Consideration Flashcards
Dunlop v. Selfridge 1915
On consideration: “An act of forbearance 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.”
Currie v Misa 1875
Facts unimportant.
Principle: “A valuable consideration, in the sense of the law, may consist either of 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.”
Tweddle v. Atkinson 1861
Couple decided to marry.
Fathers of bride and groom agreed to both pay money to groom.
Father of bride passed away before payment.
Executors of estate refused to pay the money.
Groom sued estate.
Held: Consideration must be between two parties, not via a third party.
Groom named in agreement, but consideration was not given by him.
Claim failed.
Re. McArdle 1951
Plaintiff had carried out improvements on a house promised to five beneficiaries.
Plaintiff’s husband then drew up a contract promising to repay her the cost of the improvements upon sale of the house.
Defendants refused to pay plaintiff attempted to recover.
First instance: Defendants bound to contract.
On appeal: As the contract was drawn up and signed after the fact, there was no consideration, as it was past consideration.
Appeal allowed.
Notable: Judges made comment on the reluctance to hand down decision. Defendants legally entitled to appeal, morally questionable.
Pao On v. Lau Yiu Long 1980
Plaintiffs agreed to sell shares in company to defendants.
Secured indemnity from defendants in exchange for holding on to shares for one year in order to not depress market value.
In protecting themselves from loss they also denied themselves possible profit on the shares.
Refused to complete main agreement unless terms were changed.
Defendants, fearing lack of confidence in the newly floated company, acquiesced.
Share prices dropped, defendants refused to indemnify plaintiffs.
Defendants argued that they had agreed under economic duress and that the contract was void.
Held, reversed then held at House of Lords:
First that words said could impart terms to a contract.
Further, that using a dominant bargaining position to secure favourable terms was not against public policy and as such the contract was not void.
Principle: Following Lampleigh (Murder pardon), past consideration acceptable if implied at time of agreement and act done at promisor’s request.
Thomas v. Thomas 1842
Husband expressed wish that his wife stay in their home after his death.
Upon his death she paid a token rent of £1 per year.
Executors later tried to disposes her.
Held: £1 enough for consideration.
Principle: Consideration need not be ‘fair’ or of valued exchange to be binding.
Chappell v Nestle 1960
Nestle promotion offered record in exchange for low price plays three Nestle wrappers.
Copyright owner would receive lower royalty payment, sued to prevent the promotion.
Held: Nestle stipulated the consideration and was upheld, in spite of the wrappers being inherently worthless.
“A contracting party can stipulate for what consideration he chooses. A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn.”
Collins v Godefroy 1831
A police officer was promised a sum of money by the defendant in a trial in return for the officer giving evidence, since it was important to the defendant that the officer did so. The officer had already been subpoenaed to do so.
Held: Promise to pay unenforceable as there was no consideration for him to do so.
An act to be performed regardless (Eg a job) can not be a contractual consideration.
Stilk v. Myrick 1809
Sailors contracted to sail ship.
Two of the crew deserted, the rest refused to work unless wages raised.
Captain agreed but subsequently refused to pay.
Held: Sailors already contractually obligated to sail ship.
In doing so they were not offering further consideration.
As such, captain not contractually obliged to pay.
Glassbrook Bros v. Glamorgan County Council 1925
Pit owner asked for police protection of his mine during miners’ strike.
Promised to pay for service.
Protection provided, owner refused to pay.
Held: Police service went beyond contractual obligation, as such counted as consideration.
Promise to pay enforceable.
Hartley v. Ponsonby 1857
See Stilk v. Myrick.
Distinguishing fact: 17 of 36 deserted.
Held: Agreement to continue under more dangerous, arduous conditions.
Counted as additional consideration worthy of extra payment.
Scotson v. Pegg 1861
Scotson contracted to deliver coal to X, or to X’s order.
X sold the coal to Pegg, Scotson to deliver.
Pegg promised Scotson that he would unload it at fixed rate. Pegg did not fulfil this promise.
Scotson attempted to enforce Pegg’s promise.
Held: Delivery of coal (Scotson’s duty to X) consideration enough to bind Pegg.
Williams v. Roffey Bros 1991
Builders (Roffey bros) contracted to renovate block of flats.
Sub-contracted carpentry to Williams.
Williams fell behind schedule, quoted price not high enough for work.
Roffey promised additional £10k.
Work completed on time, Roffey did not pay extra, claiming lack of consideration (Already contracted to do work as per Stilk)
Held: Finishing work on time provided consideration.
Agreement binding.
Further: Practical benefit to Roffey (No fee for late completion, convenience of keeping same contractors etc) at root of consideration.
Pinnel’s Case 1602
Cole was in debt to Pinnel.
Cole paid lesser sum at earlier date.
Argued later that they had agreed that lesser sum discharged entire debt.
Held: Lesser sum discharged whole debt, convenience/advantage of earlier payment provided consideration. (Discuss Roffey also)
Legal point: Debt may be discharged early or by different means, even if it is of less value (Adequate, not sufficient)
Foakes v. Beer 1881
Foakes owed Beer £2,090.
They agreed that Foakes could pay in instalments.
Beer agreed that no further action would be taken if the debt was paid by agreed date.
Beer later demanded an additional interest payment.
Foakes refused to pay.
Held: Convenience of installments sufficient consideration for extra payment.
Interest payments upheld.
Note: Can be viewed as unfair, Beer agreed to take no further action.
