Consideration Flashcards
Currie v Misa [1875]
Established the orthodox interpretation of consideration; “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”.
Dunlop v Selfridge [1915]
FACTS: D was a tire manufacturer who agreed with their dealer not to sell tires below a RRP. Also required their dealer to gain the same agreement with their retailers, S. The agreement with S held that if tires were sold below the RRP, they were required to pay £5/tire in damages to D. D was therefore a 3rd party to the agreement between the dealer and S. S later breached the agreement and D sued for damages and an injunction.
JUDGEMENT: Held that D could not claim for damages because consideration was not present in the circumstances.
PRINCIPLE: Consideration = “an act/forbearance of 1 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”
Thomas v Thomas [1842]
FACTS: Before he died, Mr T said. He wished for Mrs T to have their marital home for the rest of her life. However, this was not written in his will. After he died, his executors “in consideration of such a promise”agreed with Mrs T that she would pay a peppercorn rent of £1/year in return for being allowed to live in the house. They later tried to disposses her.
JUDGEMENT: Held that the £1 rent was recognised as good consideration.
PRINCIPLE: “Consideration means something which is of value in the the of the law, moving from the plaintiff; it may be some detriment to P/some benefit to D but at all events it must be moving from P.”
Chappell and Co Ltd v Nestle Co Ltd [1960]
Not directly a case on contract - it was in fact a copyright case
JUDGEMENT: The wrappers were consideration for the sale of the records, not being mere qualification for buying the records.
PRINCIPLE: The wrappers did from part of the consideration for the sale despite the fact that they had no intrinsic economic value in themselves (this thus negated the sale as being a retail sale and so s8 did not apply)
White v Bluett [1853]
FACTS: B(Sr.) lent his son B(Jr.) a sum of money but died before his son had repaid the sum. B (Sr.)’s will was executed by W who sued B(Jr.) for the outstanding payment. B(Jr.) argued that his father had stated that the repayment was not necessary and rendered the promissory note ineffective if B(Jr.) stopped complaining about the manner in which his father spread the estate among the other family members.
JUDGEMENT: Held that there was no consideration given by B(Jr.) which would absolve him of having to repay his debt to his father’s estate.
PRINCIPLE: The son had no”right” to complain; ceasing complaining was not good consideration but merely an intangible promise.
Pitt v PHH Asset Management [1994]
Classic gazumping case
FACTS: PHH were undisclosed agents of mortgagees who were selling a property for £205,000. P and Miss B put in competing bids at £200,000 and £210,000 respectively. PHH had initially accepted P’s bid “subject to contract” but then withdraw when presented with Miss B’s bid. P then threatened to sue for an injunction so PHH agreed to sell to him and consider no further offers (lock out agreement) but PHH sold to Miss B anyway.
JUDGEMENT: Held that there was consideration.
PRINCIPLE: PHH was freed from the “nuisance value” of having to defend an injunction claim. P’s agreement to not be a nuisance with Miss B and the promise to make the £ exchange within 2 weeks = consideration.
Hamer v Sidway
US case
FACTS: D agreed with his nephew (P) that if P would refrain from drinking, using tobacco, swearing, and playing cards or billiards for money until he became 21, D would pay him $5,000. When P became 21 he wrote a letter to D stating that P had performed his part of the agreement and had earned the $5,000. P and D agreed that $5,000 plus interest should remain with D until P was capable of taking care of it. D died without paying P the $5,000 plus interest.
JUDGEMENT: A waiver of any legal right at the request of another party is a sufficient consideration for a promise. The nephew had a legal right to use tobacco and drink alcohol. He gave up this right for a period of years to comply with the promise hence the requirement of consideration was met. Therefore the contract was enforceable.
PRINCIPLE: In general, a waiver of any legal right at the request of another party is sufficient consideration for a promise.
Wade v Simeon [1846]
FACTS: P claimed a sum of money from D who promised to pay if P stopped legal action. D failed to pay. P sued even though there was no valid/enforceable claim.
JUDGEMENT: No cause of action.
PRINCIPLE: A promise to enforce a claim which is known to be invalid is not good consideration.
Cook v Wright [1861]
FACTS: C honestly believed D was under a statutory obligation to reimburse them in respect of certain expenditure they had incurred in work on a street adjoining the house in which D was residing. D denied this but eventually promised to pay a reduced sum after being threatened with litigation. D later discovered that he was not under a stat. obligation to pay and refused to honour his promise.
JUDGEMENT: Held that the promise was supported by consideration and that D was liable to pay the sum promised.
PRINCIPLE: C’s honest belief in the validity of their claim provided the consideration. (However! Consideration need actually be of value in the eyes of the law and not merely something believed to be of value to the parties)
Wade v Byham [1956]
FACTS: The father of an illegitimate child promised to pay the mother of the child £1/week provided that the child was well looked after and happy. The mother was under a legal duty to look after the child. The mother sued the father when he stopped making payments. The father argued that the mother had not provided any consideration as she was simply carrying out her existing legal duty.
JUDGEMENT: Held that the mother was entitled to the payments.
PRINCIPLE: Offering more (keeping the child happy) than what the existing legal duty requires can constitute good consideration.
Collins v Godefroy [1831]
FACTS: G promises to pay C to appear in court as a witness. Unbeknownst to G, C had received a subpoena to appear in court anyways. Post-trial, C gave G an invoice to cover his time spent at court and demanded payment by the next day. Without giving him the full day to pay, Collins commenced an action to enforce payment.
JUDGEMENT: Held that G was not required to pay C as C was under a public duty to attend court as a witness due to the subpoena.
PRINCIPLE: Where there is an existing public duty. this cannot be used as consideration for a new promise.
Glasbrook Bros v Glamorgan CC [1925]
FACTS: GB (owners of a colliery) asked GCC to proved protection during a miner’s strike. GCC provided protection as requested, although they disputed the level of protection required to keep the peace. At the end of the strike the police submitted an invoice to cover the extra costs of providing the protection. The defendants refused to pay arguing that the police were under an existing public duty to provide protection and keep the peace.
JUDGEMENT: Held that in providing additional officers to that required, the police had gone beyond their existing duty and were therefore entitled to payment.
PRINCIPLE: Doing more than what is expected can be sufficient consideration.
Stilk v Myrick [1809]
C was a seaman who agreed with D to sail to the Baltic and back at a rate of pay of £5/month. There were originally 11 men in the crew but 2 deserted during the voyage. The master was unable to find replacements for the deserters and so he agreed with the rest of the crew that he would share the wages of the 2 deserters between them if they would work the ship back to London. When they returned, C demanded his share of the money but was refused. C sued.
JUDGEMENT: C was unsuccessful in his claim.
PRINCIPLE: Established the orthodox rule on performance of an existing contractual duty, that is, that the performance of an existing contractual duty owed to the promisor is not consideration for a fresh promise given by that promisor. A fresh promise requires fresh consideration.
Hartley v Ponsonby [1857]
FACTS: Half of a ship’s crew deserted on a voyage. The captain promised the remaining crew members extra money if they worked the ship and completed the voyage. The captain then refused to pay up.
JUDGEMENT: The crew were entitled to the extra payment promised on the grounds that either they had gone beyond their existing contractual duty/that the voyage had become too dangerous frustrating the original contract and leaving the crew free to negotiate a new contract.
Williams v Roffey Bros [1990]
FACTS: D were building contractors who entered an agreement with Shepherds Bush Housing Association to refurbish a block of 27 flats. This contract was subject to a liquidated damages clause if they did not complete the contract on time. D engaged C to do the carpentry work for an agreed price of £20,000. 6 months after commencing the work, the C realised he had priced the job too low and would be unable to complete at the originally agreed price. He approached D who had recognised that the price was particularly low and was concerned about completing the contract on time. D agreed to pay C an additional £575 per flat. C continued work on the flats for a further 6 weeks but only received an additional £500. He then ran out of money and refused to continue unless payment was made. D engaged another carpenter to complete the contract and refused to pay C the further sums promised arguing that C had not provided any consideration as he was already under an existing contractual duty to complete the work.
JUDGEMENT: Consideration was provided by the claimant conferring a (practical) benefit on the defendant by helping them to avoid the penalty clause. Therefore the defendant was liable to make the extra payments promised.
