Consideration Flashcards
Define Consideration
Consideration is one of the important elements that must be present when formalising a legally binding contract. The principle of consideration is to ensure that promises are enforced to the parties that promised to exchange something of value in the viewpoint of the law.
Consideration is sometimes defined as “the price paid for a person’s promise”. Anything of value promised by one party to the other when making a contract can be treated as “consideration”: for example, if A signs a contract to buy a car from B for £5,000, A’s consideration is the £5,000, and B’s consideration is the car .
Dunlop v Selfridge
Explain what is meant by ‘consideration need not be adequate’.
It means the parties have entered into an agreement where each side has provided something of value that the courts can see. Sometimes the exchange between the parties might not have the same value or equal value of the exchange but the law will take it as a consideration as adequate if the parties have agreed to the exchange .
Chappell v Nestle.
What case relates to consideration need not be adequate
Chappell v Nestle.
Held:
The wrappers did form part of the consideration as the object was to increase sales and therefore provided value. The fact that the wrappers were simply to be thrown away did not detract from this. Therefore Chappel were granted the injunction and Nestle could not sell the records as they had not complied with the notice requirements under s.8.
Explain the general rule relating to past consideration.
Past consideration is not good consideration, because it is not given in exchange for a later promise – e.g. Re McArdle (1951).
Consideration provided for a promise must be done in relation to that promise. If something has already been completed and the promise comes after, this is a past consideration. Executory consideration consists of two promises and executed consideration consists of one promise followed by some action.
Explain what is meany by Consideration must move from the promisor
Consideration must be provided by promisee in order for her or him to be able to enforce promise. Thus, party who has not provided consideration for promise cannot enforce promise and it is only the party who has “paid” for promise who can enforce it.
Case example: Tweddle V Atkinson in year 1861
Explain why Consideration cannot be the past
Consideration must be given in return for; such as in the situation of must be, to some extent, motivated by, promise or act of other party. For example, there must be fairly direct co-relation between consideration and promise or action. Something only done for reason other than promise will not be valid consideration for promise.
Case example: Roscorla V Thomas in year 1842
Roscorla and Thomas contracted to buy a horse for £30. After the sale, Thomas promised Roscorla that the horse was sound; the horse turned out to be vicious. It was held that Roscorla could not enforce the promise, as the consideration given for entering into the contract to buy the horse had been completed by the time the promise was made; in a sense, the consideration was “used up”.
explain why payment of a lesser sum is not in satisfaction of full sum
Consideration rules involves if a promise to accept less than the full amount of a debt, so it is not enforceable. In other words part payment of a debt does not generally extinguish the whole debt even if the other party agrees to this.
Case example: Pinnels case
Explain why consideration must have economic value
Consideration must have economic value
Nevertheless, consideration must have some economic or material value even if negligible. Consideration cannot consist solely in sentimental or otherwise emotional value. For example following someone wishes or promising not to keep boring a person with complaints.
Case example: White V. Bluett in year 1853
A son sued his father’s executors, alleging that the father had promised to pay him some money if he would cease, as the father alleged the son had done, complaining to him that he had been unfairly treated. This promise was too vague to be a “real” consideration.
This explains where a son’s promise to stop complaining to his father about the distribution of the father’s property was held to be incapable of amounting to consideration.
Explain the exception to the rule that past consideration is not good consideration.
There are exceptions to the doctrine of past consideration. It will not apply if the following conditions are satisfied
- the act has been done at the promisor’s request
- the parties understood that the party would receive a reward for performance of the act
- if the benefit or payment had been made in advance, it would have been legally enforceable
Lampleigh v Braithwait
Which case relates to the exception to the rule that past consideration is not good consideration.
Lampleigh v Braithwait
The defendant had killed a man and was due to be hung for murder. He asked the claimant to do everything in his power to obtain a pardon from the King. The claimant went to great efforts and managed to get the pardon requested. The defendant then promised to pay him £100 for his efforts but never paid up.
Held:
Whilst the promise to make payment came after the performance and was thus past consideration, the consideration was proceeded by a request from the defendant which meant the consideration was valid. The defendant was obliged to pay the claimant £100.
Which case relates to a payment of a lesser sum is not in satisfaction of full sum
Pinnel’s Case 1602
The claimant was owed £8 10 shillings. The defendant paid £5 2 shillings and 2p. The claimant sued for the amount outstanding.
Held:
The claimant was entitled to the full amount even if they agreed to accept less. Part payment of a debt is not valid consideration for a promise to forebear the balance unless at the promisor’s request part payment is made either:
a) . before the due date or
b) . with a chattel or
c) . to a different destination
