Consideration Flashcards
Chapter 3
What is consideration in contract law?
Consideration is the idea that to enforce a promise, you must have agreed to provide something in return. This can be a promise (executory) or an act (executed). It’s the “something in return” for a promise. A well-established definition of consideration is “benefit OR detriment”.
What is the difference between ‘adequacy’ and ‘sufficiency’ of consideration?
○ Adequacy relates to the value of the consideration. The law doesn’t care if the value is equivalent, as long as it has some value. For example, £1 can be sufficient consideration for an expensive car.
○ Sufficiency relates to the type of consideration. It must be something the law regards as appropriate for a bargain. Money, goods, and services are generally considered sufficient.
What is ‘past consideration’ and is it valid?
Past consideration is when an act or promise is done before a later promise of payment. Generally, past consideration is not valid consideration because it was not done in return for the promise. However, there is an exception if:
○The act/promise was done at the promisor’s request.
○There was a mutual understanding that the act/promise would be compensated.
○The promise, if made in advance, would have been legally enforceable.
Is performing an existing public duty good consideration?
Performing an existing public duty is generally not sufficient consideration. However, exceeding a public duty is sufficient consideration. For example, if someone is legally obligated to appear as a witness and they are offered payment for this, they cannot enforce this promise, but if they do more than is legally required, they can enforce the promise of payment.
What is the general rule for ‘alteration promises to pay more’?
Simply performing an existing contractual duty is generally not good consideration for a promise to pay more. However, there are exceptions:
○Exceeding an existing contractual duty is good consideration.
○If performing the existing duty confers a practical benefit on the promisor, it can be good consideration, as long as there is no duress.
What is the ‘rule in Pinnel’s Case’ regarding ‘alteration promises to accept less’?
The rule in Pinnel’s Case states that part payment of a debt is not good consideration for a promise to accept less. The creditor can still claim the outstanding balance, even if they agreed to accept part payment. There is a common law exception to this if the debtor gives something different in return for the creditor’s promise to forgo the balance, such as an earlier payment date or a “horse, hawk, or robe”
What is ‘promissory estoppel’ and how does it relate to part payment of a debt?
Promissory estoppel is an equitable doctrine that can prevent a creditor from going back on a promise to accept part payment if it would be unfair to do so. Key elements of promissory estoppel:
○ A clear promise to waive a legal right.
○ The promisee acted on that promise.
○ It would be inequitable for the promisor to go back on their promise.
○ It is generally a defence and it suspends rather than extinguishes rights.
What are the key requirements for a contract variation to be binding?
Just like forming a contract, a variation of a contract needs agreement, consideration, and intention to create legal relations. The main issue in variations is often consideration.
