Consideration Flashcards
define what is meant by a simple contract
a contractual agreement that is not made by way of a deed
When is consideration not necessary?
Where they made by way of deed
why is consideration not necessary where the contract is made by way of deed?
because the fact that you are engaging into a deed is enough to signal your intention to be legally bound
How does Lush J define consideration?
Some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.
In which case does Lush J define consideration?
Currie v Misa
Give the most typical example of consideration
Money
Give an example of detriment to a party
Forgoing a right
What two E words can consideration be?
Executory
Executred
What is executory consideration?
where the exchange of promises to do something in exchange for something creates a contract
What is executed consideration?
you give consideration for the promise of the reward when you present them with what they are asking for
Give an example of executed consideration
returning a lost animal for a reward. your consideration is you giving them the animal you have found
Give an example of executory consideration
the promise to pay £20 for a book creates a contract at the time it is given
What are the four main rules of consideration?
1) The promisee must actually give consideration
2) past consideration is not valid consideration
3) consideration must move from the promisee
4) consideration must be sufficient but need not be adequate
What is said in Combe v Combe?
The promisee must actually give consideration
Give the brief facts of Combe v Combe
The couple were divorcing and he offered to give her £100 per year. He never mentioned she could mot apply for maintenance but she didn’t anyway. He failed to give her the £100 and she sued for breach of contract
Give the decision of the court in Combe v Combe
There was no contract because the wife had given no consideration. He had not asked her not to apply for maintenance so she was giving nothing in exchange for the promise
What does the rule of valid consideration cannot be past consideration actually mean?
That doing an act and then receiving promise of payment for it may not give rise to the ability to enforce that promise
Which two cases say that valid consideration cannot be past consideration?
Roscorla v Thomas
Re McArdle
Give the facts of Roscorla v Thomas
C bought a horse from D for £3. After the sale was concluded D said he warranted that the horse would be free from vice. it was not so C sued.
Give the decision in Roscorla v Thomas
There was no breach of contract because the warranty was given after the contract had concluded.
Give the facts of Re McArdle
A father said in his trust that his bungalow would be split between his 5 children upon his and his wife’s death. The son and his wife got work done to the house then asked the other siblings to sign an agreement that said his wife would get some money when the parents died because she had paid for the work. The wife asked for her money and the siblings refused. she sued for breach of contract
Give the decision in Re McArdle
Because the work had been done before the agreement was signed, the consideration was past consideration and was therefore invalid
Which case stated an exception to the rule of Past consideration?
Re Casey’s Patents
Give the facts of Re Casey’s Patents
D’s engaged Mr Casey to introduce their patents into the mercantile world. he spent his own time and money promoting and improving their inventions. After this work they agreed to give him 1/3 of the profits raised by the patents but later refused saying his consideration was past consideration and therefore invalid.
Give the decision of the court in Re Casey’s Patents
At the time Casey was engaged there was an implication he was going to receive some sort of reward for his work because it would be bizarre otherwise. his consideration was valid.
From Re Casey’s Patents, state the 3 facts that when present mean past services can still be good consideration
(a) there was an act done at the promisors request
(b) the parties understood the act was to be remunerated in some way
(c) the remuneration must have been legally enforceable had it been promised in advance
What do we mean when we say consideration must move from the promisee?
that it is the person to whom the promise is being made who must provide the consideration, not someone else on their behalf.
Which case says that consideration must move from the promisee?
Tweddle v Atkinson
Give the facts of Tweddle v Atkinson
D and C agreed to give D’s son £200 for marrying C’s daughter. The son in law sued for the £200 C had agreed to give him
Give the decision in Tweddle v Atkinson
Claim failed because the consideration must come from the party entitled to sue on the contract.
Give the exception to the rule that consideration must move from the promisee
The Contracts (Rights of Third Parties) Act 1999 s1
What does s1 of the Contracts (rights of third parties) act say?
A third party may in his own right enforce a term of the contract if:
a) the contract provides he may or
b) the term purports to confer a benefit on him
What is rule 4 of consideration?
Consideration must be sufficient but need not be adequate
Give the facts of Thomas v Thomas
An executor of an estateentered in an agreement with the widow that she continue to live in the house that was part of the estate if she kept the house in good condition and paid £1 in rent per year.
What was the decision of the court in Thomas v Thomas?
It didnt matter that there was a massive undervaluation of the rent, consideration need only be sufficient not adequate
Give the facts of Chappell + Co v Nestle
Chocolate wrappers had to be sent in in order to receive a gramophone record.
What was the decision of the court in Chappell and Co v Nestle?
this was good consideration because it needs to be sufficient not adequate.
Give the facts of White v Bluett
Father agreed to wipe son’s debt to him off the record when he died if the son agreed to stop moaning about it. The executor of the will sued for the money owed by the son. Son said he had given good consideration
Give the decision in White v Bluett
The promise to stop moaning was not sufficient consideration
give an example of where forbearance to sue can be good consideration for a promise
Where someone crashes into your car and damages it. if they offer to settle in exchange for your agreement not to sue for the damage to your car then that is good consideration because you are conferring a benefit on them by agreeing not to sue them
in what situation will consideration be insufficient?
performance of your existing public duty
give the case relating to existing public duty
Collins v Godefroy
Give the facts of Collins v Godefroy
solicitor got subpoena to give evidence and had to wait a couple of days to give evidence. he sought to claim from the party who subpoenaed him 6 guineas per day they waited. he sued them for it
Give the decision in Collins v Godefroy
Court said he had not given anything in consideration because he had a legal obligation to attend court due to the subpoena. he was just fulfilling his existing public duty
When can fulfilling an existing public duty be good consideration?
When a person exceeds their existing public duty
Which case says that exceeding your duty can be good consideration?
Ward v Byham
Give the facts of Ward v Byham
two people have a child. the father agrees to pay £1 per week towards her maintenance providing the mother could prove she would be well looked after and happy. He didn’t pay and the mother sued for what she was owed. He said there was no consideration because an Act put the duty on the mother of the illegitimate child to look after it. the father argued she had done no more than she was obliged to do so there was no consideration
Give the decision in Ward v Byham
The court said the offer demanded more of her than the Act because he had specified the child must be well looked after and happy. this was more than the Act obliged so there was sufficient consideration here
What is said in Stilk v Myrick?
Performance of an existing contractual duty is not sufficient consideration
Give the facts of Stilk v Myrick
During a voyage some crew deserted. the captain was worried that others might also desert so he promised the remaining members of the crew that if they continued working and got the boat back to london he would share the wages of the 2 men who deserted between the remaining crew. they did so but were not given the additional money. they sued for breach of contract
Give the decision of Stilk v Myrick
all they had done was what they originally agreed to do under the contract. they had given no consideration for the promise of extra money.
What does Hartley v Ponsonby set out?
Exceeding an existing contractual duty can be good consideration for a further promise.
give the facts of Hartley v Ponsonby
Ship put out to sea with 36 men aboard. they lost 17 in Australia. of the 19 remaining men only 4 or 5 were able seasen. the captain said to the remaining men if they agreed to get the boat from Australia to Bombay he would oay them extra. they did this and he refused the money, saying they had given no consideration for the additional money
Give the decision of Hartley v Ponsonby
Court said it was dangerous for the ship to have sailed to Bombay. that being so there was no contractual duty for the crew to continue in the voyage. they had exceeded their existing contractual duty by continuing in the journey and this was valid consideration
Why has the area of sufficiency of consideration and existing contractual duties been rendered uncertain?
Because of the Williams v Roffey Case
Give the facts of Williams v Roffey
Roffey Bros had agreement with the council to renovate a block of flats. Roffey contracted Williams to carpet the flats. In the contract with the council there was a penalty clause which specified a date by which Roffey had to complete the work by. Every day they were later than the completion date a financial penalty would occur. Roffey agreed to pay Williams £20,000 to do the work and it became clear this wouldn’t be enough and Williams was losing money. Roffey agreed to give an extra £10,300 but failed to follow through saying there was no valid consideration. Williams sued.
Give the decision in Williams v Roffey
Because they gained a practical benefit from the work being completed on time with Williams and avoiding the penalty notice, there was valid consideration by Williams
What did Glidewell LJ say in Williams v Roffey?
Where A has entered into a contract with B and at some stage before the work has been completed B has reason to douby A will complete his side of the bargain and B thereupon promises A an additional payment in return for A’s promise to perform his contractual obligations on time and as a result of giving his promise B obtains in practice a benefit or obviates a disbenefit and B;s promise is not given as a result of economic duress or fraud on the part of A then the benefit to B is capable of being consideration for B’s promise, so that promise is legally binding.
Give the facts of MWB Business Exchange v Rock Advertising Ltd
MWB owned office space which they allowed RA to occupy as licensees. RA got into financial difficulty and fell into £12,000 arrears for the licensing fees. RA proposed paying less than they owed over the course of months and to keep occupying the office space. MWB said no and wanted the money immediately.
What was the decision of the court in MWB Business Exchange?
The court said there was a practical benefit for MWB here because that avoided the office being void space. this avoidance of a void was good consideration as it conferred a practical benefit upon MWB
Give the facts of Shadwell v Shadwell
C was engaged and D was his uncle. D offered him £150 per year until his income reached 600 guineas if he married his fiancee. the agreement fell into arrears then the uncle died. the nephew tried to obtain the money from the estate. in the 1860s if you were engaged pulling out of that marriage unilaterally was a breach of contract which could be sued for.
Give the decision of Shadwell v Shadwell
He had performed his duty to marry the fiancee which was good consideration for the contract with his uncle.
What is the general rule regarding part payment of debt?
part payment of debt does not discharge the full debt
where does the general rule regarding part payment of debt?
Pinnel’s Case
What did the court say in Pinnel’s Case?
Where you’re paying less cash than you owe this is not good consideration
What is the rule regarding part payment of debt in something other than cash?
Agreement to take something other than cash in settlement of the debt is good consideration even if it falls short of the amount you are owed because consideration need only be sufficient not adequate
What did Foakes v Beer do to the rule from Pinnel’s case
took that obiter statement and made it binding
what are the facts of Foakes v Beer
Foakes agreed to pay £500 immediately then £150 per month until the debt was paid off. What wasn’t discussed was that interest accrues on court debts. the law said she was entitled to the interest so she sued for it.
Give the decision in Foakes v Beer
Court said D owed the interest because all she’d done was pay part of what she owed. C was entitled to the interest.
How is the rule regarding part payment of debt at odds with the ruling in Williams v Roffey?
Is there not a practical benefit for the person receiving at least part payment of the debt.
give the facts of Re Selectmove Ltd
At a meeting between the tax man and managing director of the company the company proposed to pay the tax and NI from this point onwards as they are due. and on top of that to pay an extra £1000 towards their arrears. tax man said they’d check with their boss and see if he approved it. 3 months later they had heard nothing back and had not kept up their end of the bargain.
Give the decision of the court in Re Selectmove
Court said there was no contractual agreement because silence is not acceptance and there was no consideration. all they had agreed to do was pay money they already owed. Following Foakes v Beer that is not good consideration.
What argument did Selectmove’s lawyers try to make?
That there was a practical benefit for the tax man following williams v roffey
