Consideration Flashcards
Consideration - definition
Thomas v Thomas (1842) 2 QB 85 – consideration means something which is of some value in the eyes of the law…moving from the plaintiff (Patterson J)
Currie v Misa (1878) LR 10 Ex 153, 162 - …valuable consideration, in the sense of the law, may consist either in some right, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other…(Lush J)
Dunlop v Selfridge [1915] AC 847, 855- an act or forbearance of 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, (Lord Dunedin)
Eastwood v Kenyon (1840) 11 A & E 438
Consideration must not be in the past
Facts- guardian of a young heiress borrowed £140 to improve her estate and provide her with an education. She promised to pay this back and when she got married her husband confirmed this promise to pay the money back.
Legal issues- Was their promise enforceable? Had he provided consideration in exchange of that promise. He would say his consideration was lending the money but was it causally connected to her promise. It couldn’t be as she borrowed the money years ago before the promise was made. His consideration was in the past.
Re McArdle [1951] Ch 669
Consideration must not be in the past
Facts- Mr Mccardle senior died and left his estate to his wife for life and then on trust to his kids. One of his kids Monty lived with his wife in a bungalow belonging to his dad’s estate. They carried out renovation works of £488 which the wife paid for. Two years later Monty signed a document to say they would reimburse that money when the estate was distributed but didn’t when the time came.
Legal issues- this was not an enforceable contract as the consideration had already happened two years earlier.
Roscorla v Thomas (1842) 3 QB 234
Consideration must not be in past
Facts- bought a horse for £30 and after the agreement was made the defendant promised the horse was ‘sound and free from vice” which was not true.
Legal issues- breach of oral promise, but it was unenforceable as no consideration was given in exchange for that promise.
Lampleigh v Brathwait (1615) Hob 105
Consideration must be in the past exception
Facts- defendant had been found guilty of murder and was in prison. He asked Lampleigh to go to the king and seek a pardon for him after a few days he managed to do this. Subsequently he was promised payment of £100 for his efforts. He later refused.
Legal issues- on general rule should be unenforceable. However, the court said it was enforceable as although a voluntary act done before the promise is not, if the act is done at the request of the other party it might be enforceable.
Re Casey’s Patents [1892] 1 Ch 104
Consideration must be in the past exception
Legal issues- the fact of a past service might raise an implication that at the time the service was rendered it was understood by the parties that it was to be paid for. When you then get a subsequent promise to pay that may be treated as evidence that it was understood that payment would be made.
Pao On v Lau Yiu Long [1980] AC 614
Consideration must be in the past exception
Facts- the plaintiffs agreed to sell their shares in a private company to a company of which the defendants were majority shareholders. In order not to depress market value the plaintiffs agreed with the defendants that they would not sell 60% of the newly issued shares until April 1974. The defendants agreed to protect them against a fall in the value of the shares to purchase them for USD 2.50 each. The plaintiffs realised this would deprive them of an increase in the value so refused to complete the main agreement unless the defendants agreed to indemnify against any loss of value. They agreed and the shares subsequently fell below USD 2.50. The plaintiffs claimed an indemnity which was refused by the defendants on the grounds that the consideration was in the past and therefore voidable by reason of economic duress.
Legal issues- an antecedent could be valid consideration under three conditions that must be met for this exception to apply.
- The service must be rendered at the promisor’s request
- The parties must have understood that the act would be paid for or that some benefit would be derived.
- Payment would be enforceable had the promise been made before the act
Tweddle v Atkinson (1861) 1 B & S 393
Consideration must move from the promisee
Facts- two fathers made an agreement to pay and allowance to their two children who had just married. The bride’s father died before he had paid anything so the son brought and action against his estate to enforce the promise.
Legal issues- Mr Tweddle senior could sue but he hasn’t suffered a loss and his son is not party to the contract. No stranger to the consideration can take advantage of the contract.
Thomas v Thomas (1842) 2 QB 851 (Adequacy)
Consideration must be sufficient but need not be adequate
Facts- Before Mr Thomas died, he said he wanted his wife to continue living in his house. The executors said if the wife paid £1 a year rent and looked after the house she could continue living there. Later they changed their minds and argued that this consideration is inadequate for their promise for her to stay there.
Legal issues- the court said her promise is good consideration despite the fact it was a commercially inadequate sum.
White v Bluett (1853) 23 LJ Ex 36 (Sufficiency)
Consideration must be sufficient but need not be adequate
Facts- son promised not to complain to his father in exchange for writing off his debts. Father made the promise. The son did stop complaining but when the father died the executor tried to get the money from the son.
Legal issues- it wasn’t good consideration as it was not sufficient. Not doing something you shouldn’t be doing in the first place could not be good consideration.
Ward v Byham [1956] 1 WLR 496 (Sufficiency)
Consideration must be sufficient but need not be adequate
Facts- an estranged husband promised to pay £1 per week to the mother in exchange for the upkeep of their child.
Legal issues- is keeping this child well looked after and happy good consideration. It was then a legal obligation to support her child. As she had gone above and beyond what she was legally bound to do it was good consideration.
Chappell & Co v Nestle Co [1960] AC 87 (Sufficiency)
Consideration must be sufficient but need not be adequate
Facts- Nestle entered into a contract with a manufacturing company to purchase a number of recordings the copyright of which was vested in the plaintiffs. There was an advertisement on the records which stated that they could be obtained by sending Nestle the wrappers of 6 milk chocolate bars. The wrappers when received were worthless and thrown away. The plaintiffs sought an injunction restraining the two companies from manufacturing and selling the records on the ground that the transactions involved were breaches of copyright.
Legal issues- under the copyright act there is no “ordinary retail selling price” and because the 1 schilling was not the whole consideration, they were not protected by the copyright act.
Hamer v Sidway 124 N.Y. 538, 27, N.E. 256 (N.Y. 1891) (Sufficiency)
(Consideration must be sufficient but need not be adequate)
Facts- uncle promised to pay $5000 to his nephew if he refrained from drinking smoking swearing and gambling.
Legal issues- this was sufficient for good consideration as the nephew was suffering a detriment in giving up those things as he had every right to do those things.
Horton v Horton (No 2) [1961] 1 QB 215
Forbearance to sue
Facts- a husband and wife had a legal separation agreement which he hadn’t been sticking too. The wife agreed not to bring an action if he promised to pay her £30 per week.
Legal issues- this was good consideration
Collins v Godefroy (1831) 1 B & Ad 950 – general rule
Performance of a duty imposed by law
Facts- Collins was called to court to give evidence on behalf of Godfrey. He then claimed for the money he was promised to give this evidence. This was a legally required act.
Legal issues- this was not good consideration as he was under a duty imposed by the law.
Glasbrook Bros v Glamorgan County Council [1925] AC 270
Performance of a duty imposed by law
Facts- owners of a mine and the employees were on strike so the owners sought the assistance of the police to help their employees get over the picket line and into work. The police assessed they would need a mobile unit but they wanted on the spot coverage and agreed to pay them for this but later refused.
Legal issues- they argued that the police were only doing what they were legally required to do and therefore there was no consideration for this promise to pay. The courts disagreed as they said the on the spot service was going over and beyond what they were legally bound to do.
Harris v Sheffield Utd FC [1988] QB 77
Performance of a duty imposed by law
Facts- police officers attended the premises of Sheffield football club on many occasions and billed the club for “special police services” the club refused to pay saying this did not constitute “special services” but as the club had requested this service they must pay. They argued that there was a duty for them to perform these duties by law.
Legal issues- dismissing the appeal the court held that the provision of officers to attend regularly inside a club’s grounds constituted “special police services” and was beyond their legal duty.
Shadwell v Shadwell (1860) 9 CB (NS) 159
Performance of a contractual duty owed to a third party
Facts- nephew was engaged to be married and his uncle wrote a letter offering to give him £150 per year until his income exceeded 600 guineas. The uncle died and the nephew brought an action against his estate. The uncle’s estate tried to argue that there was no consideration in exchange for this promise. Marriage then was contractually binding. He was contractually obliged to marry the girl.
Legal issues- could his performance of fulfilling his obligation of marrying the girl act as good consideration. He argued he had suffered a detriment by marrying her. It did constitute good consideration.
New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd [1975] AC 154
(Performance of a contractual duty owed to a third party)
Facts- the plaintiff own cargo the defendants are employed at a port to unload goods at a port. The plaintiff owner of goods entered into a contract with the cargo carriers to transport their good to New Zealand. The owners agreed to a clause that limited the liability of the cargo owners or their agents if the goods were damaged because of negligence. The carriers then made another contract with the people who unload the goods at the port. As the result of their negligence the goods were damaged. Can the third party have the benefit of this limitation clause that has been agreed in that second contract. Do they count as an agent? What consideration have they given?
Legal issues- the performance of their contractual obligation to the carriers was good consideration.
*Stilk v Myrick (1809) 2 Camp 317- general rule
Performance of an existing contractual duty owed to the promisor
Facts- a sea voyage where two sailors deserted. The captain promised that he would split their wages between the remaining sailors if they got him home. They were contractually obligated to do this anyway.
Legal issues- argued there was no consideration. The court agreed there was no extra consideration for the new promise to pay more. This was a decision based on policy (fear of extortion). There was no such thing as economic duress at this time.
*Hartley v Ponsonby (1857) 7 El & Bl 872
Performance of an existing contractual duty owed to the promisor
Facts- a sea voyage where the captain promised to split the wages of the deserters when 50% had gone. This made the job much more hazardous.
Legal issues- new consideration had been found by going over and above there contractual obligations.
North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (1979) QB 705
(Performance of an existing contractual duty owed to the promisor)
Facts – they contracted for them to build a tanker for $30,000000 to be paid in five instalments opening a letter of credit stating that if anything went wrong the ship would not be built and the money would be paid back. After 1st instalment the value of the dollar dropped and the quote became under-priced so the builder’s asked for another $3,000000 to finish building the ship. The new agreement included that the letter of credit was extended by the 10%. They sought to get the money back on the grounds of economic duress and lack of consideration.
Legal issues- the extension of the letter of credit constituted good consideration.
*Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1
(Performance of an existing contractual duty owed to the promisor)
Facts- the defendants entered into a contract to build flats and sub contracted the carpentry work for £20,000. They realised they had under quoted the job so started to fall behind. The Roffey brothers were under penalty for late completion. They offered to pay them an additional £10,000 if they got the job done on time. Which he did but they refused to pay. They argued there was no additional consideration.
Legal issues- The promise was found to be enforceable as there was no economic duress or fraud as the Roffey brothers had received a practical benefit by avoiding the late completion penalty clause.
Pinnel’s Case (1602) 5 Co Rep 177a
Part payment of a debt
Facts- defendant owed £8 and pinnel brought an action to recover this debt. But he argued he had paid £5 and he had said it was accepted as full payment. What consideration had he given in exchange for this promise?
Legal issues- part payment of a debt given on the date that’s its due will not be good consideration for a promise to forgo the remainder of that debt. “but a gift of a horse, hawk or a robe is good”.
