Consideration and Capacity Flashcards
Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424
There must be a quid pro quo for consideration - a bargain.
If the promisee was going to do the act anyway, then that relationship between the promise causing the act is not established.
Beaton v McDivitt (1987) 13 NSWLR 162
Explained the benefit/detriment analysis that clarifies the quid pro quo test that was espoused in Australian Woolen Mills.
If one suffers a detriment and another gains a benefit (and one or both are found) then consideration is likely to be found.
Roscorla v Thomas (1842) 3 QB 234
Horse case:
The consideration is directly extended from the current promise, it cannot be old or related to a prior promise.
Past consideration is not good consideration.
Pao On v Lau Yiu Long [1980] AC 614
“An act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise.”
Past consideration can be consideration if it is specifically requested by the promisor.
Coulls v Bagot’s Executor and Trustee Co Ltd (1967) 119 CLR 460
The wife didn’t provide the money for the contract so she cannot have provided consideration and therefore the contract is not valid for her.
Consideration must flow from the promisee.
Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87 [p163]
Nominal consideration.
Consideration can be anything the promisor specifies – does not need to be seen objectively as having ‘value’.
Wigan v Edwards (1973) 47 ALJR 586 [pp165-166]
A bona fide compromise is an honest compromise.
A compromise or giving up a claim or settling a legal dispute may be consideration.
Glasbrook Bros Ltd v Glamorgan County Council [1925] AC 270
Going beyond an existing duty may qualify as consideration.
Stilk v Myrick (1809) 170 ER 168
Actions were within the original contract. Existing legal duty cannot be good consideration for a further promise.
Hartley v Ponsonby (1857) 119 ER 1471
Distinguished from Stilk v Myric because the additional difficulties that were encountered on the journey were so extreme and the additional duties so many that the completion of them by the remaining sailors counted as consideration.
Sailors were in the condition of a free man (no legal duty) – free to make a new contract – therefore there is consideration.
Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1
A promise to make bonus payments to complete work on time was enforceable if the promisor obtained a practical benefit and the promise was not given under duress by fraud.
NOTE: Be careful about precedential value.
Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723
A contract to perform an existing obligation may be enforced if, by the first party’s performance of the obligation, the other party avoids a practical detriment or the first party suffers a practical detriment.
Single judge in NSW, follows Williams v Roffey Bros. Be careful with precedential value.
Foakes v Beer (1884) 9 App Cas 605
Payment of a smaller sum of money for a larger sum is not consideration because paying less is not whole satisfaction.
Woolworths v Kelly (1991) 22 NSWLR 189
Courts do not generally enquire into the adequacy of consideration. The courts have no way of assessing the value a particular person places on the consideration he or she has contracted to receive. Moreover any requirement of consideration would render the enforceability of contracts uncertain.
PEPPERCORN analogy.
Popiw v Popiw [1959] VR 197
Where ‘duty’ is not binding in law then a promise to perform that ‘duty’ (in this case cohabitation) can be good consideration for a promise made.
