Consideration

Question 1

What is the definition of consideration?

Answer 1

The exchange of wealth.

Each party must receive a benefit and each suffers a loss.

Question 2

What is executory consideration?

Answer 2

Consideration in a contract that has not yet been completed, they promise to do something in the future.
(Most common)

Question 3

What is executed consideration?

Answer 3

Offeree doesn’t promise anything but does some ct instead. Once they’ve performed the act there has been consideration.

Question 4

What are the 4 rules of consideration?

SPEM

Answer 4

1. Sufficient- sufficient not adequate
2. Past- Not be past consideration
3. Existing duty- Not good consideration
4. Moves- Must move from the promise

Question 5

What happened in Thomas V Thomas?

Answer 5

Promised that she would pay £1 per year in rent once her husband had died.
Did not matter that it was only £1 as it still has some actual value. So supports a contract. (Must be sufficient)

Question 6

What happens in White V Bluett?

Answer 6

Promised he would stop complaining and the dad would forget about his debt.
Not good consideration as he had not given anything up. Still owed the money.

Question 7

What is past consideration?

Answer 7

Something that has already been done at the time of the agreement. When the promise comes after the act.

Question 8

What happened in Re McArdle?

Answer 8

Made improvements to mother-in-laws house, promised to compensate her. They didn’t pay so tried to claim.
Work was voluntarily and not an agreement so couldn’t claim.

Question 9

Whats the exception to the past consideration rule and what happened in Re Casey’s patent?

Answer 9

Implied promise to pay for it, usually in a business situation.
Manager who worked on it for 2 years, was promised a one-third share. Refused to give it to him.
Could rely on the agreement as even though it was past consideration it was done in a business situation and was understood by both parties it would be paid.

Question 10

What is meant by an existing duty?

Answer 10

Carrying out an existing duty is not consideration for a new promise. Known as a pre-existing duty when they already have a contract to do something.

Question 11

What happened in Stilk V Myrick?

Answer 11

Existing contract to sail a ship, 2 staff were deserted. Promised extra money to go back and watch them, but did not.
They hadn’t done anything to extra to earn the money as they were paid to sail the ship.
Already had pre-existing duty, cannot claim for just doing their job.

Question 12

What happened in Hartley V Ponsonby and why was it different?

Answer 12

19 of the crew were deserted which made the ship unsafe. Promised to pay extra but refused.
They had a contract to sail a safe ship not an unsafe ship so by picking up extra crew they had done something extra.
Good enough consideration to support a new promise.

Question 13

What happened in Williams V Roffey bros?

Answer 13

Roffey builders had a contract to build some flats, subcontracted Williams to do carpentry work for £20,000, he had under quoted for the work. Agreed to pay extra. Completed the work on time but Roffey refused to pay extra.
Even though he only did what he was contracted to do he still won the case as it was still good consideration.

Question 14

Why was this the outcome in Williams V Roffey bros?

Answer 14

Roffey benefited from Williams completing the work on time and they therefore avoided paying penalties.
Was also a small business so they did not want him to be exploited by a large business, helped him out of financial difficulties.

Question 15

When can consideration be an act for a thrid party?

Answer 15

Consideration could be something that you have to do for a third party. A pays B if they do something for C.

Question 16

What happened in Shadwell V Shadwell?

Answer 16

Agreed to pay claiment an income if they married a particular person. Promising to marry third party was sufficient consideration.

Question 17

What is the rule on part payment?

Answer 17

Promise to accept part payment of an existing debt instead of the whole debt is not consideration (Pinnels case).
Its only accepted if the parties voluntarily agree to end a contract with satisfactory compromise e.g debt is paid off with something else (not necessarily of equal value).

Question 18

What happened in Foakes V Beer?

Answer 18

Owed Mrs. Beer £2000, offered to pay £500 immediately and the rest by instalments. Agreed to this but once all instalments had been paid she brought action for the interest.
Liable to pay the interest, she was doing him a favour by accepting the instalments so was entitled to the full interest/payment.

Question 19

What happened in D&C builders V Rees?

Answer 19

Owed builders £482 for work they had done for her. They were in financial difficulty so she offered to pay £300 which they accepted.
Builders were later allowed to claim the rest of the money owed. She took advantage of their vunrability. Part payment isn’t consideration.

Question 20

What is the exception to Pinnels rule?

Answer 20

Promissory estoppel- if they promise to vary contract and the other relies on that they cannot go back on the promise. (Willing promise)
- If they make a change before conduct then the new promise replaces old one.

Question 21

What happened in High Trees case?

Answer 21

Landlord promised to accept half of usual payment during WW2.
Tenant benefitted without any consideration, as he relied on this promise and the landlord voluntarily agreed to lower price, once the war was over he could not claim for the rent lost during those years.

Question 22

What is the fourth rule (move)?

Answer 22

A person cannot sue/ be sued under a contract unless they have provided consideration. Must be part of the agreement to be able to sue (third party).

Question 23

What happened in Tweddle V Atkinson?

Answer 23

Fathers of an engaged couple had contract to give a sum of money once the couple married.
One father died before the wedding.
The couple could not sue for the money as they were not part of the agreement.