Consideration Flashcards
WHITE v BLUETT (1853) 23 LJ EX 36
Can forbearance be valid consideration.
In White v Bluett a father promised not to enforce a debt against his son, on condition that the son stopped moaning about the distribution of his father’s property. The court decided that the son had not provided consideration for the father’s promise.
Chappell & Co Ltd v Nestlé Co Ltd [1960] AC 87, HL
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.
‘Consideration need not be adequate’ means that the consideration does not have to adequately reflect the value of the promise in return for which it is given. ▪ ‘Consideration must be sufficient’ means that the consideration must have some value.
In Chappell v Nestlé the claimants owned the copyright in a piece of music, ‘Rockin Shoes’. Nestlé arranged for copies of this tune to be made into records, and offered these records to the public for 1s.6d. plus three wrappers from their 6d chocolate bars. The issue before the court involved copyright. The House of Lords had to decide whether the three wrappers were part of the consideration given for the record. The House of Lords held by a majority that the wrappers were part of the consideration.
HAMER v SIDWAY (1891) 27 NE 256
American case. Can forbearance be valid consideration.
In Hamer v Sidway the question before the court was whether William Story was contractually bound to pay his nephew $5,000 on his 21st birthday. On 20 March 1859, William had promised his nephew that if he would stop drinking alcohol, smoking, swearing and gambling until he was 21 years of age, William would pay him $5,000. His nephew agreed and ‘in all things fully performed his part of the said agreement’.
It was argued that there was no consideration as the promise to stop smoking, drinking, etc did not in fact harm his nephew, but actually benefited him and that William gained no personal benefit from the promise. The court dismissed this argument. The nephew had a legal right to do all the things he abstained from doing. He had abandoned that right in consideration of the promise of $5,000 and the court was not prepared to speculate on the effort which had been required to give up the various activities.
ROSCORLA v THOMAS [1842] QB 234
Past consideration will not be sufficient.
A past act will not normally amount to sufficient consideration for a later promise (Roscorla v Thomas).
Roscorla bought a horse from the defendant. Afterwards, the defendant assured him that the horse was ‘sound and free from vice’. This proved to be untrue, and Roscorla sued the defendant for breach of contract. The assurance was held to be unenforceable as Roscorla had not given any consideration for it. Roscorla had not bought the horse in exchange for the defendant’s promise. He had already bought the horse.
For a past act to amount to consideration for a later promise of payment or other reward, the following three conditions must be satisfied:
▪ the act must have been done at the promisor’s request (ie at the request of the person who later promises payment) (Lampleigh v Brathwait), and
▪ there must have been a mutual understanding from the outset that the act would be rewarded in some way (Re Casey’s Patents), and
▪ had the promise of payment/reward been made in advance it would have been legally enforceable, ie all the requirements for a binding contract are satisfied.
LAMPLEIGH v BRAITHWAIT (1615) HOB 105
Occasionally a past act will be good consideration. The act must have been done at the promisor’s request.
The defendant had asked the claimant to seek a royal pardon for him, in relation to a crime which he had committed. The claimant made considerable efforts to do this and the defendant later promised him £100 for his trouble. The promise was held to be enforceable.
The act must have been done at the promisor’s request. This derives from the case of Lampleigh v Brathwait (1615) Hob 105, where the defendant had asked the claimant to seek a royal pardon for him, in relation to a crime which he had committed. The claimant made considerable efforts to do this and the defendant later promised him £100 for his trouble. The promise was held to be enforceable.
RE CASEY’S PATENTS, STEWART v CASEY [1892] 1 CH 104
Exception to the rule that past consideration will not be sufficient – there must be a mutual understanding that the act would be rewarded in some way.
The parties must have understood from the outset that the act was to be rewarded in some way. The case of Re Casey’s Patents, Stewart v Casey [1892] 1 Ch 104 made it clear that this second condition also had to be satisfied.
In Re Casey’s Patents, Stewart v Casey the defendants had asked the claimant (Casey) to manage certain patents for them, which the claimant did. The defendants later promised Casey a one-third share of the patents for the work.
The court held that it must always have been assumed that Casey’s work would be paid for in some way; the defendants’ promise simply crystallised that reasonable expectation. Thus Casey was entitled to the agreed sum. Bowen LJ said: ‘Now, the fact of a past service raises an implication that at the time it was rendered it was to be paid for …’ The subsequent promise of a one-third share of the patents simply fixed the amount the defendant was to receive for his services. If the promise had not been made, the defendant would have been entitled in restitution to a reasonable sum for what he had done.
