Consideration Flashcards
What is the definition of ‘consideration’?
The three Ps according to Pollock - “the Price one Pays for another’s Promise”
Consideration is reciprocity and without it a contract is unenforceable.
Which case states that considerate need not be adequate, but must be sufficient?
Chappell v Nestle
Which case states that consideration must have some economic value?
Thomas v Thomas
Which case states that forbearance is generally not good consideration?
White v Bluett, due to public policy issues
Which case suggest that giving up ones’s legal rights (and so a type of forbearance) is good consideration?
Hamer v Sidway, US case
Is past consideration good consideration?
Generally no, Roscarla v Thomas
What is the exception to the rule set in Roscarla v Thomas?
Past consideration may be good consideration if all the following 3 conditions are satisfied:
1) the act was carried out at promisor’s request (Lampleigh v Brathwait)
2) the parties understood from th ebeginning that the act was to be rewarded in some way (Re Casey’s Patents), and;
3) all other requirements for a valid, binding contract exist.
Is A’s performance of his existing contractual duties good consideration in exchange for a promise from b to pay more?
Generally no, Stilk v Myrick
If A exceeds his duties in some way or confers extra benefit on B will the rule set by Stilk v Myrick apply?
No (Hartley v Ponsonby) but it is a question of fact and public policy.
What are ‘The Glidewell Principles’?
a) There is a contract for goods/services in return for payment;
b) B doubts whether A will complete his obligations;
c) B promises additional payment if A completes his obligations on time;
d) as a result of giving this promis, B obtains a practical benefit or obviates a disbenefit; and
e) B’s promise to pay extra is not given as a result of economic duress or fraud on the part of A
If ‘The Glidewll Principles’ are satisfied will the rule set by Stilk v Myrick apply?
No, Williams v Roffey Bros
is A’s performance of his existing contractual duties to a third party good consideration?
According to Scotson v Pegg - yes, a promis to do something can amount to consideration even if the promisor is already bound to perform this obligation for another party
Is the performance of one’s public/legal duties good consideration?
Generally no, Collins v Godefroy
Which case states that the rule set in Collins v Godefroy will not apply if performance is not contrary to public policy?
Williams v Williams
Which case states that the rule set in Collins v Godefroy will not apply if performance exceeded public duty?
Glasbrook Bros
Is the part payment of undisputed debts good consideration for a promise by the creditor to forgo the balance?
Generally no, Foakes v Beer
Which case states that part payment is good consideration if the debtor gives something different, or pays early?
Pinnel’s case
What is the definition of promissory estoppel?
According to High Trees House it is where a promisor has, by words or conduct, made a promise to the other party (the promisee) to forgo a legal right, once the promisee has acted on this promise he will have a good defence to any claim brought by the promisor which is inconsistent with the promise.
When will promissory estoppel apply?
If all the following conditions are fulfilled [PRIDE]:
Promise - to waive a legal right
Reliance - promisee must act upon the promise reliably
Inequitable - for promisor to go back on his promise
Defence - no action risen
Effect - is to extinguish or suspend legal rights
Which case states there must be a promise to waive legal right, which must be intended to be acted upon by the other party for promissory estoppel to apply?
Hughes v Met
Which cases states the promisee need not have acted to his detriment but only have altered his behaviour for promissory estoppel to apply?
Ajayi v RT Briscoe and Alan v El Nasr
Which case states it must be unjust/inequitable for the promisor to go back on his promise and insist on his full legal rights?
D&C Builders v Rees
Which case states the promissory is a shield not a sword, and so does not give rise to a cause of action?
Combe v Combe
What is the effect of promissory estoppels?
Usually operates to suspend promisor’s legal rights.
Which case states that the promisor may resume rights after promissory estoppel by giving promisee reasonable notice?
Tool Metal v Tungsten
What is the effect of promissory estoppel in cases where promisee cannot resume his original positon?
May operate to permanently extinguish promisor’s legal rights - Ajayi v RT Briscoe
What is the effect of promissory estoppel on one-off debts?
Uncertain, may operate to waive payment - D&C Builders
What is the definition of agency?
it is the relationship that arises where one person (agent) acts on behalf of another (principle) and has the power to effect the principal’s legal position with regard to a third party
How is agency created?
According to Freeman and Lockyer v Buckhurst Park Properties in one of two ways:
1) Actual authority; or
2) Apparent authority
What is the definition of ‘actual authority’?
legal relationship between principal and agent created by express appointment
What is the definition of ‘apparent authority’?
legal relationship created between the principal and third party when: a representation (words or conduct) is made by the principal to the third party that the agent had authority; the representation is relied upon by the third party, believing that the agent had authority; and in reliance of the representation, the third party altered their position (by entering the contract)
What happens when an agent has no authority?
the principal cannot sue or be sued by the third party.
The third party may sue the agent in tort of deceit, in the agent knew he had no authority; or breach of an implied warranty of authority.
What happens if an agent exceeds his authority?
There is no authority
