Consideration and Promissory Estoppel Flashcards
The definition of consideration
‘an act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought’ (Dunlop v Selfridge)
For there to be consideration
Both the promisor and the promisee must give consideration.
Potential issues with consideration
Not good consideration
The variation is a promise to pay more
The variation is a promise to pay less.
Rules of Consideration
- Consideration must not be past
- Consideration must move from the promisee to the promisor
- Performance of an existing obligation is not good consideration
- Part payment of a debt is not good consideration
Consideration must not be past:
Where one party has already acted, a later promise by either party to perform an act in return is not good consideration, as it is past consideration
Eastwood v Kenyon
Exception to ‘consideration must not be past’
The Doctrine of implied assumpsit:
Lampleigh v Brathwaite
Pao On v Lau Yiu Long Test
Pao On v Lau Yiu Long
- if certain conditions are met, the past consideration can still be good consideration
- Was it at the request of the promisor?
- Was payment understood to be due
- Would the contract be enforceable apart from this issue.
Past Consideration: Was it at the request of the promisor?
i.e. did the promise maker ask for the variation
Lampleigh v Braithwait.
Past consideration: Was payment understood to be due?
i. e. did both parties assume that payment would be made for the variation?
- This is more likely in a commercial context (Re Vasey’s Patents)
Past Consideration: would the contract be enforceable apart from this issue
i.e. there are no other consideration, acceptance of ICLR issues
Consideration distinguished from conditional gifts
Where the arrangement gives the promisee nothing to do except receive performance of the promise
- Dickinson v Abel
Consideration must move from the promisee to the promisor
In return for receiving the promise-maker’s promise, the promisee must have given consideration.
Essentially, both parties must provide consideration.
A claimant can only claim on a contract if he has provided consideration
Tweddle v Atkinson.
Exception to movement of consideration from promisee to the promisor
s. 1 Contract (Rights of Third Parties) Act 1999
3rd parties (people who are neither promisor nor promisee to the contract) can now enforce a contract between others which benefits that 3rd party, even though the 3rd party has not provided any consideration.
Consideration must be sufficient, but need not be adequate
Consideration must have some value in the eyes of the law (sufficient) even if it is inadequate (i.e. far less than the promise if worth)
Thomas v Thomas
Company giving away records at a discounted price to people who sent in three wrappers. The court held that the wrappers did constitute consideration.
Chappell v Nestle
- the wrappers represented Nestle’s increased sales of chocolate bars
Giving up a legal right is sufficient, but promising not to enforce one that you do not have is insufficient.
White v Bluett
- A son promising not to complain about his father’s properties was not sufficient consideration.
Being spared the trouble and expense of legal proceedings was deemed to be sufficient consideration.
Cook v Wright
Gambling chips in a casino were not good consideration for the money handed over by the client
Lipkin v Gorman v Karpnale
Performance of an existing obligation is not good consideration
An existing obligation is something that you already have to so, and so cannot be good consideration
a. duties imposed by law
b. Performance fo contractual duties already owed to a third party as consideration
Duties imposed by general law will not amount to good consideration
Collins v Godefroy
- A witness who had been subpoenaed could not enforce a promise to be paid to appear in court as it was his public duty to do so
Extra or special duties may be good consideration
Glasbrook Bros v Glamorgan CC