Consideration

Question 1

What is consideration in contract law?

Answer 1

Consideration is the exchange of something of value that makes a contract enforceable, involving a benefit to one party and a detriment to the other

Question 2

Who must provide consideration in a contract?

Answer 2

Consideration must move from the promisee, meaning only the person who has provided consideration can enforce the contract

Question 3

What is the difference between executed and executory consideration?

Answer 3

• Executed consideration: An act performed in exchange for a promise
• Executory consideration: A promise to perform an act in the future

Question 4

What can replace consideration in some contracts?

Answer 4

A deed can replace consideration in formal agreements, often used in complex transactions (e.g., construction)

Question 5

How does the limitation period differ for standard contracts and deeds?

Answer 5

Standard contracts: 6 years
Deeds: 12 years

Question 6

Does consideration need to be adequate?

Answer 6

No, consideration must be sufficient (have legal/economic value) but need not be adequate (equal in value)

Question 7

How did Chappell & Co v Nestlé Co (1960) expand the definition of consideration?

Answer 7

Even nominal items (e.g., chocolate wrappers) were valid consideration because they had economic significance

Question 8

Why was the promise in Roscorla v Thomas (1842) unenforceable (past consideration)?

Answer 8

The promise was made after the contract was formed, making it past consideration, which is not valid

Question 9

What are the three conditions from Pao On v Lau Yiu Long (1980) that allow past consideration to be valid?

Answer 9

1. The act was done at the promisor’s request
2. Both parties understood the act was to be compensated
3. Payment/benefit would have been legally enforceable if promised in advance

Question 10

Can performing an existing duty count as valid consideration?

Answer 10

Generally, no. If someone is already legally or contractually bound to do something, it does not count as fresh consideration

Question 11

Are there exceptions where performing an existing duty can be consideration?

Answer 11

Yes, if the person goes beyond their legal obligation, or if the promise benefits the promisor in a practical way

Question 12

Can an existing contractual duty owed to the promisor be valid consideration?

Answer 12

Yes, if the promise results in a practical benefit for the promisor