Consideration

Question 1

Does the consideration need to have an objective value?

Answer 1

Thomas v Thomas: the consideration need only have value ‘in the eyes of the law’.

Question 2

Australian case discussing the effect of allow consideration to be dispensed with for promissory estoppel being used as a sword.

Answer 2

Waltons Stores ltd v Maher (AUS): gives effect to promissory estoppel. However, it differs from contract: no need for agreement, only given effect as to the degree of reliance (here it was demolishing houses in preparation for a contract which was never concluded, despite Po’s representations).

Commonwealth v Scituate Bank (Holmes J)

(1) would cut up the doctrine at its roots;
(2) using estoppel as a sword is to create a new legal relationship whereas using it as a defence merely alters and existing one (ie, reducing or increasing obligation).

Question 3

Basic statement of the non-enforceability of bare promises

Answer 3

Dunlop v Selfridge: ‘Consideration is an act of forbearance of one party. Or the promise thereof, is the price for which the promise of the other [the promisor] is bought, and the promise thus given is enforceable’

Re Hudson (Charities)

Question 4

A way to get around the requirement using a deed

Answer 4

Bolton Metropolitan Borough Council v Torkington

Question 5

What happens if the formalities for the deed are not met (ie, no witness?)

Answer 5

Shah v Shah (where the witness was in a different room, cannot rely on informality of deed after delivering it)

Actionstrength v International Glass Engineering (but mere verbal guarantee as to validity of deed is not effective)

Question 6

The detriment must be requested

Answer 6

Combe v Combe: it can be implied

Question 7

Give the basic categorisation of considerations

Answer 7

The consideration can take the form of a detriment, loss, forbearance, responsibility, right, interest undertaken by the promisee (at the promisor’s, possibly implied, request)

Currie v Misa (list above from this case)

Question 8

Give examples of consideration

Answer 8

Barry v Davies (only one of the 4 boxes above is required. Here it was the obligation to pay if the promisees bid was the highest, or the benefit of having the bids driven up)

Attrill v Dresdner (bonus pool for individuals: the consideration was incentives, individuals showing they had refrained from resigning. In addition, these facts show the detriment/benefit can be impliedly requested)

Question 9

The courts can ‘invent consideration’ when the promisee acts to his detriment, though not clearly as a response to a request.

Answer 9

Pitt v Jones: need not be conscious of consideration, only that he was suffering a detriment and was receiving a benefit in that temporal order. Seems all that is required is cognisance and some level of motivation, not active deliberation on the consideration.

Williams v Roffey: makes consideration more acceptable: gives effect to the parties’ ‘true understanding”.

Question 10

What are the contradictory cases for acting to detriment without motivation?

Answer 10

Shadwell v Shadwell: no need for the claimant to have altered their position because of the promise, eg no need to prove but-for.

Offord v Davies: contradictory: the possibility he altered his conduct in reliance on the promise was held not to be enough.

Collier v Wright: no evidence of a request fatal. Eg, no evidence it was weighing as a potential motive at all for the claimant.

Question 11

If there is no evidence that D was motivated at all for the promise then will it be binding?

Answer 11

Brikom: no, albeit the burden of proof is on the defendant. Also, if induced by the promisor it is instant consideration.

Brikom: seemingly, it is also possible for a party to enforcean estoppel not made to them, provided they were made to someone, and then the lease was assigned.

Question 12

What happens if the contractor acts purely out of his own motive?

Answer 12

Thomas v Thomas: here part of the motive was kindness, but another was the benefit. If it had been purely the kindness, there would be no consideration.

However, per Pitt v Jones it seems as if the promisor would have to be totally ignorant of the benefit for it not to form part of his motive.

Question 13

What is the difference between consideration and the price of the contract?

Answer 13

Thomas v Thomas: seems to hinge on whether it is seen as a price.

For example, if in Carlill the claimant had to go out and get influenza then it would be consideration, if there was no contract until, then it was a condition

Likewise, in Thomas v Thomas it was a condition she remained a widow. It was not requested of her, if she remarried there was no contract. Conversely, if it was consideration then she would be in breach.

Question 14

Is it consideration to forebear from bringing a valid claim?

Answer 14

Cook v Wright: reasonable claim with good faith okay - promisor receives benefit of not having the hassle. Note, must also seriously intent to pursue, and disclose any crucial facts.

Haigh v Brooks: doubtful claim okay.

There is no direct authority for bad faith and invalid claims, but it is highly likely they would be found against public policy (though not on grounds of consideration)

Question 15

Is past consideration valid?

Answer 15

Eastwood v Kenyon: no

Question 16

Can past consideration be valid?

Answer 16

Eastwood v Kenyon: if it requested initially, if the contractor expected to be rewarded; and the promisor promised to reward them (though not necessarily promising their promise yet).

Pao On v Lau Yiu Long: past consideration could be valid provided the action had been requested by the contractor and there was an understanding the party would be reimbursed at a later date. Here, psotponing selling shares was done in expectation of some form of compensation.

Question 17

Can consideration take the form of something the party already had an obligation in law to do?

Answer 17

Glasbrook Bros Ltd v Glamorgan County Council: no, here the police could only calim they had provided consideration if they provided a greater volume of policing than was legally required of them.

Question 18

For an already legally enforceable obligation to provide child care, is a promise to look after the children binding?

Answer 18

Williams v Williams: consideration found in giving up future rights

Ward v Byham: bare promise to look after child was binding as it included an ‘additional’ promise of making the baby happy. Note, this is the start of Lord Denning recognising a practical benefit: not all obligations are enforced - see child contact. Who is to say what view the parties have towards the robustness of the law?

Pace Thomas v Thomas, where consideration was found lacking in a son’s happiness from letting his mother living in the house.

Question 19

What happens when the party is already obliged to perform what they promise as consideration under another contract?

Answer 19

New Zealand Shipping Co v Satterthwaite: this is enforceable.

Question 20

What are the justifications for preventing decreasing pacts?

Answer 20

They keep the contarctor to their obligation: this is desirable on the basis that they may have won the contarct on this low price.

Further, it prevents duress.

Question 21

What happens when the consideration could benefit either party?

Answer 21

Allan v El Nasr: changing the currency of the agreement could benefit either party (could go up or down).

Question 22

Are increasing pacts (ie, when Po promises to pay more?)

Answer 22

Stilk v Myrick: old case, where promise to pay sailors more because they were filling in for the missing sailors was invalid. This seems to be based on the underdeveloped basis of economic duress.

However, see Hartley v Ponsonby, where a significant number desert, or Hanson v Royden, where a new job is undertaken.

Williams v Roffey & Nicholls: yes, valid on the grounds A is given B’s assurance of working faster/better on a building contract/not needing substitutes.

Andrews argues the impetus for this change came from the law’s recognition of a more nuanced form of duress, thus no longer needing to rely on a blanket ban.

Antons Trawling Co v Smith (NZ): no need for consideration - the indication of a binding contract is already present.

Question 23

What are potentially unique features of Williams v Roffey & Nicholls?

Answer 23

A note worthy feature, or non-unique one, is that wherever the other party requests to pay more it is likely they see an economic benefit.

The practical benefit apparently needs to go both ways, and there needs to be equal bargaining power.

Further, it seems the Po requested the increase, not the other way around, and this might be a ground for distinguishing it.

Further, it is likely price gouging will be allowed.

Question 24

Are decreasing pacts valid?

Answer 24

Yes, but only in equity. Agreeing to accept less can be enforced by estopping the individual promising to pay less from enforcing their full legal rights.

Collier v P & MJ Wright (Holdings) ltd 2007: if B relies on A’s assurance he could extinguish the debt by part payment by paying it is valid. (Seems to take extinguishing view, but cf MWB v Rock, where A cannot collect the amount during the suspended period (Burrows)).

Lord Sumption: ‘ripe for reexamination’

Question 25

Are decreasing pacts valid in common law?

Answer 25

No: Foakes v Beer. However, if D agrees to pay earlier than required it could be.

Also note, again doubts occur - Pinnel’s case won’t be overruled.

Lord Blackburn: “conviction that all men of business, whether merchants or tradesmen, do every day recognise and act on the ground that prompt payment of a part of their demand may be more beneficial to them than it would be to insist on their rights and enforce payment of the whole.”

Question 26

Are there any ways which a decreasing pact could be legitimised?

Answer 26

Re v Selectmove: restructuring payments in such a way that it helps P collect fully would not do, even if meant P could collect more in the long run.

A big issue with the usual decreasing pact is that it does not assist P in actually performing. It is almost like a pure threat (ie not to go to court).

Also, cf doubts in the logic of the doctrine.

“When a creditor and a debtor who are at arm’s length reach agreement on the payment of the debt by instalments to accommodate the debtor, the creditor will no doubt always see a practical benefit to himself in so doing. In the absence of authority there would be much to be said for the enforceability of such a contract.”

Question 27

What are some successful ways the decreasing pact can be rendered enforceable?

Answer 27

Pinnel’s Case: early payment counts, along with currency and location.

Question 28

Is accepting a cheque fresh consideration?

Answer 28

C & C Builders v Rees: no. This is despite the fact the money might be quite bulky and hard to transport. Difficult to say what would happen if the other party requested a check (Po).

Also, Cf Lord Denning and clean hands, which should be used to get around any duress points.

Question 29

What happens if the parties agree to liquidate the payment from an uncertain provision to a certain one?

Answer 29

Ferguson v Davies: this is valid, albeit not a decreasing pact.

Question 30

What are circumstances when the creditor, rather than the debtor, can provide fresh consideration?

Answer 30

Venbergen v St Edmund’s Properties: change of place, more time, different currency, waiver of old debt?

Question 31

What are the requirements of promissory estoppel?

Answer 31

Hughes v Metropolitan Railway (full, single cite): This involves a clear and unambiguous representation by words or conduct regarding past, present, or future, and one that the Pe will not insist on the stric enforcement of its rights.

Question 32

What degree of reliance is the party required to carry out?

Answer 32

The post chaser: anything above de minimis.

Question 33

To what extent does the estoppel operate?

Answer 33

It operates up to the extent of the estoppel (ie, I will only collect £50 bro, no worries, go ahead and buy that nice car from my sister).

Also, when there is no clear finishing point for a suspended right (ie, no enforcement until a new contarct is negotiated), then reasonable notice is required. Here, a failed counterclaim for payment amounted to valid notice.

Tool Manufacturing Co

Also, Burrows analyses this on the basis that when the parties intend for the rights to be extinct for a set period then they cannot be resumed by notice (cf the long infinite period after part payment), but then they enter a suspensory period which can be resumed by notice.

Question 34

Can promissory estoppel be used to get around consideration?

Answer 34

Collier v P&MJ Wright Ltd: yes, part payment of a debt in reliance on a representation that it would be enough can do. Whether this is permanent or tempory until notice is given is unclear. cf this case where it was the last co-debtor left.

Question 35

What are some issues with the High Trees dicta?

Answer 35

What happens if the part-payment is late?
What if, in instalments, the last payment does not come in?
Is the defendant even relying (detrimentally) on anything?
The cases are the wrong way around: Foakes v Beer (omitting estoppel) was after Hughes.
More forms of reliance (eg, paying money you thought you had elsewhere)
Post chaser suggests a ‘fair amount’ requirement, yet this does not surface in Collier, merely mechanistically requiring part-payment.

Question 36

Is promissory estoppel a sword or shield?

Answer 36

Combe v Combe: only a shield

Question 37

What is the requirement of estoppel by convention?

Answer 37

NG bank NV v Ros Soca (pattern of visible conduct which indicates a shared assumption)

Vistafjord (three requirements: evidencing an agreement by conduct; they regulate their agreements on that basis; it would unjust or unconscionable for one party to resile)

Vistafjord (both parties must be fully cognisant)

Question 38

What changes have been suggested by MWB v Rock?

Answer 38

Lord Sumption in MWB v Rock noted in dicta that an agreement to restructure arrears payments had non-distinguishable practical benefits from Foakes v Beer and as such could not be supported without full examination of the core cases. This is despite the stronger indicators in MWB that there would be a real practical benefit in assisting MWB (eg, the salient benefit is that of debtor, not the creditor): MWB would be able to pay more easily if back-loaded payments (and did pay in Re Selectmove); MWB would have less downtime on its lease.

However, also see the defendant requested it and was doing it rather informally (and rapidly) over the phone, suggesting the lack of legitimacy in the request.

These would imply MWB was not merely gouging extra time by relying on its ability to either bankrupt in a suit or delay payment at arms length (which wouldn’t even matter here as that’s what they wanted anyway).

In Other Words: many of these factors (eg, was it requested, mutual benefit) all go back to consideration’s role in preventing duress and threats via the delays and shortcomings of suits and bankruptcy division.

Lady Arden does not seem to support her old extinctive position. Maybe a promise to release a debt would only be suspensive?

Question 39

How does the himalaya clause operated?

Answer 39

New Zealand Shipping Co: the idea is that stevedores are undertaking unilateral contracts with the shipowners. The moving of the good amounted to good consideration for the moving of the goods, whilst also constituting an accpetance of the unilateral contract by the owners to waive their rights to sue the unloaders.

“The relations of all parties to each other are commercial relations entered into for business reasons of ultimate profit. To describe one set of promises, in this context, as gratuitous, or nudum pactum, seems paradoxical and is prima facie implausible”

Question 40

Will estoppel bind if the representation is to an intent rather than a fact?

Answer 40

Jordan v Money: no

Question 41

Does the reliance need to be detrimental?

Answer 41

Ajayi v Briscoe (Nigeria) Ltd

Lord Hodson remarked that promissory estoppel may be induced if the other party “altered” his position on the basis of the promise. The case also establishes a limitation to estoppel in situations where it is impossible for the promisee to resume his original position.

Question 42

Does consideration really protect parties?

Answer 42

However, would Po extracting an additional promise for a hat really resolve this? Surely any duress issues remain - consideration’s formality requirements seem really to just make sure the individuals has legal representation since no-one else would think of such things.

Question 43

What did MWB v Rock Decide?

Answer 43

MWB v Rock decided that oral modifications are invalid if there is a no oral modificatios clause. Lord Sumption noted that if the parties decided to bind themselves then, as commercial parties, they should be allowed to do so.

Note, that in the CA the court found that “the increased chance of payment and the property being occupied for longer was a practical benefit to MWB and thus valid consideration.”

Also, any unfairness arising from the strict adherence to the rules would be mitigated by promissory estoppel, although there needed to be an ‘unequivocal assurance’, something more than just the oral promise: assuring the other party that the strict legal rights would not be enforced.

Question 44

Described the facts and principle of Chappel & Co

Answer 44

Facts: nestle organised a scheme whereby purchasers could send in wrappers along with 4d to buy a record.

Held: All that mattered was that Nestle were interested in the wrappers, not that they had no objective value. Thus, they qualify as consideration. The wrappers weren’t a condition, rather part of the consideration (Lord Reid doubted the idea of multiple pre-conditions).

What happens if Nestle had wanted another company’s wrappers? Would this still constitute consideration, even though it was of no value whatsoever (unlike current case, where it could push sales up, pace idea of finding wrappers on the ground).