Consideration Flashcards
Consideration
Consideration must be sufficient, but need not be adequate.
Adequacy = equal in value to the performance in exchange for which consideration is given.
Sufficient = consistent with then legal rules which the courts have developed in this area.
Chappell & Co v Nestle Co Ltd (1960)
Nestlé advertised that it would supply a recording of a piece of music to anyone who sent in 1s 6d together with 3 Nestle wrappers.
Held that the wrappers constituted consideration.
Lord Somervell of Harrow stated that ‘a contracting party can stipulate what consideration he chooses’
Nestlé: consideration does not just have to be of economic value
Consideration: the price of the promise.
Currie v Misa (1875)
Thomas v Thomas (1842)
Promisor needs to be gaining the benefit, promise needs to be sustaining the detriment.
Thomas: 1) Consideration must be asked of the promisee.
2) The law plays no regard to the adequacy of consideration, just so long as there is something considered to be a contribution.
Combe v Combe (1951)
Consideration in bilateral contracts must be requested of the promisee.
Shadwell v Shadwell (1869)
That the requirement for consideration to be requested, whether expressly or impliedly has been overlooked.
Consideration distinguished from conditional gifts
Dickinson v Abel (1969)
*Gift may be conditional upon something happening.
Consideration= whether it is a move from the promisee.
If it does not move from the promisee then it is not consideration however beneficial it may be to the promisor.
Dickinson: held to be a gift as Abel had not been asked to do anything in return for the promise of payment.
Roscorla v Thomas (1842)
Consideration must not be past.
- the making of the promise and the provision of the consideration which is to support it must constitute a single transaction.
(Boscola - Action failed as promise came after the sale, not as single transaction)
Implied Assumpit: exception to Roscorla
Sometimes possible to argue that something done before a promise is made can make that promise bind despite the timing.
Pal On v Lau Yiu Long (1980)
Lord Scarmann obiter stated 3 requirements for technically past consideration to be regarded as sufficient for implied Assumpit.
1) act must have been done at promisor’s request.
2) parties must have understood that the act was to be renumerated either by a payment of conferment of some other benefit.
3) payment/conferment of a benefit must have been legally enforceable had it been promised in advance.
Collins v Godefroy (1831)
If during the existing duty (in this case to testify)the promisee is bound by general law (not contract) to carry out, it’s performance will not amount to consideration.
However, if the promisee does more than his duty requires the Courts can still find consideration.
Ward v Byham (1956)
Lord Denning took the simple view that a performance of a general legal duty could amount to consideration.
(Father let mother look after child and promised her £1 a week for the service. F went back on promise, mother cited that it was the then law for the mother to look after the child. Court held her claim as he was receiving a benefit (mother looking after her child) and he ought not avoid it by saying that mother was under a duty to maintain child)
Scotson v Pegg (1861)
New Zealand Shipping Co Ltd v Satterthwaite (The Eurymedon) (1956)
Performance of contractual duties (by promisee) already owed to a third party as consideration.
Lord Wilbeforce in New Zealand believed that you cannot refuse certain commercial agreements because of a lack of consideration.
If consideration in a narrow sense can not be found, then it will be found in a broad sense.
Stilk v Myrick
The captain of a ship mid voyage was unable to find new recruits.
He then promised the remainder of the crew that they would receive extra wages for extra work.
However they were not paid more.
Had the sailors given consideration to the captain’s promise of the extra wages given that they were already contractually bound to serve for duration of voyage?
Court held that they had not.
William v Roffey
(Limits application of principle to cases in which the promisee has undertaken to do work for or to supply goods to the promisor)
D’s were contractors refurbishing a block of flats and plaintiffs were subcontracted to them to carry out carpentry work.
The contractors agreed to pay more money to the plaintiffs to ensure that work was completed on time.
D’s failed to pay as they believed that the plaintiffs were doing nothing more than they had originally be contracted to do.
Court of appeal held that: where the promise conferred a practical advantage on the promisor - court would find that it was supported by consideration.
Re Selectmove (1995)
Whether a binding contract between a company and the inland revenue that the revenue would not put the company into liquidation?
Company argued that it had given consideration for the alleged agreement by agreeing to pay its debt in instalments.
- Court of Appeal, Peter Gibson J held this repayment could not be regarded as consideration for the alleged promise since the company was doing no more than it was already obliged to.
Ratio of case is that: Foakes v Beer is not to undermined.
