Consideration 2

Question 1

what does the law presume in commercial agreements

Answer 1

that the parties intended to create legal relations

Question 2

what does the law presume in domestic/social agreements

Answer 2

that the parties did not intend to create legal relations

Question 3

Balfour v Balfour

Answer 3

general position that there is no intention to create legal relations in domestic/social situations.

Question 4

Merritt v Merritt

Answer 4

in domestic/social situations, the person who wishes to enforce the contract must prove that there was an intention to create legal relations.
They can do this by using the objective test ‘ would reasonable people regard the agreement as intended to be binding?’

Question 5

Parker v Clark - legal relations in social situations

Answer 5

where one party has acted to their detriment by relying on the arrangements made between them, then this may be sufficient evidence that they intended to create legal relations

Question 6

when is a contract enforced

Answer 6

a contract is enforced when there is legally sufficient consideration

Question 7

legally sufficient consideration

Answer 7

a valuable consideration consists of some right, interest, profit or benefit accruing to one party, or some forbearance, detriments loss or responsibility given, suffered or undertaken by the other - Currie v Misa

Question 8

Chappel & Co Ltd v Nestle Co

Answer 8

As part of an ad promotion, nestle promised to give a record to anyone who sent in a postal order accompanied by three wrappers.
this was good enough consideration because ‘ A CONTRACTING PARTY CAN STIPULATE FOR WHAT CONSIDERATION HE CHOOSES’ - LORD SOMERVEL
The people sending the wrappers had to go through some troubles and nestle benefitted from it as it promoted their sale of chocolate

Question 9

Economic value

Answer 9

consideration must be of some economic value

Question 10

Sufficient but not adequate

Answer 10

Consideration must be legally sufficient, courts will not look into whether it was a fair bargain

Question 11

White v Bluett

Answer 11

A father promised to free his son from a debt if he stopped complaining, but this was not good consideration as the soon didn’t give anything up

Question 12

Hamer v Sidway

Answer 12

An uncle promised to pay his nephew $5,000 in return fo him giving up tobacco, drink and gambling. This was legally sufficient consideration

Question 13

executory contract

Answer 13

an exchange of promises to do things in the future. the consideration here is in the future so it is executory and still valid consideration

Question 14

consideration

Answer 14

something offered or given in exchange for something else.

Question 15

Coombe v Coombe

Answer 15

Wife promised not to sue for maintenance , husband promised his wife some money. However he did not make the promise in return of the promise made by his wife, the two promises were independent - NO CONSIDERATION

Question 16

Who need to provide consideration

Answer 16

the promisee ( the person to whom the promise is made) provides consideration

Question 17

past consideration

Answer 17

When the promise comes after the act.

PAST CONSIDERATION IS NOT LEGALLY SUFFICIENT

Question 18

Re Mcardle

Answer 18

Mrs Mcardle carried out improvement works to a house, after all the improvement had been done, the owners of the house promised to pay her £488. This promise was unenforceable because the consideration was wholly past and the act had been done at the time that the promise to pay was made.
There was also no bargain has the works had not been requested

Question 19

unexpressed bargain

Answer 19

• Act is requested by one party but no payment is discussed
• circumstances where there would not normally be a gift e.g. interior decorator that you don’t know painting your house
• acts that carry the implication that payment would be made for the act
  LEGAL CONSEQUENCE IS THAT IT IS ENFORCEABLE

Question 20

Re Casey’s Patent

Answer 20

Casey owned some patents and Stewart worked to obtain some rights for him. Casey promised S a payment.
Casey later argued that this was past consideration.
Court upheld that the bargain was clear as the parties understood that Stewart would be paid for his work on the patents and the promise merely verbalised this unexpressed understanding

Question 21

Lampleigh v Braithwait

Answer 21

B killed a man, and he request that L would get the Kings pardon. L did this.
B was so pleased that he promised to give him £100 but he then refused to pay.
Courts held that the promise was enforceable as L obtained the pardon at the request of B, which was carried out at the understanding, even though they were unspoken that a payment would be made for the service.

Question 22

Pao On v Lau Yiu Long - PAST CONSIDERATION

Answer 22

The act must have been done at the promisors request, the parties must have understood that the act was to be remunerated further

Question 23

performance of existing duties and consideration

Answer 23

performance of existing duties is not good consideration, unless the perfomance offers somethign extra or goes beyond the existing public duty. - Collins v Godefrou

Question 24

Stilk v Myrick

Answer 24

Two sailors deserted a ship mid-voyage. Captain promised to divide the wages of deserting sailors amongst the rest of the crew if they got the ship home safely (were already under contractual agreement to do this)
When they got home they tried to sue for the money but it didn’t work because they already had a duty to get the ship home

Question 25

Hartley v Ponsonby

Answer 25

Ship was sailing to Bombay, half of the crew deserted. Captain promised the rest of the crew extra if they continued.
it was held that this was good consideration as they suffered and had to work more, and they went above and beyond their existing contractual duty

Question 26

third party consideration

Answer 26

third party promises are enforceable - Shadwell v Shadwell

Question 27

Williams v Roffey Bros

Answer 27

Williams was a carpenter who was sub contracted by a head contractor. Roffey was the head contractor, and he was subject to a penalty by the client if the works were not finished on time.
Williams showed signs he wouldn’t be able to finish the works and they renegotiated an extra amount per flat to finish the works on time.
Williams was under a duty to finish the work by the completion date, but Roffey received a practical benefit which was avoiding the penalty fee.

Question 28

considerations in part payment of debt

Answer 28

part payment of debt can be good consideration if there is a benefit like getting the money on time rather than not getting it

Question 29

The rule in Pinnel’s Case

Answer 29

Part payment of a lesser sum is not good consideration

Question 30

exceptions of the rule in pinnel’s case

Answer 30

1. paying a smaller sum on an earlier date or in a different place from that specified
2. giving a piece of personal property as satisfaction of the debt
3. if a third party pays a smaller sum in satisfaction of the debt

Question 31

MWB v Rock Advertising

Answer 31

Rock had a license to occupy offices owned by MWB. Rock wanted to expand his business and agreed to pay a larger fee for larger offices for 12 months.
they agreed a sum of money(£3.5k for the first 3 months and £4.5k for the rest).
After the 4th month Rock were £12k in arrears and MWB sough to sue. Orally they agreed to vary the contract, so that they’d be less initially but more at the end of the contract.
If the rule in Pinnels case was used then it would not be sufficient consideration. However it went to CA and SC
CA: by keeping rock in the offices, it meant offices wouldn’t be empty which would be a further loss for MWB- PRACTICAL COMMERCIAL BENEFIT like in Williams v Roffey

Question 32

Promissory estoppel

Answer 32

Stops people from going back on their promises that led to a course of action by the other party. Estops people from going back on their word - Central London Property Trust Ltd v High Trees House

Question 33

How to apply the doctrine of promissory estoppel

Answer 33

• it must be inequitable for the party to go back on their promise (D&C Builders Ltd v Reeves)
• it can only be used as a defence if one party tries to sue (Combe v Combe)

Question 34

Criteria for promissory estoppel

Answer 34

• The promise relied upon must be clear and unequivocal, not ambigous: Woodhouse AC Israel Cocoa SA v Nigerian Produce Marketing Co
• The promisor intends that the promisee act in reliance on that promise
• The promisee does rely on the promise, altering their position as a result
• Detriment? There was some doubt as to whether it was necessary for the promisee to act to their detriment in reliance.