Consideration Flashcards
What are the requirements for consideration?
- Consideration must move from the promise (the person looking to enforce the promise must have provided consideration).
- Consideration must not be past.
- Consideration need not be adequate but must be sufficient.
Russcorla v Thomas
English case
After initial sale of horse, parties discuss health of horse. When horse is later found not to be healthy, court holds the discussion re: horse’s health was not part of the initial agreement to sell. Consideration cannot be past.
Re: McArdle
British case
Family member looking to collect from other family members after doing renovations. (Marge Simpson problem in class.) Consideration cannot be past.
Haigh v Brooks
English case
A worthless piece of paper exchanged for 10,000 pounds. Consideration does not have to be adequate. “People can enter into bad contracts.”
White v Bluett
English case
Father’s promise to pay son if son stops complaining found to be unenforceable, as consideration “paid” was son was insufficient.
O’Neill v Murphy
Irish case
Builder working on church in exchange for prayers. Prayers are not sufficient consideration.
Pando v Fernandez
American case
Lottery ticket case. Prayers are not sufficient consideration. Court also noted it could not be proven that the prayers resulted in the winning of the lottery (sufficient causation.)
Chappell v Nestle
British case
Musician suing Nestle to be paid more as Nestle received the benefit of increased chocolate bar sales from promo. Nestle argued wrappers were not worth anything to the company. Court sided with Chappell
“A contracting party can stipulate for what consideration he chooses. A peppercorn rent does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn.”
Revenue Commissioners v Maroney
Irish case
Father “sold” pub to sons to avoid gift tax. The price in the contract was never paid by sons, as it was not meant to be a real sale.
Invented/illusory consideration is not sufficient.
Hamer v Sidway
American case
Uncle promises to pay nephew $5,000 to not swear/drink and focus on his studies.
Forbearance can be good consideration
Collins v Godefroy
English case
Plaintiff was subpoenaed to give evidence at trial of defendant. Defendant than promised Collins a fee to give evidence.
Performance of an existing duty is not sufficient consideration.
Glasbrook v Glamorgan
British case
Mineowner concerned about security of mine during labor strike. Police are asked to go above and beyond their typical security procedures and provide a standing guard at the mine. Police agree on the condition that they are paid for this extra work. Mineowner agrees and then proceeds not to pay.
Court finds in favor of policy - If you go “above and beyond” your required duty, it can be considered sufficient consideration.
What is the Pinnel precedent?
“Payment of a lesser sum on the day in satisfaction of a greater was no satisfaction of the whole.”
Part payment of a debt is not generally sufficient consideration.
D and C Builders v. Rees
British case
Builders provide services and then cannot obtain payment. Wife of defendant then says she’ll pay the 300 pounds or they will get nothing. They agree, but then successfully sue for the remaining amount they are owed.
The Pinnel rule: Part payment of a debt is not generally sufficient consideration
Foakes v Beer
British case
Beer obtained a judgement against Foakes (a doctor) for a sum of money. Foakes agreed to a payment plan to settle the debt. After money was paid back, Beer went after Foakes for the interest he owed based on the Pinnel rule. Cited in class as an example of how the Pinnel rule can result in unfairness.
