Consideration Flashcards
What is consideration R2P1
Consideration is the value that each side gives to a contract - the law enforces deals not empty promises.
Each side must promise something of value to the contract, but what we mean by value can be difficult to pin down.
Does consideration need to be adequate R2P1
Consideration must be sufficient, it need not be adequate
That means that there is no requirement that the consideration is of equal value on each side, but it must be of some value.
The law doesn’t require equal value on each side because some goods are difficult to put a value on, so it just wouldn’t be practical, such as how much would you pay for a hamster.
Also the courts leave it to the parties to make their own deal, they don’t concern themselves with whether a party has made a sensible or valuable contract. This is called the laissez faire approach - leaving people to make their own decisions.
Key cases on sufficiency of consideration R2P1
Filler
Chappel V Nestle (1960) R2P1
Nestle ran a promotion in which they would supply music records in return for a small sum of money and three wrappers from bars of Nestle milk chocolate. Chappell had copyright in the record and was entitled to a percentage of the selling price. He argued the wrappers were part of the price as you couldn’t get a record without them, he wanted compensation for the increased chocolate sales gained by Nestle.
The court held the wrappers did form part of the consideration.
Thomas V Thomas (1842) R2P1
A man didn’t include his wife in his will but, before he died, he made it known that he wanted his wife to live in their house for the rest of her life. His executors made a contract with her whereby she could live there for £1 a year - a minimal v sum known as a peppercorn rent. Later on there was an attempt to evict the wife but the court found that she had made a binding contract. Although, not at a commercial rate, £1 a year was real consideration.
White V Bluett (1853) R2P1
A father lent his son a sum of money, he died before the son had repaid the money. The fathers’s executors sued the son for the money but the son argued that his father promised that repayment was not necessary if the son stopped complaining about the manner in which the father distributed his money among the other members of the family. This argument failed - the court said that a sons promise not to bore his father with complaints was not good consideration.
Ward V Byham (1956) R2P1
An unmarried couple had a child together and lived together for 5 years. When the couple separated the child went to live with the neighbours and the father paid the neighbour £1 a week. Later on the mother was in a position to look after the child again, the father agreed to pay her £1 a week provided she ensured the child was well looked after and happy. After a time the mother remarried and the father stopped paying, arguing the mother had an existing legal duty to look after the child and therefore wasn’t giving any consideration for the promise to make payment. The court decided that by promising to ensure the child was well looked after and happy she had gone beyond her existing legal duty and therefore had provided consideration.
Hamer V Sidway
(An American case from 1890) a nephew who gave up gambling, drinking and smoking did provide consideration to his uncle’s promise to pay him.
When does past consideration not count R2P1
Past consideration doesn’t count. This was shown in the case Re McArdle.
Mrs M lived in a house owned by her brother in law. She repaired and improved the house and, after the work was finished, her brother in law was so pleased that he promised to pay her for the work. In fact he never paid her. She sued to enforce the promise but lost the case because she did not give consideration for his promise to pay her.
Answer - her consideration was past - she had already done the work when the promise was made so there was no exchange of promises.
When is past consideration good consideration R2P1
If the act was done at the other parties request or a reward was always expected.
Lampleigh V Braitwait (1615) R2P1
A man was wanted for murder and was likely to be hanged. His friend knew the king, so he asked his friend to obtain a pardon from the king, which his friend did. Afterwards he was so grateful that he promised his friend £100. He didn’t pay so his friend sued. His friend won, although the consideration was past he only acted because the wanted man asked for his help.
Stewart V Casey’s Patents (1892) R2P1
S&C invented something and protected it by a patent. Casey managed this patent and obtained commercial contracts in order to make from the invention. S&C then promised Casey a 1/3 share in the money from the invention. When Casey sued to enforce the share S&C claimed his consideration was past as he had already done the work when the promise was made. The court held that a payment was always expected because what Casey had done was a commercial service, therefore the past consideration was good.
Three reasons someone already has to do something R2P2 (Check this with Tim cos don’t quite understand)
He has a contract with Sam to do something and Sam promises him extra money.
He has a contract with Sam to do something which will benefit Paula, Paula then offers to pay Tim as well.
He has a public duty to do something and Sam offers to pay him.
Why might a contracting party make an extra promise R2P2
The key point is there is just two parties and the original contracting party makes an extra promise. They might do this perhaps it looks like the contract may not be performed so the extra payment is an encourage to get on with it.
The original case on extra payment R2P2
This is still good law.
Stilk V Myrick (1809) - A sailor contracted to help sail a ship to the Baltic Russia and back for £5 a month. When 12 of the crew diverted the captain promised to share their wages out to the rest of the crew if sailed back to London. The sailor agreed and continued with the journey.
When the ship got back to London the captain refused to pay the extra money. The sailor sued and lost, he had not provided any consideration for the extra payment as he had already had a contract to sail the ship back.
