Consideration and Promissory Estoppel Flashcards
What is consideration?
A promisee must provide consideration for their promise either by incurring some detriment or by conferring a practical benefit on the promisor
Requirements of consideration
1) must move from promisee, but need not be for the promisor’s benefit
2) it is usually given at request of promisor
3) a benefit enjoyed/detriment suffered - forbearance can constitute consideration
4) must be sufficiently referable, connected or induced by the promise
5) it must be of economic value
6) needs not be adequate but must be sufficient
What does “consideration need not be adequate but must be sufficient” mean?
The consideration must have value in the eyes of the law (sufficiency) but need not be of equal value (adequacy).
Judicial definition of consideration
Currie v Misa
“a valuable consideration in the sense of the law, may consist of some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other”
Consideration MUST move from the promisee
Tweedle v Atkinson
Two fathers made promise to pay their children sums of money upon marriage. One died before paying and so the other’s son sued his estate.
He couldn’t bring an action as no consideration moved from the son for the promise.
(But note now Rights of Third Parties Act will allow).
A promise to abstain from what one has no right to do is no consideration
White v Bluett
Mr B lent money to his son. Executor of his estate on death sued the son for the money back. Son claimed that refraining from complaining about division of estate was consideration and could keep money.
Court held no good consideration - he had no right to complain about the division of the estate anyway.
A practical benefit is sufficient for consideration
Williams v Roffey Bros.
Sub-contracted work for building flats. W in financial difficulty, R going to be liable for penalty (late completion). Extra payment offered to W for on time completion.
Work finished on time. Issue whether consideration in promise for extra payment to fulfil pre-existing duty.
Held: practical benefit conferred by avoiding penalty charge and saved time and resources on not looking for new contractors.
Consideration must be something of economic value
Thomas v Thomas (1842)
On death - husband promised wife home for life. Executors of will agreed to this “in consideration of John’s desires” provided she pay £1 p/a rent and kept premises in good repair. Later refused to complete.
Held: Provision for payment and the obligation to repair is part of an express agreement and is quite sufficient consideration for a contract.
The moral feeling which motivated the arrangement is not relevant.
Trivial things can be sufficient consideration
Chappel & Co v Nestle
Advert to provide customers with copy of record if sent 7p with 3 Nestle chocolate bar wrappers.
Publisher entitled to music royalties of 6.25% of retail price for records sold. Nestle tried to argue gift (as they made loss not profit) and wrappers had no value.
Held:the wrappers were part of the consideration price, and an injunction was granted - acquiring wrappers might involve expenditure otherwise not incurred.
Past consideration is not good consideration
Re McArdle
Daughter-in-law undertook repairs on house, forming part of family estate.
After completion other children agreed to pay her back when estate to be distributed but changed mind upon mother’s death.
The promise was unenforceable as all the work had been done before the promise of payment was made
Exception to past consideration rule: when done at promisor’s request
Lampleigh v Braithwait
B due to be hanged. Asked L to seek pardon from King.
Upon release promised to pay £100, later refused.
Lampleigh could recover the promised payment because the act, though performed in the past, was requested by defaulting party.
Duty imposed by general law or public duty is generally not consideration
Collins v Godefroy
Godefroy promised Collins six guineas if he would attend court to testify on his behalf.
Promising something that have to do anyway is not incurring a detriment so no consideration.
If you go above performing a public duty then this can be consideration
Ward v Byham
Husband agreed to pay mother of his child sum provided child was ‘well-looked after and happy’. When payment ceased he argued that existing public duty to look after child so no consideration.
Court held that role of parent is to maintain a child, “happy” is going beyond so consideration for payments.
In a situation where there is an existing contractual duty owed to a third party this is good consideration
The Eurymedon
Contract for transport of drill had a clause in it excusing liability for damage of drill for the ship’s owners and ‘any servants, agents, and independent contractors employed by the carriers’.
Third party, C, damaged drill. Difficulty in locating consideration from A to C.
Held: consideration supplied by C was the performance of their contractual duty owed to B.
Performance of an existing contractual duty is not sufficient consideration for any additional payment
Stilk v Myrick
Sailors that desert ship. No consideration for captain’s promise to divide wages of deserters among rest of crew as already obliged to do everything to bring ship home in original contract.
