Consideration, Privity, Agency and Capacity Flashcards
what is the principle that past consideration is insufficient consideration?
e.g. find a wallet then person gives u £50, it doesnt count as consideration BUT there are exceptions to this principle
what 3 conditions must be satisfied for a past act to be good consideration?
act must be done at promiser’s request e.g. asked for it to be done and promised money after as they’d done what was asked of it
parties must be understood from outset that act was to be rewarded some way even if not specified
the payment or conferment of other benefit must have been legally enforceable had it been promised in advance e.g. intention
is the performance of an existing duty imposed by law sufficient consideration in exchange for a promise of payment?
NO but if exceed this duty then can be consideration so will be entitled to more payment etc
what is the general rule about consideration in relation to existing contractual duty owed to a third party?
performance of an act they were bound to is sufficient consideration for a separate contract with someone else e.g. can use one act for consideration with multiple contracts
what is the general rule about consideration in relation to existing contractual duty owed to the other party
not sufficient consideration unless they confer additional practical benefit e.g. they won’t be in breach with a different contract or they get it done quicker
is part payment of debt consideration?
no- debtor is usually bound to pay the full amount of an undisputed debt
what is the exception to the rule on consideration and part payment of debt?
where the debtor can show that they gave something different e.g. pays less but pays early and this is more beneficial to creditor
if part payment is by a third party it can be good consideration as action cannot be brought against them as they did it to be nice etc
what is promissory estoppel?
if neither exception above applies, can use this so that a creditor may be prevented from going back on a promise to accept part payment if in all circumstances it would be unfair for the creditor to do so
what is promissory estoppel in simple terms?
if you have made a promise not to enforce your legal rights (impliedly or expressly) and the promisee has relied on that promise even though they have not provided anything in return, then if you try to enforce your legal rights you will be estopped if it would inequitable in all circumstance to do so
what are the conditions for promissory estoppel to apply?
must be a clear promise to waive a strict legal right (implied or by conduct)
promisee must act on the promise
can only be used as a defence not to give rise to a cause of action
must be inequitable for the promisor to go back on their promise
how does promissory estoppel apply for continuing obligations e.g. rent
when promiser agrees to accept reduced rate, must give reasonable notice to end this reduced rate
if have given an end date to the reduced rate they can just go ahead and exercise legal right to request full rate
how does promissory estoppel apply to one-off debts?
more unclear here- as part payment of debt not sufficient consideration as have only fulfilled what they were always going to do so creditor can go back on promise as there is no consideration given
what is doctrine of privity?
only parties to a contract can acquire rights under it and only parties to a contract can be subject to liability under it- this prevents a third party from enforcing a contract in order to get the benefit of it
NOW 3rd parties can if the contract expressly provides they can and the contract shows that the 3rd party will get a benefit
what is apparent/ostensible authority
no actual authority from principal but agent could still form a binding contract- even if they are just unsure of their authority or didn’t know they didn’t have the authority to act
how can a contract be ratified?
principal validates the contract even though agent had no authority to enter into it
principal will be bound as it is as if agent had authority all along
