What do implied requests mean? + case
Alliance Bank v Broom - there was good consideration as D by providing the security was impliedly requesting that C hold back on enforcing debt
Describe past consideration is not good consideration + cases
-McArdle - Consideration has no value if it has already been done before the agreement was made
-Roscorla v Thomas - D’s assurance was unenforceable as C’s earlier payment for the horse could not be consideration for it.
Exceptions for past consideration + cases
-Lampleigh v Brathwait - Where the act is requested by the other party (the D) then the promise will be enforceable
-Pao On:
-The act was done at the promisors request
-The parties “must have understood that the act was to be paid”
-The promise would have been enforceable had it been made at the time of the act.
What is valuable consideration? + case
Currie v Misa - some right, profit or benefit accumulating to one party and some detriment or loss suffered or undertaken by the other party.
What does consideration need not to be adequate but must be sufficient mean? + cases
“Adequate” value is not required, it can be nominal or even trivial value
-Chappell v Nestle - Market freedom (individuals) means they can decide how much the goods and services are worth
-Ward v Byham - Consideration must be sufficient, this means real and have some value
-White v Bluett - It cannot be an intangible concept (sons promise not to complain to his farther)
Describe performing a pre-existing duty is not consideration + case
What the Claimant offers can be argued as to have no real benefit to the Defendant since C was already obligated and there is a risk of duress. But C’s performance will often be of practical benefit to D.
-Stilk v Myrick - a promise to pay more for the same consideration is not good consideration
What did the case of Glasbrook v Glamorgan state?
If the duty was imposed by the general law then it will not amount to good consideration for a promise, but a promise to do more than is strictly necessary may amount to good consideration.
What are the exceptions to performing a pre-existing duty + cases
Williams v Roffey - if the D party gains a ‘practical benefit’ or avoids a loss under the contract and doesn’t have to find someone else to do the work then performing an existing duty will amount to valid consideration.
Hartley v Ponsoby - if there is an extra element to the duty then consideration will exist
Abolishing Consdieration
-Complexity of the law makes it inaccessible – legal advice will be needed so costly
-Outdated due to the law being filled elsewhere – may have become an unnecessary formality
-Makes the law subjective leading to inconsistency and uncertainty
-What is considered as sufficient? – Chappleton v Nestle (unfair something that has no market value is good consideration.
-Court/Government interference and found consideration in contracts where there appeared to be none, confusing?
