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Contract Law > Consideration and Intention > Flashcards

Consideration and Intention Flashcards

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1
Q

What is Consideration?

A
  • The price you pay for the promise (can be money, services, goods, or promise to do/not do something)
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2
Q

What are the 7 Rules of Consideration?

A
  1. Consideration must not be in the past
  2. Consideration must move from the promise
  3. Consideration must be sufficient in the eyes of the law but not adequate for the promise given
  4. Performance of a duty imposed by law
  5. Performance of a contractual duty owed to a third party
  6. Alteration promises to pay more money
  7. Alteration promises to pay less money
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3
Q

What does consideration must not be in the past mean?

A
  • If a promise comes after the consideration is given it is construed as a gratuitous promise and unenforceable
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4
Q

Eastwood v Kenyon (1840)

A
  • Eastwood borrowed money from an Heiress (consideration) to educate and improve her estate (promise)
  • Heiress promised to repay the sum
  • Heiress did not repay the sum
  • Eastwood brought a claim for the sum
  • Court ruled that she was not required to repay the sum since the consideration was in the past
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5
Q

Re McArdle (1951)

A
  • Mr. McArdle died and left his estate to his children and wife
  • Mr. McArdle Jr. lived in a property with his wife
  • The wife paid to renovate
  • The children signed a doc stating they would reimburse the wife
  • Mrs. McArdle took action to enforce the repayment
  • The court ruled they were not obligated to repay her because the renovation was in the past
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6
Q

Exceptions to Considerations being in the past

A
  1. The service must have been rendered at the promisor’s request (not a voluntary act)
  2. The parties must have understood that the act would be paid for, or that the other party would derive some benefit (later promise to pay is evidence of understanding)
  3. Payment would be legally enforceable had the promise been made before the act
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7
Q

Lampleigh v Brathwaite (1615)

A
  • Brathwaite was found guilty of murder
  • He asked the claimant to seek a pardon for him from the King
  • Brathwaite offered to pay him but did not once released
  • The court ruled that the claimant was entitled to payment because it was a requested act
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8
Q

Re Casey’s Patents (1892)

A
  • Casey managed Patents
  • After finished working, Casey was promised a share
  • Even tho his actions were in the past it was reasonable for him to expect payment
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9
Q

Pau On v Lau Yiu Long (1979)

A
  • Pau On agreed to sell shares to Lau Yiu Long
  • In fear of a price drop, Pau On made further agreements with Lau Yiu Long
  • Later Pau On tried to say the later agreements were not enforceable because of duress and no consideration
  • The court ruled that there was consideration and no economic duress
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10
Q

What does consideration must move from the promisee mean?

A
  • Consideration must move from the promisee but need not move to the promisor
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11
Q

Tweddle v Atkinson (1861)

A
  • Two fathers of newlyweds made an agreement to give their children an allowance
  • The brides father passed before any money was given
  • The son in law (Mr. Tweddle Jr. brought action to enforce the promise
  • The court ruled that Mr.Tweddle Jr. cannot sue because he was not involved in the promise
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12
Q

What does consideration must be sufficient in the eyes of the law but need not be adequate for the promise given mean?

A
  • The court does not look at adequacy because of freedom of contract and it is not the courts job to interfere in peoples bargains
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13
Q

What does “adequacy” mean in consideration must be sufficient in the eyes of the law but need not be adequate for the promise given?

A
  • The consideration provided has to be of the same value as the promise given
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14
Q

What does “sufficiency” mean in consideration must be sufficient in the eyes of the law but need not be adequate for the promise given?

A
  • The consideration must have some value in the eyes of the law
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15
Q

Thomas v Thomas (1842)

A
  • Before Mr.Thomas died he stated that he wanted his wife to continue to live in their house
  • When he died, his executives agreed with the Wife that she could live in the house for £1/month and maintained the property
  • They later changed their minds and attempted to evict her claiming the £1/month was inadequate
  • The court argued that the agreement is sufficient and need not be adequate.
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16
Q

Chappell & Co Ltd v Nestle (1960)

A
  • Nestle offered music records in exchange for 3 chocolate rappers and a small sum of money
  • The court ruled that the consideration was sufficient
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17
Q

White v Bluett (1853)

A
  • A son argued that his father wrote off his debt to him in an agreement that he would not complain about the distribution of his estate
  • The court ruled that an agreement to not argue has no value in the eyes of the law and is not sufficient
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18
Q

Ward v Byham (1956)

A
  • An estranged father promised to pay his wife £1/week for the upkeep of their child
  • The court ruled that keeping a child happy and well kept constitutes sufficient consideration
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19
Q

Is performance of a duty imposed by law good consideration?

A
  • No performance of a duty imposed by law is not good consideration
  • But if you exceed a duty imposed by law it will amount to good consideration
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20
Q

Collins v Godefroy (1813)

A
  • The claimant was called to give evidence in court against the defendant
  • The defendant offered money to the claimant to share the evidence
  • The court ruled that the claimants legal obligation to attend court and give evidence does not constitute as consideration
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21
Q

Glasbrook Bros v Glamorgan County Council (1925)

A
  • The owners of a mine asked police to help maintain order while their employee’s were on strike
  • The police agreed to help
  • The owners were not forthcoming with the money stating it was the police’s legal obligation
  • The House of Lords found in favour of the police because they exceeded their duty imposed by the law
22
Q

New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd (1974)

A
  • Cargo owner entered into a contract with Cargo carrier with a 1 year time limitation clause because it is cheaper
  • Cargo carrier entered into a separate contract with Stevedores
  • Stevedores were responsible for unloading the goods at destination
  • Stevedores damaged the goods belonging to the Cargo owner
  • The Cargo owner brought a claim against the Stevedores after 1 year
  • The court found in favour of the Stevedores because the Cargo owner benefited from the time limitation clause and the Stevedores fulfilled their obligation
23
Q

Is performance of an existing contractual duty owed to the promisor good consideration in exchange for more money?

A
  • No it is not good consideration unless there is a fresh bargain
24
Q

Stilk v Myrick (1809)

A
  • Two sailors deserted a ship and left the crew shorthand
  • The captain promised to pay the remaining crew additional wages if they got them home safely
  • The captain then refused to pay the additional sum
  • The court found in favour of the captain because they were contractually obligated to sail the ship
25
Q

Hartley v Ponsonby (1857)

A
  • After half a crew deserted a ship, the journey became hazardous
  • The captain promised the reaming sailors additional wages
  • The court said the captain provided fresh consideration because they went above and beyond what they were originally contracted to do
26
Q

North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd

A
  • A contract between the parties to build a ship for 30 million to be paid in 5 instalments
  • The defendant opened a letter of credit as a form of security which stated the bank would pay any instalments not paid
  • The builders decided they no longer wanted to build a ship due to the US $ plummeting and the cost being under priced
  • The defendants agreed to pay an additional 3 million and extended the letter of credit
  • The court found the extended letter of credit to be consideration
27
Q

Williams v Roffey Bros Ltd (1990)

A
  • The Roffey bros were in contract with Flat owners to refurbish flats and would be penalized them everyday they were late
  • The brothers were also in a separate contract with Williams for the carpentry work
  • Williams fell behind schedule so the brothers offered to pay an additional 10k but did not pay
  • The court found in favour of Williams because of the practical benefits the brothers gained by avoiding the penalties
28
Q

What key points were made from Williams v Roffey?

A

Performance of an existing contractual duty owed to the promisor can be good consideration for a promise to pay more money if there is:

  • an absence of economic distress
  • a practical benefit accrued to the promisor as a result of their promise to pay more money
29
Q

Is Part Payment of Debt good consideration?

A
  • No part payment of debt is not good consideration for a promise to forgo the remainder of debt
  • Paying part with money and the rest with something sufficient is good consideration
30
Q

Pinnel’s Case (1602)

A
  • The defendant owed the claimant $8
  • The parties agreed for the debt to be settled with $5
  • The claimant brought action to claim the remaining sum
  • Promising to accept less is not good consideration
31
Q

Foakes v Beer (1883)

A
  • Dr Foakes owed Mrs Beer £2090 for a debt
  • It was agreed that Dr Foakes would pay £500, and the remainder in £150 instalments
  • Mrs Beer brought an action for the interest on the debt
  • No consideration was provided by the claimant to not take further action
32
Q

Mrs Rees v D&C Builders

A
  • Mrs Rees owed the D&C Builders £482
  • Knowing the D&C Builders were in financial distress she offered £300 as a settlement or nothing
  • D&C Builders originally accepted the offer but then later brought a claim to recover the full amount
  • No consideration was provided by D&C Builders to accept less
33
Q

Re Selectmove (1995)

A
  • Selectmove owed the Inland Revenue money
  • An oral agreement was made that the payment could be done in instalments
  • inland Revenue later sought repayment of the full amount
  • The court ruled that there was no practical benefit in Selectmove agreeing to instalments
34
Q

MWB Business Exchange v Rock Advertising (2016)

A
  • MWB rented office spaces to Rock advertising
  • An oral agreement was made for Rock to pay its debt in instalments
  • MWB later decided they did not want to wait for the full amount
  • The courts found in favour of Rock Advertising because MWB benefited by recovering money owed and keeping Rock as a tenant
35
Q

Rock Advertising v MWB Business Exchange (2018) SC

A
  • The Supreme Court overturned the decision on this case because the oral agreement made between the parties could not be altered unless it was in writing and signed, which it was not
36
Q

Exceptions to the Rule of Part Payment of Debt

A
  • Something other than money
  • Lesser sum plus another form of consideration
  • Lesser sum paid before the due day
  • Promissory estoppel
37
Q

What is Promissory Estoppel?

A
  • Promissory estoppel stops a person from going back on their promise if someone relied on it and suffered a loss because of it
  • There must be an existing legal relationship between the parties
  • He who comes to equity must come with clean hands (you cannot use the defence if you have behaved inequitable)
  • Can only be used as a shield against someone bringing legal actions
38
Q

Central London Property Trust Ltd v High Trees House Ltd (1947)

A
  • Property Trust let a block of flats to High Trees for 99 years at an annual rent fee of £2,500
  • WW2 flats were not occupied so the annual rent fee was reduced to £1,250
  • Once the flats were occupied again Property Trust wanted to claim back the full rent, including the years from the War
  • The courts ruled that the defendants relied upon the promise to accept half
  • The courts ruled that the claimants could not claim the rent back even those there was no formal contract because of promissory estoppel but could return to charging the full rent after the war
39
Q

Combe v Combe (1951)

A
  • A husband and wife agreed that the husband would pay the wife maintenance
  • The payments stopped because the couple split
  • The wife sought to restore the payments by promissory estoppel
  • The court ruled that this was a domestic dispute and no legal agreement
40
Q

Ajayi v Brisco (1964)

A
  • Brisco agreed to sell trucks to Ajayi, with payment to be made in installments
  • Ajayi later faced difficulties and requested a suspension of payments, which Brisco agreed to.
  • Brisco later sought to enforce the original payment terms, and Ajayi argued that promissory estoppel should prevent this.
  • The courts ruled that Ajayi did not rely on Brisco’s promise
41
Q

WJ Alan & Co v El Nasr (1972)

A
  • A sale of coffee
  • El Nasr paid for the coffee using Kenyan shillings which WJ Alan accepted
  • WJ Alan later requested for the difference in exchange
  • The court ruled that promissory estoppel applied because the sellers accepted the payment
  • This case proved that detriment or loss is not always necessary
42
Q

Brikom Investments Ltd v Carr (1979)

A
  • Brikom and tenants agreed to do renovations without an increase in rent price
  • Once renovations were complete Brikom tried to increase rent
  • The court ruled that promissory estoppel applied because the tenants signed agreements which they relied on
43
Q

Collier v P & MJ Wright Holdings (2007)

A
  • Three partners owed a debt to P & MJ Wright Holdings
  • One partner had an agreement with P & MJ Wright Holdings that if he paid one-third of the debt he would no longer be liabale
  • The 2 others failed to pay their part in the debt and P & MJ Wright Holdings wanted to recover the rest from the partner who did pay
  • The court ruled that promissory estoppel applied because P & MJ Wright Holdings accepted the payment and the partner relied on the understanding
44
Q

What are Domestic Agreements?

A
  • Presumption of the court is that there is no intention to create legal relations
  • Burden is on the party that wants to show legal ramifications
45
Q

What are Commercial Agreements?

A
  • Presumption of the court is that there is an intention to create legal ramifications
  • Burden is on the party seeking to show there is no legal intention to create legal relations
  • Difficult to show no intention for legal ramifications to flow
46
Q

Balfour v Balfour (1919)

A
  • A husband promised to pay his wife an allowance while he worked abroad
  • The couple split and the wife sought to resume the payments
  • The court ruled that this was a domestic arrangement
47
Q

What needs to be proven in order to rebut the presumption in a social and domestic agreement?

A
  • Seriousness
  • Certainty of terms
  • Reliance
48
Q

Jones v Padavatton (1969)

A
  • A mother and daughter agreed that if the daughter studied abroad the mother would pay her tuition as well as provide accommodation
  • They fell out and the mother attempted to evict her daughter
  • The court ruled this was a domestic agreement
49
Q

Parker v Clarke (1969)

A
  • An agreement between an elderly couple and their niece
  • The couple agreed that if their niece moved in and shared maintenance duties she could have the house when they passed
  • The niece sold her house and moved in
  • They fell out and the niece brought legal action
  • The court found that there were legal relations because of the seriousness of the agreement
50
Q

Edwards v Skyways (1969)

A
  • Plaintiff was promised an expiration payment from his employer as an act of good will
  • The expiration payment was not forthcoming and the defendant argued it was an act of good will and did not intend for legal ramifications
  • The court ruled that there was not enough evidence that the promise was not without legal ramifications
51
Q

Bowerman v ABTA (1996)

A
  • ABTA displayed a sign that stated that customers who booked through ABTA would be refunded if the company went out of business
  • Bowerman booked a trip and the company collapsed
  • The court ruled that the sign was an offer and a promise to customers
52
Q

Blue v Ashley (2017)

A
  • Blue and Ashley had an informal conversation in a pub where Ashley promised to pay Blue £15 million to help raise the share price of his company
  • Blue later sued Ashley for the £15 million
  • The court ruled that there was no legally binding contract because the conversation was seen as banter

Contract Law (3 decks)

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