Consideration, intention to create legal relations and privity Flashcards
Four requirements for a contract in English law
(1) Offer (2) Acceptance (3) Consideration (4) Intention to create legal relations
Five rules of consideration:
(1) Consideration must be something specific, but need not be a ‘fair’ price
(2) Paying for something that’s already done isn’t consideration
(3) Consideration must move from the promisee
(4) Doing something you’re already under a duty to do isn’t consideration
(5) Paying only part of an existing debt isn’t consideration
Case showing that even paying a £1/year rent can be consideration
Thomas v Thomas (1842)
Case showing that even providing something as trivial as chocolate wrappers can be consideration
Chappell v Nestle (1960)
Case in which a vague promise was not specific enough to be good consideration
White v Bluett (1853)
A son promised his father he would “stop complaining” in return for writing off a debt - this was not tangible enough to be good consideration
Case in which a promise to keep a child “happy” was good consideration
Ward v Byham (1956)
It was good consideration because there is no legal duty to keep a child “happy”
Case showing that a promise to pay for work which has already been undertaken is not good consideration
Re McArdle (1951)
Bungalow repairs for £488 were completed - a promise to pay for them was only made afterwards - but past consideration is not good consideration
Case showing that even when a fee is not agreed in advance, there can be consideration when it is implied there will be payment, because work has been undertaken at a person’s request and would generally be paid for
Lampleigh v Braithwait (1615)
A man secures a pardon for another man from the King - they hadn’t agreed a fee, so the accused man says there was no consideration, but held it was implied there would be payment
Case showing that in a commercial context, it can be implied that payment will be made, so even if the amount is not agreed there is still consideration
Re Casey’s Patent (1892)
Case showing that doing something you’re already under a statutory duty to do can’t be consideration
Collins v Godfrey (1831)
Case showing that doing something you’re already under a contractual duty to do (e.g., because it’s your job) can’t be consideration
Stilk v Myrick (1809)
Crew on a ship in the Baltic Sea - when some crew abandon the ship, the others say they’ll only continue for an additional sum - but they were under a duty to continue crewing the ship anyway so continuing the voyage can’t be consideration for that sum
Case showing that when you take on extra duties in an employment context, this can be good consideration
Hartley v Ponsonby (1857)
Ship - many crew desert - the remaining crew say they’ll only continue for an additional sum - their agreement to continue is acceptable consideration for this sum because the nature of their duties has become harder and more risky
Case showing that when you take on extra duties than you were statutorily obliged to, this can be good consideration
Glasbrook Bros v Glamorgan County Council (1925)
Police agree to provide extra policemen during a strike on payment of fee - although they were obliged to provide police anyway, they had done more than necessary so this was good consideration
Case showing that doing something you’re already obliged to do can sometimes be good consideration, so long as the promisor receives a practical benefit (e.g. avoiding a late payment fee)
Williams v Roffey (1990)
Case showing that part-paying a debt is not good consideration for discharging the rest of the debt, when you end up paying less overall (and there is no practical benefit to the creditor) - even when you’re acting on the creditor’s agreement
Foakes v Beer (1884)
Case showing you can’t sue someone who is not privy to the original contract
Dunlop v Selfridge (1915)
Tyres are sold, with a promise not to re-sell below a certain value - then they are re-sold to someone who does sell them below this value. But the initial seller cannot sue this new party
Case showing an exception to the rule on privity in the case of family bookings
Jackson v Horizon Holidays Ltd (1975)
Damages can be awarded to a family for a family holiday, even though only the father made the contract
Case showing that consideration must move from the promisee
Tweddle v Atkinson (1861)
Two fathers-in-law of a couple agree with each other to pay the couple some money. The son - the husband in this couple - cannot sue his father-in-law for the money, because he is not privy to the contract, and so has not provided consideration
Case showing the concept of a collatoral contract
Shanklin Pier v Detel (1951)
Case about painting a pier
Shanklin instructs a painter to buy Detel paint for the pier, on the basis of Detel’s promise of long-lasting durability. The paint is not of good quality. Although Shanklin is not privy to contract, there is a collatoral contract, because they have relied on Detel’s promise in instructing painter to buy it
Contracts (Rights of Third Parties) Act 1999: a third party can enforce a contract when…
(1) They are expressly mentioned in it (by name or as a class), and either
(2a) the contract says they can enforce it, or
(2b) the contract was made to benefit them
A problem with the Contracts (Rights of Third Parties) Act 1999 is that…
…a company can exclude enforcement under the Act in its terms
What are the rules on intention to create legal relations?
Business contexts: intention to create legal relations is presumed to apply (though this can be rebutted)
Social and domestic contexts: intention to create legal relations is presumed NOT to apply (though this can be rebutted)
Case in which a contract had a clause saying it was “binding in honour only”, showing there was no intention to create legal relations
Jones v Vernons Pools (1938)
Football pools contract
Case showing that social and domestic arrangements are presumed not to be legally binding
Balfour v Balfour (1919)
