Consideration and estoppel

Question 1

The doctrine of Promissory Estoppel

Answer 1

where a person makes a promise, unsupported by
consideration, to waive a debt or other existing obligation, and where the Promissee acts on the promise, the promisor is prevented or estopped from retracting the promise.

Question 2

what are the facts of Central London Properties Trust v High trees Ltd?

Answer 2

during the war the plaintiff agreed to accept a reduced rent from 1940-1945. The plaintiff sought the full annual rate for the final two quarters of 1945..

Lord Denning stated obiter that the landlord was estopped from seeking back rent, as he couldn’t deny the promise
made.

Question 3

what was held in the case of D&C Builders v Rees?

Answer 3

The plaintiff under duress agreed to accept less in full settlement. The court held that promissory estoppel only applies to a promise voluntarily given

Question 4

Can a promise be withdrawn?

Answer 4

It was held in the case of Barge Inn Ltd v. Quinn Hopsitality Ireland Operation 3 Ltd that A promisor is entitled to withdraw their promise with the terms, or by giving reasonable notice, unless the
promisee is unable to return to his previous position. This case is also authority that a Pinnel’s case can be defeated
by promissory estoppel, only where an inequity exists. This was also expressed obiter in High Trees.

Question 5

what are the key elements of a claim of promissory estoppel?

Answer 5

1. There must be a pre-existing legal relationship between the
   parties.
2. There must be an unambiguous representation.
3. There must be reliance/detriment by the representee.
4. There must be some element of unfairness of
   unconscionability.
5. It is a shield not a sword.
6. The remedy is a matter for the court.

Question 6

explain the maxim shield not sword

Answer 6

In Combe v Combe denny J stated that the principle of promissory estoppel does not create new causes of action where no existed before. it only prevents a party from insisting on his strict legal rights, when it would be unjust to allow him to enforce them.

The party must wait to be sued and then use promissory estoppel as a defence (as a shield)

Question 7

Proprietary Estoppel

Answer 7

Proprietary estoppel arises where a person has done an act in reliance on the belief that he has, or will acquire a right in or over another’s land and can create new rights if real property is involved.

Question 8

what are the facts of Pascoe v Turner? Proprietary Estoppel

Answer 8

The parties had lived together for a considerable period of time in a house owned by the plaintiff and when he moved out and went to live with another woman, he assured the defendant that she could remain in the house and that it would belong to her. On the basis of this assurance, the defendant carried out repairs and improvements to the property.

When the plaintiff subsequently brought proceedings for possession, the Court of Appeal held that the fee simple estate in the house should be conveyed to the defendant.

Question 9

what are the facts of Smyth v Halpin? - Propriety estoppel

Answer 9

The plaintiff had asked his father to provide him with a site on the latter’s land so that he could build a house for himself. The father indicated that the family house would be his (the plaintiff’s) after his mother’s death and that there was no need for him to have two houses, suggesting that the plaintiff build an extension on the family home instead.

In his will, the father left the family home to his wife for her life and thereafter to one of his daughters. The plaintiff instituted proceedings seeking the reversionary interest following the life interest in favour of his mother.

Question 10

what are the facts of what are the facts of Gillet v Holt? - Propensity estoppel

Answer 10

is one of the most important decisions in this area. In that case the plaintiff spent his working life as a farm manager for the defendant whom he also regarded as a friend.

The defendant repeatedly promised the plaintiff that he would succeed to the
farming business and the house in which the plaintiff and his family had lived for over
25 years. Relations between the parties deteriorated and the plaintiff was dismissed.

The defendant made dispositions of the property to the second named defendant in whose favour he also altered his will.

Finding for the
plaintiff, the Court of Appeal ordered that the farmhouse be conveyed to the plaintiff and
awarded him a sufficient sum of money to compensate him for his exclusion from the rest of the farming business.

Question 11

Common expectation

Answer 11

common exception arises where a party has a common expectation that s/he will receive something in return for acting in their detriment

Question 12

The doctrine of consideration

Answer 12

A contract generally will not be enforceable unless the person to whom the promise is made gives some consideration for that promise. Consideration is something of value (however small) given or promised in exchange for a promise or something of value.

Question 13

contracts under seal

Answer 13

Common law recognises a promise to be enforceable if it is contained in a deed under seal. A seal may be affixed to a contract by placing a red sticker on the paper or simply drawing a circle with “LS” (locus sigillz) stamped on it.

The deed then takes effect upon delivery. Contracts made under seal are enforceable contracts and do not require consideration. This was recently upheld in the case of McDonnell v Ring

Question 14

Executory consideration

Answer 14

consideration is called executory when a party makes a promise in return for a counter-promise - that is, a promise to do something (or to refrain from doing something) at a future date.

In the majority of modern contracts, the consideration provided by both parties is executory

With this type of consideration, the contract comes into existence before either party has commenced its performance

Question 15

Executed consideration

Answer 15

consideration is called ‘executed’ when it is made in return for a promise of an act. This is a special type of consideration, limited to the case of unilateral contracts. If A offers a reward to any person who finds and returns his dog, then this statement is an offer: no contract comes into being until the offer is accepted, by the acts of finding and returning. these acts constitute the consideration for the contract, as well as its performance by that party. The acts of finding and returning are therefore said to be executed consideration

Question 16

Acts of forbearance and the case of hamer v Sidway

Answer 16

By forbearing from doing something, a party is not doing something s / he is normally entitled to do. Forbearance amounts to good consideration.

In Hamer v Sidway, an uncle offered to pay his nephew $5,000 if he refrained from alcohol, smoking and gambling until he was 21 years of age. When the uncle refused to pay the money, the nephew sued on the basis of this agreement.

The uncle tried to argue that the agreement was unenforceable as there was no consideration provided. How-
ever, the Court was of the opinion that as the nephew gave up something that he was legally entitled to do, this constituted sufficient consideration under the circumstances.

Question 17

what are the facts of O’Keeffe v Ryanair Holdings?

Answer 17

In O’Keeffe v Ryanair Holdings. The plaintiff, Ms O’Keeffe, was the one-millionth passenger to fly with Ryanair. In recognition of this event, and in return for Ms O’Keefe participating in the surrounding publicity, she was
promised free flights for life.

She gave up her privacy by taking part in the publicity etc. This was an act of forbearance
so was good consideration.

Question 18

consideration must move from the Promisee

Answer 18

Consideration is the price of a promise, so a person can only enforce a promise if they themselves provided consideration. Thus, in order for a contract to be deemed legally enforceable, it must be shown that consideration moved from the promisee.

Therefore, in order to be successful, the person to whom a promise is made must show that he/she personally provided consideration in return for the promise. A party may not rely on consideration provided by a third party.

Question 19

what are the facts of tweeddle v atkinson? - consideration must move from the Promisee

Answer 19

In this case the plaintiff’s father and father-in-law exchanged promises that they would each pay a sum of money to the plaintiff following his marriage. The father-in-law died without making the promised payment, and the plaintiff sued his father-in-law’s executers for the specified
amount. The court held that the plaintiff had no enforceable rights under the agreement, as he had provided no consideration for his father-in-law’s promise.

Question 20

what exception was established in the case of McEvoy v Belfast

Answer 20

where a promise is made to two or more people collectively, then the consideration furnished by one will suffice to enable the other to enforce that promise.

in this case case, a father had £10,000 on deposit with the defendant. bank He transferred it into a joint account m his own name and the name of his infant son.

Question 21

Adequacy of consideration

Answer 21

• The general rule is that consideration need not be adequate must be sufficient and can never be
  past.
• The courts presume that the parties to a contract are the best judges of their own interests, and they will not decline to find that an agreement is an enforceable contract simply because it appears to be unfair or one-sided.
• There is no requirement in contract law that the price paid is reasonable in the circumstances of the particular contract. However, the consideration provided must have some actual value in
  the eyes of the law; but, that value need not be the market value or a fair value.

-In Bolton v Madden (1873) LR Blackbum J. held: “The adequacy of consideration
is for the parties to consider at the time of making the agreement, not for the court when it is sought to be enforced”.

Question 22

sufficiency of consideration

Answer 22

• O’Neill v. Murphy
  Saying a prayer was insufficient.
• Re Wilson
  Natural love and affection was insufficient.
• RyanAir ltd v. Billigfluege.De GMBH
  HC held that the provision of information was sufficient consideration

Question 23

performance of a pre-existing public duty and the case of Collins v Godefroy

Answer 23

McDermott comments that “performance of a public duty is not regarded as sufficient consideration unless the duties performed go beyond those that are required from public servants”

In Collins v Godefroy, the court held that in such a case, the promise to attend court did not amount to good consideration, being merely the fulfilment of a duty owed by the plaintiff

Question 24

what was held in the case of Harris v. Sheffield Unityed Football Club? - pre-existsing public duty

Answer 24

Football club refused to pay for the extra policing resources needed on match days. Held that this was required due to the private match created by the clubs. This was therefore not in the ordinary course of duty.

Question 25

what are the facts of England v Davidson - pre-existsing public duty

Answer 25

In England v Davidson, the defendant offered a reward for anyone who should give information leading to the conviction of a felon. The plaintiff, a police constable, gave such information and claimed payment of the reward.

The defendant replied that the constable was bound to give the information by virtue of his office: this was rejected by the court, which held that the giving of such information was not something which the constable was bound to do as part of his duties. Consequently, his actions could amount to sufficient consideration to enforce his claim to the reward.

Question 26

Pre-existing contractual relationship

Answer 26

Where one party already owes a contractual duty to the other, then it is clear that a promise to fulfil that duty cannot, except in exceptional circumstances, amount to sufficient consideration.
This rule was laid down in the early case of Stilk v Myrick

Question 27

what was the test laid out in Williams v. Roffey Bros regarding Pre-existing contractual relationship?

Answer 27

This relaxed the rule greatly.
1. If A has entered into a contract with B to do work or supply goods or services to A in return for payment
and;
2. Before A has completely performed his contractual obligations, B has reason to doubt whether A will be
able to complete their obligations and
3. B promises A additional payment in return for A’s promise yo perform the obligation under contract in
time
4. As a result of giving his promise B obtains in practice a benefit or avoids a disbenefit and
5. Bs promise is not given under economic duress or fraud on the part of A then
6. The benefit to B is cable of being consideration.
This is a pragmatic approach and gives businesses more freedom. However, Clark argues that it undermines
bargain theory and blurs the line between estoppel and consideration.

Question 28

past consideration

Answer 28

Past consideration means some act carried out before a promise is made. It is well established that past consideration cannot make a promise enforceable: past consideration is no consideration.

Question 29

what are the facts of Roscorla v Thomas - past consideration

Answer 29

In that case, the
plaintiff bought a horse from the defendant. It was alleged that after the sale, the defendant promised the plaintiff that the horse was sound and free from vice. This promise was held by the court to be unenforceable: this express promise was made after the sale was complete and was unsupported by fresh consideration.

Question 30

what are the facts of Re McArdle? - past consideration

Answer 30

In Re McArdle, A number
of children were entitled under their father’s will to a house after their mother’s death.

During the lifetime of the mother, the wife of one of the children made various improvements to the home.

The children at a later date agreed with her that she would be reimbursed for this work. However, it was held that since the work had, at that point, been completed, the purported consideration was past consideration, and the promise was unenforceable.

Question 31

Exception to the rule that past consideration is not good consideration

Answer 31

In the case of Pao on v. Lau Yiu Long, it was estbalished that an act done before the giving of a promise to make a payment or to confer a benefit can sometimes be
consideration.
1. Act is done on promisor’s request;
2. Parties understood that the act was to be paid for either through payment or conferment of payment;
3. Legally enforceable if promised in advance.

Question 32

what was held in the Pinnels case

Answer 32

Agreeing to take a lesser amount for a debt in not valid consideration, so the rest of the money is still owing. This
is unless something else is given – a horse, hark or robe.

Question 33

what are the facts of D & C Builders v Rees - Pinnels case

Answer 33

The plaintiff completed building work for the defen-
dants and were owed £482 for this work. The plaintiff was in dire financial straits and pressed for payment for six months without success.

Finally, the defendant’s wife, knowing of the plaintiff’s money problems, offered them £300 in full settlement stating that if they did not accept that they would get nothing.

The plaintiff reluctantly agreed but once they got the £300 they sued for the rest. The Court of Appeal allowed their claim on the basis of Pinnel’s rule.

Question 34

what does McDermott note about the case of Williams v Roffey Bros and the Pinnel case

Answer 34

The case of Williams v Roffey Bros relaxes the rule that the performance of a duty already owed to the promisor cannot constitute consideration.

Yet, as McDermott notes,
it is clear that the judgment in Williams has not altered the rule that part payment of a liquidated debt will not constitute consideration for a promise to forgo the remainder of the amount due.
This was crystallised in Re Selectmove Ltd

Question 35

what are some exceptions to the rule in Pinnel’s case

Answer 35

a. Something extra i.e the addition of some new element which would in itself be good consideration is necessary - e.g Pinnels
b. Composition with creditors, settlements in insolvency - A debtor in such circumstances may enter into a composition
agreement with its creditors whereby each creditor accepts a lesser amount in full settlement. e.g Woods v. Roberts
c. Payment by a third party as this is a separate agreement that must be adhered to e.g HP v. Temple.

Question 36

what are the criticism of the doctrine of consideration

Answer 36

Such criticisms include that the doctrine lacks coherency and consistency. That if the parties intend to create a legal relationship, it should not matter whether there is an element of exchange between
the parties.