Consideration at Common Law

Question 1

What is required for a valid contract?

Answer 1

Consideration under English law.

Question 2

How is consideration different from misrepresentation?

Answer 2

It is about considering whether the promise is enforceable.

Question 3

What exchange is consideration observing?

Answer 3

The exchange of things, not the exchange itself.

Question 4

What is consideration?

Answer 4

Consideration is about tracing the purpose and motivation behind one’s decision to enter into the legally binding contract.

Question 5

What does consideration originate from?

Answer 5

In actions in assumpit: an action brought for something that was bound to happen.

Question 6

What is the bargain theory?

Answer 6

Consideration can be found in the course of identifying the bargain inherent in the formation of the contract. Facilitates the bargain involved.

Question 7

What is a bargain?

Answer 7

A form of exchange that is motivated by self-interest or where the parties may feel it would be mutually advantageous for them.

Question 8

What was consideration defined as in Currie v Misa?

Answer 8

‘Some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other”.

Question 9

Must it be sufficient or adequate for consideration?

Answer 9

Consideration must be sufficient.
-Does not matter how much you give, instead it must be of value.

Question 10

What is adequacy for?

Answer 10

Equitable courts.

Question 11

When is past consideration good?

Answer 11

-The act was done at the promisor’s request.

-The parties must have understood that the act was to be remunerated.

-Payment or benefit received must have been legally enforceable.

Question 12

What must be ignored?

Answer 12

The benefit, detriment theory.

This definition does not take into account how in a bilateral contract it is important to assess both sides of the contract which is the exchange of promises from both sides.

It must be a legally significant benefit or detriment as opposed to a factual one.

Question 13

What does the bargain theory claim?

Answer 13

Anything is consideration if it was that parties promised to each other

Question 14

What does sufficient mean?

Answer 14

The benefit or detriment need not be equivalent in value to what is received in return.

Question 15

How does sufficiency give the parties freedom?

Answer 15

They are free to make their own agreements and apply their own valuations
and so the courts will not interfere if a promisor thinks that it is worth providing a benefit in return for something which, on the face of it, is of little value.

Question 16

What is giving up a legal right to sue a promisor?

Answer 16

This is a legally sufficient benefit or burden, even if the claim is speculative (see Pitt v PHH Asset Management Ltd (1993)) and this is something which the courts actively encourage in order to avoid unnecessary and expensive litigation.

Question 17

What will the courts only enforce?

Answer 17

Bargains.

Question 18

What was the crucial finding in Nestle?

Answer 18

Nestlé had requested the wrappers as the consideration for their promise. This request provides the reason why a benefit was conferred on Nestlé and it is what makes the promise a bargain.

Question 19

What did Lord Dunedin in Dunlop Pneumatic Tyre Co. Ltd v Selfridges say that consideration is?

Answer 19

‘The price for which the promise of the other is bought’.
The courts look for a request because this shows that the promisor intended to get something in return for the promise and intended to create a bargain.

Question 20

What is not good consideration?

Answer 20

Past consideration, it refers to a time before the making of a promise.

Question 21

What is executed consdieration?

Answer 21

Consideration performed after the promise and in return for it.

Question 22

Why is executed consideration good consideration?

Answer 22

Even though it is past in relation to the dispute or time of enforcement, it would not be past in relation to the time the promise was made.

Question 23

What is an exception to past consideration?

Answer 23

When there was an earlier implied request and an understanding from the beginning that the act would be paid for.

Question 24

What does not usually form good consideration?

Answer 24

Performance of a non-contractual obligation.

Question 25

Can the performance of a contractual obligation owed to a third party form good consideration?

Answer 25

Yes it can be good consideration.

Question 26

Can the promise to perform or the performance of an existing duty be good consideration?

Answer 26

It can be good consideration for the fresh promise, provided that there is no duress.

Question 27

What was the problem in Adam Opel GmbH v Mitras Automotive (UK) Ltd Costs?

Answer 27

The presence of duress that was the problem rather than the absence of consideration.

Question 28

When can the original contract be rescinded?

Answer 28

By mutual agreement if both parties still have obligations to perform under it, otherwise there will be no consideration on one side of the agreement to rescind the contract.

Question 29

What happens when a contract is rescinded?

Answer 29

The original contract is freely set aside by each party giving up its rights under it and then a new promise is made for fresh consideration which is not the subject any longer of a previously existing duty.

Question 30

Is is still good if the consideration is part payment of debt?

Answer 30

The performance of a contractual duty owed to the promisor is not good consideration has also governed agreements to discharge a debt.

Question 31

Where must the consideration move from?

Answer 31

From the promisee.

Question 32

Why was non-bargain promises not enforced in Combe v Combe?

Answer 32

The husband had not made a bargain that in return for his promise to pay his ex-wife, she would refrain from applying to the courts for maintenance. She did that of her own volition.

Question 33

What is estoppel?

Answer 33

A principle which prevents a person who leads another to believe in a certain state of affairs from going back on such words or conduct when it would be unjust or inequitable to do so.

Question 34

What is estoppel not?

Answer 34

It is not a contractual doctrine in the strict sense.
it is not concerned with enforcing agreements that are supported by consideration (bargains).

Question 35

In High Trees, what did Denning state the four promises are?

Answer 35

1)The promisor must intend it to be binding.

2)He must intend it to be acted upon.

3)It must be acted upon.

4)The promisor must attempt to act inconsistently with his promise.

Question 36

What was concluded in Dunlop v Selfridge, which was not decided in Tweedle v Atkinson?

Answer 36

The fact of not being a party, rather than simply the failure to provide consideration, became an independent ground for not being able to enforce a contract.

Question 37

What did Denning state in the High Trees case?

Answer 37

‘A promise intended to be binding, was intended to be acted upon and in fact acted upon is binding so far as its terms properly apply’.

Question 38

What is not good consideration regarding debt?

Answer 38

A promise to accept part payment in discharge of the whole debt is not good consideration as the debtor is already obliged to pay that part of the debt.

Question 39

When may a promise regarding debt be binding?

Answer 39

If the debtor goes beyond the existing obligation at the creditor’s request, for example by paying in kind or in a different manner, etc.

Question 40

What was the rule in Stilk v Myrick?

Answer 40

A promise to perform a contractual obligation already owed to the other party will not constitute good consideration.

Question 41

Who thought a practical benefit was sufficient in Williams v Roffey?

Answer 41

Glidewell LJ

Question 42

What case firs laid down the part payment of a debt rule?

Answer 42

Pinnel’s case - a rule later approved in Foakes v Beer.