Consideration

Question 1

What is meant by consideration?

Answer 1

The idea of an exchange/ bargain in the contract

The ‘price’ that each party has to pay for whatever is obtained from the other

Question 2

Where does the definition of consideration arise from?

Answer 2

Common Law (Currie v Misa)

A more sophisticated definition was provided in 1876 by Pollock in ‘Principles of Contract’ which was approved by the HL

Question 3

Can a promise be enforced without consideration?

Answer 3

No
English law will not enforce a gratuitous promise
(done without charge, payment or any value given in return)

Question 4

What is the CL definition of consideration, in the case of Currie v Misa (1875)?

Answer 4

‘A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to one party or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other’

Question 5

What is the definition of consideration taken in the case of Pneumatic Tyre Co v Selfridge (1915)?

Answer 5

‘An act or forbearance of the one 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’

Don’t have to do something, just have to promise to do so

Question 6

What is executed consideration?

Answer 6

Where the promise has been performed, the contract

Question 7

What is executory consideration?

Answer 7

Where the promise is yet to be performed

Question 8

What are the 3 general principles in relation to consideration?

Answer 8

1. Must to ‘sufficient’ though it need not be ‘adequate’
   (Chappell v Nestle)
2. Past consideration is no consideration
3. Consideration must move from the promise

Question 9

What is meant by: consideration must to ‘sufficient’ though it need not be ‘adequate’?

Answer 9

What each party is bringing doesn’t have to be the same
Consideration has to be something of value in the eyes of the law
BUT that value doesn’t have to be economic

Question 10

Chappell v Nestle (1960)

Answer 10

N were offering a record for sale
Price: 1s 6d + 3 empty Nestle wrappers
Copyright was owned by C (permission wasn’t obtained)
Record normally sold at 6s 8d
C sued to prevent the promotion
Held: wrappers = part of the consideration
Even though they were thrown away when received + they weren’t the same price as the record
It was sufficient for N, so sufficient for the law

Question 11

What did Lord Somervell state in the case of Chappell v Nestle?

Answer 11

‘It is said that, when received, the wrappers are of no value to Nestle. This is irrelevant. 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’

Question 12

White v Bluett (1853)

Answer 12

Father lent his son a sum of ££ but died before he could repay it
Father distributed his wealth between the children
Father promised not to enforce the sons debt if he stopped complaining
Once the father had died, W (executing will) sued the son for the outstanding payment
Held: there was no consideration given by the son which would absolve him from having to repay the debt to his father’s estate
Ct: the son had no right to complain - father was free to distribute his wealth how he wished
Ceasing from complaining wasn’t consideration

Question 13

Ward v Byham (1956)

Answer 13

Unmarried couple had a child together
Father promised to pay the mother £1 per week
Provided she ensured the child = well looked after + happy
Father stopped the payments when the mother remarried
Father argued that the mother was already under a legal duty to look after + maintain the child
Argued mother was therefore not providing any consideration for the promise of the payments
Held: promising to make sure the child was well looked after + happy she had gone beyond her existing legal duty
Therefore provided consideration
She = entitled the the payments

Question 14

Hamer v Sidway (1881)

Answer 14

Uncle asked the nephew to stop drinking, smoking, gambling
Uncle promised to give him $5,000 to stop in exchange for his abstinence
The nephew fulfilled his promise
NY CA: this was enough to constitute consideration
The nephew had given up something that he had a right to do
Therefore there was enough consideration

Question 15

What is meant by: past consideration is no consideration?

Answer 15

If A renders a service to B, with no promise of payment given by B, the service is gratuitous

B’s subsequent promise of payment is gratuitous + = not enforceable because the consideration for it is past

Question 16

Re McArdle (1951)

Answer 16

Father left a house to his 5 children, equal shares
Wife of one of the sons carried out improvements to the house amounting to £488
She also bore the cost of these repairs
After the repairs, she got all 5 children to sign a document - promised to repay £488 after the estate was distributed
After the widow died wife asked for payment
Other 4 sons refused to pay her back
She tried to enforce this
CA: promise to make the payment came after the consideration had been performed
Therefore, promise to make the payment was not binding
Past consideration is not good conversation

Question 17

Are there any CL exceptions to the principle of past consideration?

Answer 17

Yes

= 3 requirements by Lord Scarman in Pao On v Lau Yiu Long (1980)

Question 18

What are the 3 CL exceptions to the past consideration stated by Lord Scarman in Pao On v Lau Yiu Long (1980)?

Answer 18

1. Act must be performed at the request of the promisor Lampleigh v Braithwait (1615)
2. Expectation of payment or conferment of some other benefit (won’t do it for free)
   Re Casey’s Patents (1892)
3. Action would still be good consideration if it was done after the promise

Question 19

Lampleigh v Braithwait (1615)

Answer 19

B had killed another man
Asked L to secure a pardon
L went to considerable effort + expense to secure the pardon for B
B had subsequently promised to pay L
B failed to pay
L sued
Held: L could enforce the promise because B had requested it

Question 20

Are there any statutory exceptions to the general principle of past consideration?

Answer 20

Yes

s27 Bills of Exchange Act 1882

Question 21

What is meant by: consideration must move from the promisee?

Answer 21

A party cannot sue/ enforce a contract if they haven’t provided any consideration
Only the parties to the bargain are able to enforce it
Tweddle v Atkinson (1861)

Except where the Contract (Rights of Third Parties) Act 1999 applies

Question 22

Tweddle v Atkinson (1861)

Answer 22

Couple = getting married
Father of the bride entered an agreement with the father of the groom
Would each pay the couple a sum of ££
Father of the bride dies without having paid
Father of the son also died - was unable to sue the agreement
Groom made a claim against the executor of the will
Held: groom was not party to the agreement
The consideration did not move from him
Therefore, he was not entitled to enforce the contract

Question 23

Hirachand Punamchand v Temple (1911)

Answer 23

Claimants = ££ lenders in India
Lent ££ to the D = an army officer serving in India
Claimants sought return of ££
BUT = unable to get any response so they contacted his father
Some correspondence went between the claimant and the father’s solicitors. The claimants asked how much the father would be prepared to pay to settle the son’s accounts. An amount was agreed which was a substantial, amount although not the full amount due. The claimant promised to send the promissory note relating to the son’s debt to the father once they received payment. The father paid, but the claimant retained the promissory note and sued the son to enforce the balance.

Held:

The payment made by the father was sufficient to discharge the full balance. Where the person making payment in return for discharging the debt owed by another this will amount to good consideration as the existing duty to make payment was not owed by them but a third party.

Question 24

Can performance of a public duty amount to consideration?

Case?

Answer 24

No - Collins v Godefroy (1831)

UNLESS something extra is provided - Glasbrook Bros v Glamorgan County Council (1925)

Question 25

Collins v Godefroy (1831)

Answer 25

Police officer = promised a sum of ££ by the D in a trial in return for giving evidence
= important to the D that the officer did so
Officer had already been summoned to do so
Held: = no consideration given by the police officer
He was already under a legal duty to attend Ct

Question 26

Glasbrook Bros v Glamorgan County Council (1925)

Answer 26

Ds = owners of a colliery
During a strike D asked for additional police protection for the colliery
Insisted he required police officers to be stationed on the premises
Police superintendent provided mobile officers
BUT refused to station more officers at the colliery unless the manager paid extra to cover the expense
D agreed
BUT later refused to pay - arguing police = under an existing public duty to provide protection + keep the peace
Held: providing the additional officers required, the police had gone beyond their existing duty
Therefore entitled to the payment

Question 27

Can an existing contractual obligation owed to a 3rd party amount to consideration?
case?

Answer 27

Yes

Shadwell v Shadwell (1860)

Question 28

Can an existing contractual obligation owed to the same party amount to consideration?
case?

Answer 28

No it will not amount to consideration - Stilk v Myrick (1809)

UNLESS something extra is provided - Hartley v Ponsonby (1857)

OR there is a ‘practical benefit’ provided and no improper pressure (duress) is applied - Williams v Roffey Bros + Nicholls (1991)

Question 29

Stilk v Myrick (1809)

Answer 29

Team of 11 sailors agreed to crew a ship from London to the Baltic + back
2 sailors deterred in the Baltic
Remaining 9 refused to work + pressed for higher wages
Captain agreed at the time but later refused to pay
Sailors sued the captain
Held: promise to pay was unenforceable - sailors were already contractually bound to return the ship to London
Therefore, = no consideration given by the sailors in return for the captain’s promise of additional wages

Question 30

Hartley v Ponsonby (1857)

Answer 30

Facts = similar to Stilk v Myrick
17 out of 36 crew deserted the ship
Voyage became very dangerous - the crew eft weren’t very capable
Captain promised to pay the remaining sailor additional wages for our getting the ship home
Held: the promise of additional wages was enforceable
Sailors had agreed to do something more dangerous - exceeded their contractual obligation
Represented good consideration for the promise of extra ££

Question 31

Williams v Roffey Bros + Nicholls (1991)

Answer 31

Ds = firm of builders contracted to renovate a block of flats
Own contract contained penalty clause for late completion
D sub-contracted carpentry to W (£20,000)
W fell behind with the work
Told D that they wouldn’t complete the work on time
D promised to pay an additional £10,300 if they completed the work on time
Once the work was completed, D refused to pay
Argued that the new agreement was void - lack of consideration (already contractually obligated to do the work)
CA: W had provided consideration - benefit of allowing the D to avoid the penalty clause
Therefore D = liable to make the extra payments promised

Question 32

What is consideration the main test for?

Answer 32

Is the main test of enforceability of contracts

Question 33

What did Gildwell LJ state in the case of Williams v Roffey Bros + Nicholls (1991)?

Answer 33

‘A promise to make bonus payments to complete work on time = enforceable if the promisor obtained a practical benefit + the promise was not given under duress or by fraud’