Consideration + Privity Of Contract Flashcards
Provide an introduction for consideration.
- Both parties must give something to the other by way of exchange.
- Dunlop v Selfridge: definition given by Sir Fredrick Pollock + approved by Lord Dunedin: ‘promise of one party, is the price for which the promise of the other party is bought, + promise thus given for value is enforceable.’
- Consideration must be certain- vague promise isn’t enough.
Explain the first element of consideration, consideration need not be adequate but must be sufficient.
Always applicable
Adequacy:
* Chappell v Nestle: consideration need not be adequate. Law’s concerned with bargains + not gifts (doesn’t need to be financial equality).
* Thomas v Thomas: law doesn’t concern itself with equivalence of consideration, as long as both parties agree it’s a valid contract.
Sufficiency:
* Consideration must be sufficient.
* White v Bluett: consideration must be be real, tangible + have some value
Explain the second element of consideration, past consideration isn’t good consideration.
Not always applicable.
* Re McArdle: if the thing you’re offering to put in a contract has already occurred- cannot be good consideration- no contract.
* Lampleigh v Braithwaite: exception- if other party later promises for what’s just been done at his request (causes C to go out their way), then courts will occasionally enforce that promise, especially if an important matter.
Explain the third element of consideration, consideration must move from promisee.
Not always applicable.
* Tweddle v Atkinson: consideration moving from promisee means a person cannot sue/be sued under a contract unless they’ve provided consideration for it.
* Bilateral contract- each person is a promisor + promisee.
* Unilateral contract- one party makes promise + other does act.
Explain the fourth element of consideration, performing an existing duty can’t be consideration for a new contract.
Not always applicable.
* Pre-existing duty is something you’re legally required to do.
* Collins v Godefroy: duty imposed under public duty to act (e.g. police doing what they’re required to do under public duty.)
* Stilk v Myrick: duty imposed under existing contract with promisor (e.g. contract of employment, merely doing one’s job.)
* Glasbrook Bros: if there’s an extra element required for new payment- there’s consideration.
Explain the fifth element of consideration, promise to accept part payment of pre-existing debt in place of whole debt isn’t consideration.
Not always applicable.
* Pinnel’s Case: payment of a lesser sum on day a debt is due can’t be in satisfaction of greater debt.
Law in Pinnels case is harsh, exceptions have been developed:
* Principle of accord + satisfaction- where there’s agreement (accord) to end contract + satisfaction (consideration) that has been voluntarily accepted. Accepting something other than money for whole debt is consideration, even if not equal to value of debt. Must be done at request of creditor, not debtor.
Explain privity of contract, with regards to consideration.
- Dunlop v Selfridge: contract can’t confer rights nor impose obligations on someone who isn’t a party to contract
-
Jackson v Horizon Holidays: privity rule caused injustice- courts tried to find ways of avoiding it- especially when it comes to rule preventing all members of a family claiming.
Exceptions When Privity Rule Doesn’t Apply: - Agency arises when one person (agent) is authorised to make contract on behalf of another person (principle). Principle + agent both bound by terms of contract- treated as same being.
Contracts (Rights Of Third Parties) Act 1999: -
S.1 Contracts (Rights Of Third Parties) Act 1999:** someone who isn’t a party to a contract may enforce a contract if:
**1)* 3rd party is expressly identified by name/member of a class/answering particular description.
2) contact expressly provides 3rd party may enforce contract.
3) Contract term is an attempt to confer benefit of term on 3rd party. - Beswick v Beswick: confirmed this.
