Consideration

Question 1

Thomas v Thomas

Answer 1

(1842)
Facts: the testator, Mr Thomas, expressed a wish that his wife should have for the rest of her life the house in which they had lived. Obligation to pay £1 per year, and keep the house in good repair. Argued there was no contract because no sufficient consideration.
Held: even though the payment of £1 could in no way be regarded as anything approaching a commercial rent for the property, it was sufficient.
‘Sufficiency’ originates from the ‘freedom of contract’ approach. The parties are regarded as being entitled to make their agreement in whatever form, and on whatever terms they wish, even if it is a bad bargain.

Question 2

Chappell & Co v Nestle Co Ltd

Answer 2

(1960)
Facts: this case arose out of a ‘special offer’ from Nestle, under which a person who sent in three wrappers from bars of their chocolate could buy a record at a discounted price. For the purpose of the law of copyright it is important to decide whether the chocolate wrappers were part of the consideration in the contract to buy the record.
Held: the HoL held that the wrappers were sufficient considerations, even if they were thrown away be Nestle. Perhaps due to the fact that it was hence possible to discern that they represented sales of chocolate bar.

Question 3

Re McArdle

Answer 3

(1951)
Facts: William McArdle left a house to his sons and daughter. One of the sons was living in the house and him and his wife carried out various improvements to it. His wife then got each of the siblings to sign a document agreeing to contribute to the costs of the work. The document was worded in a way that read as though the work was to be done, and that when completed the others members of the family would make their contribution out of the McArdle estate.
Held: the document did not truly represent the facts. If it had done so then it would be a binding contract. As Jenkins LJ pointed out: “the work had been done and nothing remained to be done… at all, the consideration was a wholly past consideration.”

Question 4

Stilk v Myrick

Answer 4

(1809)
Facts: the disputes in this case arose out of a contract between the crew of a ship and its owners. The crew had been employed to sale from London to the Baltic and back. Some crew deserted part-way through. The captain promised that those remaining would split the other crews’ wages upon arrival. This was later denied.
Held: the sailors could not recover. There was no consideration for the promise to pay extra money, as the sailors were only doing what they were obliged to do under their existing contracts - sail the ship back to London.

Question 5

Williams v Roffey Bros & Nichole

Answer 5

(1991)
Facts: case concerned a contract to refurbish a block of flats. The defendants were the main contractors and had engaged the plaintiffs as sub-contractors for carpentry work. Agreed price was £20,000. Part way through the plaintiffs ran into financial difficulties because the contract price was too low. There was a penalty clause under which the defendants would have been liable for late completion. Defendants therefore promised to pay a further £10,000. Because it seemed the defendant’s were going to default on this payment they ceased work and sued for the additional money in relation to the eight completed flats.
Held: promise to make extra payments was enforceable. Agreement provided ‘practical benefit’ to the defendants in that they were less likely to have to pay the penalty clause and avoided the trouble and expense of employing other carpenters.