Consideration & Promissory Estoppel Flashcards
To make a valid contract, the parties must express themselves how?
- So their meaning can be determined with a reasonable degree of certainty
No promise will be enforceable unless? (2)
- it is supported by consideration
- Or it is made in a Deed
Is a gratuitous promise enforceable?
- No
- Unless it is made in a deed
Rules of consideration? (2)
- Consideration must be of economic value
2. Consideration must be sufficient but need not be adequate
Is past consideration good consideration?
No
- Roscorla
- Re McArdle
-It can be good under Pau On
Past Consideration can be good under Pau On if? (3)
1) Act was done at the promisor’s request
2) Parties understood that the act was to be remunerated
3) Remuneration would have been legally enforceable had it been promised in advance
Is forbearance good consideration?
Yes
Is an existing duty good consideration? (3)
1) Existing duty imposed by law
o Not good consideration unless you do something more than you are required to do
• Glasbrook Brothers v Glamorgan County Council (1925)
• Ward v Byham (1956)
2) Existing duty owed to promisor
o Stilk v Myrick (1809),
o Williams v. Roffey Bros
- Glidewell’s test
3) Existing duty owed to third party
o Pao On
o can be good consideration
Williams v Roffey Bros
- Glidewell’s Test (6)
- Glidewell LJ created the test
(i) if A has entered into a contract with B to do work for, or to supply goods or services to, B in return for payment by B, and
(ii) at some stage before A has completely performed his obligations under the contract B has reason to doubt whether A will, or will be able to, complete his side of the bargain, and
(iii) B thereupon promises A an additional payment in return for A’s promise to perform his contractual obligations on time, and
(iv) as a result of giving his promise B obtains in practice a benefit, or obviates a disbenefit, and
(v) B’s promise is not given as a result of economic duress or fraud on the part of A, then
(vi) the benefit to B is capable of being consideration for B’s promise, so that the promise will be legally binding
Defence of Promissory Estoppel will occur if (6)
- A is contractually bound to perform a service or pay money to B
- A is not able to perform in accordance with the contract
- B agrees to allow A to perform differently or not at all
- In reliance on that promise A does so perform differently or not at all
- B then decides to sue A claiming the original performance is still due
And the court decides that it would be INEQUITABLE in the circumstances to allow B to enforce his strict legal rights
Then A’s defence of promissory estoppel will succeed
Requirements for Promissory Estoppel? (5)
- Promise that gives rise to the estoppel must be a clear and unequivocal promise
- Promisee must have altered his position in reliance on the promise made
- Must be inequitable for the promisor to go back on the promise and insist upon strict legal rights under the contract
- Promissory estoppel only serves to suspend, not wholly to extinguish, the existing obligations
- Promissory estoppel cannot create a cause of action
Bret v J.S. (1600) Principle
Consideration must be of economic value
White v Bluett (1853) Principle
Consideration must be of economic value
Consideration must be sufficient but need not be adequate
Forbearance can be good valid consideration if it is worth something
Thomas v Thomas (1842) Principle
Consideration must be of economic value
Motive not important
Pitt v PHH Asset Management (1993) Principle
Consideration must be sufficient but need not be adequate
Pitt v PHH Asset Management (1993) Facts
- P mortgage the residence, selling it
- P bid on cottage
- PHH withdrew P’s offer, received a higher offer
- P sued
- PHH said they had a lockdown agreement
- PHH said there was no consideration in the agreement
- Was there valid consideration?
- Lockdown agreement (agreement not to negotiate with someone else)
- P had done enough for valid consideration to support the lockout agreement
- Made enough promises
Roscorla case Principle
Past consideration is not good consideration
Roscorla case Fact
- Sale of a horse (like a car)
- Sold for £30
- Seller said it was a great horse
- Horse was not good
- Can buyer sue the seller
- Held sale was concluded before promise was made
- Sale was done, promise is not enforceable
- It was a gift promise, not part of transaction
Re McArdle Principle
Past consideration is not good consideration
Re McArdle Facts
- Made improvements on a bungalow
- On fathers estate
- Father died, left to wife
- McArdle did work on a bungalow
- Agreed to pay percentage of bungalow sale
- Promised pay
- Valid consideration?
- Promise to pay was made after the work was done, therefore, it is past consideration
- Held: not enforceable
