Consideration Flashcards
What is consideration?
In addition to agreement (usually arrived at through offer and acceptance) and intention to create legal relations, a third requirement, “consideration” is an essential element in the formation of a simple contract. It is not, however, a requirement of a contract contained in a deed.
A statement to do something is a “bare” and gratuitous promise. It only becomes enforceable upon consideration being given.
This can be given in money, but it can also be given in B’s agreement to perform a service to which A might agree - Indeed it could involve an undertaking by B NOT to do something he otherwise might have done. Thus, the promisee must give something in return for the promise of the promisor in order to convert a bare promise made in his favour into a binding and simple contract.
Definition of consideration given by Sir Charles Pollock in Dunlop Pneumatic Tyre Co. v Selfridge Co was:
“A A o f o o p, o t p t, i t p f w t p o t o i b, a t p t g f v i e.”
“An Act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.”
Another well known definition- and one that attracted some critisism- was given by Lush J in Currie v Misa, what was it?
“A valuable consideration in the sense of the law, may consist either in some right, interest profit or benefit accruing to the one party, or some forbearance, detriment loss or responsibility given, suffered or undertaken by the other. “
Thus, consideration may consist of benefit to the promisor or detriment to the promisee.
This overlooks the idea of consideration being purely executory and speaks of the benefit and detriment as alternatives, “either/or” Whereas this is certainly correct– It is not necessary to have both- it might be more precise to say that whilst consideration may consist of a benefit to the promisor, in practical terms it must always consist of a detriment to the promisee because of the rule that consideration must move from the promisee.
Benefit and detriment have a different meaning in law to normal usage, what is the difference?
they do not refer to whether the bargain is advantageous. They are used in a legal as opposed to a factual sense. A person who, in return for a promise of a payment of money, promises to abstain from smoking will legally incur a detriment and provide consideration even though the promise is beneficial to him in factual terms.
Consideration is not so much a doctrine as a set of distinct rules. What are those rules?
i) Consideration must not be past. ii) Consideration must move from the promisee. iii) consideration need not be adequate but must be sufficient. iv) consideration must not consist of a duty already owed.
What is past consideration?
consideration which consists of some benefit or service previously rendered to the promisor. Unlike executory or executed consideration, past consideration is not good or valid consideration. Suppose that, without being asked, a neighbour decides to weed my garden and mow my lawns. When he has finished, I promise him a case of wine. I am not contractually bound to deliver the wine.
The above is an example of past consideration
In Riscorla v Thomas Lord Denman stated that the promise must be…?
“Coextensive” with the consideration.
What happened in Riscorla v Thomas
The claimant had purchased the defendant’s horse for £30. After the sale had been completed, the defendant promised that the creature was “sound and free from vice”. In fact the horse turned out to be vicious. The claimant’s action for breach of contract failed as the consideration for the promise i.e the sale, was past
A more modern authority is McArdle, Re. What happened?
The estate of a testator was held on trust for his 5 children (of whom monty McArdle was one), in equal shares subject to the prior life interest of the testator’s widow. Monty and his wife Marjorie lived in a bungalow forming part of the estate. Marjourie spent the sum of £488 carrying out improvements and alterations to the bungalow which were completed in 1944. In 1945 the McArdle children signed a document saying that they would repay her upon the death of the widow.
They told the executors not to pay (everyone bar Monty). It was held by the CoA that since all the works had been completed before the execution of the document of 1945, the consideration for the promise to pay was wholly past, the promise was therefore purely gratuitous and unenforceable as a contract.
There was no exchange. The contract itself made no difference.
Lampleigh v Braithwait
Brathwait had committed a murder and asked Lampleigh to obtain a pardon for him. At his own expense he rode across London and managed to get the pardon. Braithwait then promised Lampleigh the sum of £100 but failed to pay. It was held that Braithwait was bound to pay the sum.
“A mere voluntary courtesie will not have consideration to uphold an assumpsit. But if that courtesie were moved by a suit or request of the party that gives the assumpsit, [i.e. the defendant] it will bind, for the promise, though it follows, yet it is not naked, but couples itself with the suit before”
What is an exception to the past consideration rule?
The requested performance rule.
If the request comes from the defendant. i.e. Lamleigh v Braithwait.
Erle C.J. IN kENNEDY v Broun suggested an interpretation of the past consideration rule in Lampleigh v Braithwait:
“Probably… such a service on such request would have raised an implication to pay what it was worth; and the subsequent promise of a sum certain would have been evident for the jury to fix the amount.”
For the requested performance rule to apply, it seems that the parties must have:
…assumed throughout that the service would be paid for or rewarded in some way. This is more likely to be the case in a commercial context.
Casey’s Patents, Re
The claimant and partner registered certain patents for methods of storing hazardous liquids.
