Consideration & Promissory Estoppel

Question 1

Consideration

Answer 1

Refers to something of value that each party agrees to give or do for the other as part of a contract. It can be money, services, goods, or a promise to do (or not do) something. For a contract to be valid, there must be consideration exchanged between the parties

Question 2

Rules of Consideration

Answer 2

1. Consideration must not be in the past
2. Consideration must move from the promise
3. Consideration must be sufficient in the eyes of the law but need not be adequate for the promise given
4. Performance of a duty imposed by law
5. Performance of a contractual duty owed to a third party
6. Alteration promises to pay more money
7. Alteration promises to pay less money

Question 3

Consideration: Practical Scenario

Answer 3

• I have a hamster, I will it you for 10 pounds. yes, agreed
• thank you for mowing my lawn, would you like one of my hamsters? Yes, please.

Question 4

Rule #1 Consideration must not be in the past

Answer 4

Means that in a contract, the exchange of something valuable (consideration) cannot be based on something that has already been done. Must involve a present or future act or it is not enforceable.

Question 5

Eastwood v Kenyon (1840)

Answer 5

Eastwood v Kenyon (1840): Eastwood was a guardian of a young heiress who borrowed 140 pounds to educate and improve her estate, she promised to repay the sum, when the money was not forthcoming Eastwood brought an action against her to enforce but the court stated it was not enforceable because the consideration was in the past.

Question 6

Exception to Rule #1

Answer 6

• the service must have been rendered at the promisor’s request
• The parties must have understood that the act would be paid for, or that the other party would derive some benefit
• payment would be legally enforceable had the promise been made

Question 7

Lampleigh v Braithwaite (1615)

Answer 7

Braithwaite was found guilty of murder and was in prison. The defendant approached the plaintiff and said to go to the king and ask for a pardon on his behalf, he did and went to the plaintiff several times and asked for the pardon and he in fact is granted the pardon, Braithwate says to the plaintiff when he comes out of prison he will pay him 100 pounds. The exchange already happened in the past - he was asked to complete the act by the defendant, and the court said a voluntary act done before the promise is made would not constitute good consideration. He did not act voluntarily and was asked to go to the king and ask for pardon. Exception: past consideration can be valid it it was performed at the request of the promisor.

Question 8

Re Casey’s Patent (1892)

Answer 8

Normally, if you do something for someone and they later promise to pay you, that promise isn’t enforceable because the act was already done without any prior agreement.

In Re Casey’s Patents, Casey helped manage patents, and afterward, he was promised a share in them as a reward. The court held that this was enforceable because:

The work was done at the request of the other party (not just volunteered).
There was an implied promise that Casey would be paid in some way for his work, even if the exact terms were decided later.

So, if the service is done with an expectation of payment and later a promise is made, it can still count as valid consideration.

Question 9

Pau On v Lau Yin Long (1979)

Answer 9

In this case, Pao On agreed to delay selling shares to protect the company’s value, and Lau Yiu Long later promised to compensate him. The court said the promise was enforceable because:

The act (delaying the sale) was done at the promisor’s request.
There was an understanding that the act would be compensated later.
The promise would have been enforceable if it had been made in advance.
So, past consideration is valid if the act was done at someone’s request, with an expectation of payment, and later formalized.

Question 10

Rule #2: Consideration must move from the promisee

Answer 10

the person who is receiving the promise (the promises) must give something of value in return for the promise. this means that only the person who provides consideration (something of value: i.e. money or services) can enforce the promise made in the contract. If the promise doesn’t provide anything of value, they can’t hold the other party to their promise.
the consideration does not need to move directly to the promisor (the person making the promise). It can move to a third party instead. the only thing that matters is that the promise gives something of value as part of the agreement, whether it benefits the promisor or someone else. the thing that you give in exchange for the promise has to come from you the promisor, it cannot come from someone outside the agreement.

Question 11

Tweedle v Atkinson (1861)

Answer 11

Two fathers agreed to give an allowance to their children, who had just married. The bride’s father died before paying any money. Tweedle was intended to be the beneficiary of the agreement, but he did not provide any consideration (he didn’t give anything of value in return for the promises made by the fathers) Tweedle Junior brought an action against the estate to enforce the promise. the court ruled that Tweedle could not enforce the contract because he had provided no consideration. although the agreement was made for his benefit, he wasn’t part of the value exchange between the two fathers. the court emphasized that a person who is not part of the consideration cannot enforce a contract, even if it was made for their benefit. It shows that while the benefit of the contract could go to a third party (tweedle), the third party still cannot enforce the contract unless they have themselves provided consideration.

Question 12

Rule #3: Consideration must be sufficient in the eyes of the law but need not be adequate for the promise given

Answer 12

In a legal context, sufficiency means consideration (the thing of value being exchanged) has to have some value in the eyes of the law. It doesn’t have to be money - it could be a service, a promise, or an object - but it must be something the law considers valid.

Adequacy means the law doesn’t care if the consideration is a fair or equal exchange. For example, if someone agrees to sell their car for $1, as long as both parties agree to the terms, the law will still recognize the contract, even though $1 is not an “adequate” price for a car. the value exchanged doesn’t have to match in terms of worth - it just has to exist.

As long as something of legal value is given, the courts will uphold the contract, even if one party gets a much better deal than the other.

Example: If I promise to sell you my car that is worth $30,000 for $1 would be sufficient. It doesn’t need to be equivalent in value.

Giving up something you had no right to do in the first place is not good consideration.

Exception: BUT if you exceed a legally imposed duty that can amount to good consideration.

Question 13

Thomas v Thomas (1842) (Adequacy)

Answer 13

Before Mr. Thomas died he stated he wants his wife Mrs. Thomas, to be allowed to live in one of his houses. After his death, his executors agreed to let her stay in the house for a rent of 1 pound per year and required her to keep the house in good repair. Later, the executors tried to remove her from the house, and she took them to court. the court held that the 1 pound per year and her agreement to maintaim the house were valid consideration, even though the rent was far below what the property was worth. The court didn’t care that the rent was not “adequate” or a fair price for living in the house. what mattered was that there was “sufficient” consideration: Mrs. Thomas agreed to pay something of value (the 1 pound and the promise to maintin the house), which made the agreement legally binding.

Question 14

Chappell & Co Ltd v Nestle (1960) Sufficiency

Answer 14

The case demonstrates the principle that consideration must be suffificent but need not be adequate in the eyes of the law. Nestle ran a promotion where customers could get a music record (a copyright song owned by Chappell & Co) by sending in three chocolate bar wrappers along with a small payment. Chappell & Co argued that the chocolate wrappers had no real value and shouldn’t count as part of the consideration. They claimed the promotion infringed on their copyright, as it allowed people to get the records too cheaply. The court had to decide whether the chocolate wrappers could be considerded valid consideration. The House of Lords ruled that the wrappers were sufficient consideration, even though they were essentially worthless once used. The wrappers were seen as part of the deal because customers had to go out and by the chocolate bars in order to participate in the promotion. The case settles the sufficiency aspect by affirming that consideration doesn’t need to have a high or marketable value (it doesn’t need to be “adequate”), but it must be something of legal value - in this case, buying the chocolate and sending in the wrappers fulfilled this requirement. The key is that the consideration was something Nestle asked for in exchange for the record, so it was sufficient for the contract, even if it was trival in value.

Question 15

Ward v Byham (1956) Sufficiency

Answer 15

A mother (Ms. Ward) was promised by the father of their child that he would pay her 1 pound per week if she ensured that their child was “well looked after and happy.” At the time, the mother alreadt had a legal duty to care for the child, so the father argued that her promise to look after the child wasn’t valid consideration since she was already required by law to do so. However, the court held that the mother’s promise to kepp the child happy and well looked after was sufficient consideration. Even though she had a legal duty to care dor the child, going beyond that duty (ensuring the child was happy, which wasn’t a strict legal requirement) was something extra she promised to do. The court ruled that this went beyond her existing obligations, and therefore, it was sufficient consideration ti make the father’s promise of payement enforceable. This case demonstrates the sufficiency doesn’t mean the consideration has to be entirely new or extraordinary; it simply has to be something that the law recognizes as having some value, even if it is related to an existing obligation. In this case, ensuring the child was happy was considered sufficient consideration, making the father’s promise enforceable.

Question 16

Rule #4: Performance of a duty imposed by law

Answer 16

Performance of a legal obligation (something the law tells you to do) is not a consideration for a promise. BUT if you exceed a duty imposed by law it will amount to good consideration. For example: this could be an obligation like following traffic laws, paying taxes, or, as in the example of parenting, providing basic care for your child. If you promise to do something that you are already legally required to do (your legal duty), this does not count as valid consideration for a new contract. you can’t use an existing legal obligagtion as the “something of value” to enforce a promise from someone else. For example, a police officer can’t ask for extra payement their regular duties, like investigating a crime, because that’s something they already required to do by law.

Question 17

Collins v Godfrey (1813)

Answer 17

Collins was subpoenaed (legally required) to appear as a witness in a court case. Godfrey promised to pay him for his time if he testified. However, Collins was laready obligated by law to attent court because of the subpoena. When Godfrey refused to pay, Collins tried to enforce the promise. The court ruled that Collins could not enforce the promise becuase he was already legally required to attent court as a witness under the subpoena. since Collins was performing a duty that the law imposed on him, his act of attending court could not could not count as valid consideration. In other words, you can’t enforce a contract if the only thing you are offering in return is something you’re already legally bound to do. Doing something you’re already required to do by law - like testifying in ocurt - doesn’t provide sufficient consideration to create a new contract.

Question 18

Glasbrook Bros v Glamorgan County Council (1925)

Answer 18

Minors strike, the owners of a mine whose workers were on strike sought the assistance of the police to get the men who weren’t stiking across to their jobs and wanted the police to come and maintain order, the police came and inspected the situation saying that a mobile police escort would be sufficient. The mine owners wanted on the spot coverage and would pay them for doing so. The owners of the mine refused to pay and said it is their legal obligation to make sure something is maintained. The House of Lords sided with the police and that mobile coverage should be compensated because providing this act was going beyong their legal obligation.

Question 19

Rule #5 Performace of a contractual duty owed to a third party

Answer 19

doing somehting that you have promise to do for someone else (a third party), but another person also benefits from it. For example, if you have a contract with Person A to do a ask, and Person B promises to pay you for doing that same task, your performance of the task can be valid consideration for Person B’s promise, even though you were already obligated to do it for a Person A. In short, it means fullfilling an obligation you owe to one person, but using it to form a new agreement with another person.

Question 20

New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd (1974)

Answer 20

In this case, a company (Satterthwaite) contracted with a shipper to transport goods. New Zealand Shipping (NZ shipping) was the company responsible for unloading the goods as part of this shipping contract. WHen the goods were damaged during unloading, Satterthwaite sued NZ Shipping. However, NS Shipping claimed they were protected by an exemption clause in the original contract between Satterthwaite and the shipping company. The legal question was whether NZ shipping, who was not originally a party to the contract, could rely on this exemption clause. NZ Shipping argued that that by unloading the goods (which they were already contracgtually obligated to do for the shipping company), they had provided valid consideration and were therefore entitled to the benefit of the exmeption clause in the contract. The Privy Council ruled in favor of NZ Shipping, holding that perfornance of a contractual duty owed to a tfhird party (in this case, unloading the goods for the shipping company) could indeed count as valid consideration in forming a contract with a different party (Satterthwaite). Even though NZ Shipping was already bounded by its contract with the shipping company, its performance of unloading the goods was enough to form a new agreement with Satterthwaite. This case fits the rule by confirming that performing a contracgtual duty owed to a third party can be valid consideration for a seperate agreement. It doesn’t matter if you’re already obligated to do something for one person - as long as another person benefits and agrees, it can still count as consideration.

Question 21

Rule #6: Performance of an existing contractual duty owed to the promisor

Answer 21

Contractual re-negotion and to pay more money for the thing you are contractuallly obligated to do anyway. Means that if you are already bound by a contract to do something for someone (the promisor), doing that same thing usually cannot count as new consideration for another promise from them. For example, if you have already agreed in a contract to paint someone’s house for $500, and they later promise you an extra $100 just to finish the job, you can’t enforce the extra $100. This is because you’re already obligated to paint the house under the originial agreement, so you’re not offering anything new in return for the extra money. In short: if you’re doing something you’re already contractually bound to do, you can’t use that same action as new consideration for a new promise from the same person (the promisor). BUT if you go beyond your contractual obligation it could amount to good consideration

Question 22

Stilk v Myrick (1809)

Answer 22

A group of sailors, includign Stilk, were contracted to sail a ship from London to the Baltic and back. During the voyage, two cre memebers deserted, and the captain promised the remianing sailors extra pay if they completed the voyage short-handed. However, when they returened, the captain refused to pay the extra money. Stilk sued, claiming he was owed the additional wages.The court ruled in favor of the captain, stating that Stilk was already contractually bounded to complete the voyage, regardless of how many crew memebers were present. Since Stilk was performing his existing duty (sailing the ship), his performance could not count as valid consideration for the captain’s new promise of extra pay. This case reinforces the principle that if you already obligated to do something under a contract, doing that same thing cannot be considered new consideration for a fresh promise from the same party. In other words, youcan’t claim extra benefits for something you were already required to do under the original agreement.

Question 23

Unless there is a fresh bargain… Hartley v Ponsonby (1857)

Answer 23

this case illustrates an importanct exception: if the circumstances change significantly and the party doing the work goes beyond their original duty, there can be a fresh bargain, making the new promise enforceable. In this case, some sailors deserted the ship. However, in Hartley v Ponsonby, the desertion was much more severe - so may sailors deserted that it became dangerous and risky for the remaining crew to continue the voyage. The captain promised the remaining sailors extra pay to complete the voyage. Unlike Stilk’d case the court ruled that the sailors were entitled to the extra pay. The reasoning was that the situation had changed so drastically (due to the danger and the signifcantly reduced crew) that continuing the voyage went beyond their original contractual duty. This created a “fresh bargain”, meaning the sailors were doing more than what they originally agreed to, and the captain’s promise of extra pay was supported by new consideration. So, while the rule is that performing an existing contractual futy can’t be used as new consideratio, Hartely v Ponsonby shows that if the original duty changes significantyl - making the work riskier or much harder - a fresh agreement can be formed, and the new promise can be enforcable.

Question 24

North Ocean Shipping co Ltd v Hyundai Construction Co Ltd (1979)

Answer 24

In this case the cost to build a ship was $30 mil, meant ti be paid in five installments. The defendant opened a letter of credit (form of security, provides in the event something goes wrong the builders are bankrupt the bank will pay back the payments they paid in installments) in favor for the plaintiff. After payingthe first payment the value of the us $ plummeted which meant the value of the ship was now underpriced, the defendant then goes to the plaintiff asking for an extra $3 mil, they relutantly agreed to pay the money, and increased their letter of credit $3 mil, after the ship was built and delivered the plaintiff was not happy abput [aying the extra money and go to complain about it. The court found there was consideration, becuase they extended the letter of credit an additional 3 million.

Question 25

Williams v Roffey Bros (1990)

Answer 25

Lack of economic duress plus practical benefit amounted to good consideration. The defendant entered into contract with a block of flats to refurbrished the flats, they then subcontract carpentry work to Williams for carpentry work, price of 20,000 ounds for the work and after doing some of the work Williams came to the realization becuase they were underpriced and becuase he decided to fall behind schedule, this became a problem for the bros becuase in their contract every day they were being fined and if it wasn’t done there was a pentalty clause, becuse of this they offered to pay him an additional 10,000 pounds per flat if he can complete on time. He starts to catch up and they refuse to pay him the additonal money, the bros said you are doing the work you were contractually allowed to do there has been no consideration for the promise of 10,000 pounds. The court disagreed and was in favor of WIlliam becuase he was entitled to the money and provided consideration even thoug he was doing no more than what he was contractually obligated to do. In the abscence of fraud and economic distress it was there because it was the brothers who went to Willam voluntarily and they were just trying to get a practical benefit of avoiding the penalty cause The court is saying if there is no distress and the promisor willingly offers the money and if the practical benefit applies to you why wouldn’t it be plausible.

Question 26

Rule #6 Exception

Answer 26

Key point from Williams v Roffey - performance of an existing contractual duty owed to the peromisor CAN be good consideration for a promise to pay more money if:
1. There is an absence of economic duress, and
2. A practical benefit accured to the promisor as a result of their promise to pay more money.

Question 27

Rule #7 Part Payment of Debt

Answer 27

normally arise in the context of promises to accept less. generally, part payment of debts is not good consideration for a promise to forgo the remainder of the debt. the application of ‘practical benefit’ reasoning to promise to accept less

Question 28

Exceptions to Rule #7

Answer 28

If something other than money is offered. If a lesser sum plus some other form of consideration is paid. If a lesser sum is paid before the due day. Promissory Estoppel

Question 29

Pinnel’s Case (1602)

Answer 29

In Pinnel’s Case, Cole owed Pinnel a certain sum of money. Cole paid part of the debt before the due date and Pinnel accepted it. However, Pinnel later sued Cole for the remainder of the debt. Cole argued that since Pinnel had accepted the part payment as settlement of the whole debt, he was no longer obligated to pay the rest.

The court ruled in favor of Pinnel, holding that part payment of a debt is not valid consideration to discharge the full debt. The reasoning was that paying a lesser sum than what is owed is not legally sufficient to satisfy the full debt because the creditor is not receiving anything more than what they are already entitled to. In other words, paying part of a debt does not count as valid consideration for a promise to forgive the rest.

However, the court also established an exception: if something extra or different is provided (such as early payment, goods instead of money, or payment at a different location), that could be considered sufficient consideration to settle the debt. In Pinnel’s case, it was noted that Cole paying the part debt earlier than the due date could be considered extra value, but the court ultimately decided that it wasn’t enough to completely discharge the debt.

So, Pinnel’s Case illustrates the general rule that part payment of a debt alone is not sufficient consideration to wipe out the rest, unless there is something additional or different provided that makes the agreement more valuable.

Question 30

Foakes v Beer (1883)

Answer 30

Dr. Foakes owed Mrs. Beer a large sum of money. They agreed that if Dr. Foakes paid part of the debt in installments, Mrs. Beer would not take further legal action to claim the rest. Dr. Foakes paid off the principal amount of the debt, but he didn’t pay any interest. Later, Mrs. Beer sued for the interest, despite their earlier agreement.

The House of Lords ruled in favor of Mrs. Beer, holding that part payment of the debt (the principal) did not discharge the full obligation, which included the interest. The court reaffirmed the rule from Pinnel’s Case, stating that paying part of a debt is not enough consideration to clear the entire debt, including any additional amounts owed (like interest in this case).

Foakes v Beer illustrates the rule because:

Although Dr. Foakes paid the principal debt, there was no additional consideration (something extra) to support the agreement that the rest of the debt (interest) would be forgiven.
The court upheld the principle that a creditor can still claim the remainder of the debt, even if part payment has been accepted, unless the debtor offers something new or different (such as paying earlier, providing goods, or any other additional benefit).
Thus, Foakes v Beer reinforces the idea that part payment alone cannot discharge a full debt, unless new consideration is provided, maintaining the precedent set by Pinnel’s Case

Question 31

D&C Builders v Rees (1966)

Answer 31

D&C Builders did some work for Rees, and the final bill was £482. Rees knew the builders were in financial trouble and offered to pay them £300 to settle the entire debt, effectively forcing them to accept less. The builders, needing the money, accepted the part payment but later sued for the remaining balance.

The court ruled in favor of D&C Builders, stating that the £300 part payment did not discharge the full debt. Although Rees had argued that they had agreed to settle for £300, the court found that the agreement was made under unfair pressure, as Rees took advantage of the builders’ financial difficulties. There was no valid consideration for the builders to accept less than what was owed, and the agreement was not made voluntarily.

The case highlights two key principles:

Part payment of a debt is not valid consideration to discharge the full debt, following the rule established in Pinnel’s Case and reaffirmed in Foakes v Beer.
Equitable principles come into play—if part payment is accepted under duress or unfair pressure, the court may void the agreement, as happened in this case.
In D&C Builders v Rees, the court emphasized that part payment made in bad faith or under pressure is not a valid way to settle a full debt. So, while the rule about part payment still applies, the case shows that agreements must be fair and voluntary for them to hold up in court.

Question 32

Practical Benefit

Answer 32

practical advantage or benefit that one party gains from an agreement, even if it’s not a new or extra payment.

In the context of contract law, practical benefit can allow a promise to be enforceable, even when someone is only doing something they are already contractually obligated to do. The courts may recognize that the party who receives the promise still gets something valuable from it, like avoiding inconvenience, delays, or other negative consequences.

For example, if a builder agrees to finish a project earlier than originally planned and the client promises extra payment for it, the practical benefit to the client is that they get the project done sooner, even though the builder was already required to finish the project. This benefit may count as consideration, making the new promise enforceable.

This idea was explored in the case of Williams v Roffey Bros & Nicholls (Contractors) Ltd (1990), where the courts allowed the extra payment because the contractor received a practical benefit (avoiding penalties for late completion) from the builder finishing the work on time, even though the builder was already contractually obliged to complete the work.

Question 33

Re Selectmove (1995)

Answer 33

Select move owed the Inland Revenue money. An oral agreement was made with representative from the Inland Revenue that the amount owed could be paid off in installments. The Inland Revenue later sought repayment of the full amount owed. select move argued that in agreeing to the installment plan, a practical benefit accrued to the Inland Revenue to the Inland Revenue becuase without it Select move would be declared bankrupt and they get nothing. Oral agreement to pay in installments (promise). Later want to go back on the promise and claim the full amount. By agreeing to this practical benefit could not stand.

Question 34

MWB Business Exchange v Rock Advertising (2016)

Answer 34

MWB rented office spaces to Rock Advertising, unfortunately Rock’s work plummeted and they fell into debt, an oral agreement was reached that they would repay the agreement in installments.
Later MWB decided they didn’t want to wait and want to the full amount but Rock said you already promised to agree the installment payments, there was no consideration Rock tried to argue as a result of MWB promise to accept installments of payment they argued practical benefit.
Practical benefit was:
1.The (albeit slow) recovery of arrears

2. Keeping Rock as a tenant and avoiding the risk of having an empty office and the time and expense of finding a new tenant

This case was decided on entirely different grounds. The contract in question contained a ‘no oral modification’ terms of agreement cannot be altered unless written and signed by both parties. The parties are free to modify the contract orally but the supreme court said you have to give effect the ‘oral modification’ clause. Because there was no written contract and just an oral the Supreme Court said the contract was not effective.

Question 35

Exceptions to Rule #7

Answer 35

Pinnel’s case
1. Something other than money
2. Lesser sum plus another form of consideration
3. Lesser sum paid before the due day.
4. Promissory Estoppel
I owe you 100 and give you 80 pounds and flowers is considered good consideration
The promise to accept a later payment before the due date
Essentially tells us in certain circumstances despite the fact that there is not consideration an alternation promise to accept less is still enforceable
Equity was developed to mitigate against harsh rules

Question 36

Promissory Estoppel

Answer 36

legal principle that prevents a person from going back on a promise, even if there is no formal contract, when someone else has relied on that promise to their detriment.

In simple terms, if someone makes a promise, and another person acts on that promise (like making plans or spending money) because they believe it will be kept, the person who made the promise can’t just take it back if it would unfairly hurt the other person. It’s a way to protect people from being harmed by broken promises in certain situations.

The practical effect that in certain circumstances a promise to accept less will be enforceable despite the fact that no consideration was given.

Question 37

Central London Property Trust Ltd v High Trees House LTD (1974)

Answer 37

In sep 1937 P let a block of flats in Londodn to D for a term of 99 years for an annual rent of 2,500 pounds. Impact of World War II - flats not occupied - so in 1940 p agreed to reduce the annual rent to 1250 pounds. By 1945 flats fully occupied again. The promise to accept half the rent was enforceable because there was no consideration to accept half rent. There was a promise to pay half rent ad despite something consideration the promise was enforceable but it is only enforceable while the conditions that gave rise to the promise in the first place continue to exist. If you come back and claim the full rent from 1940-45 you will be stopped from doing so. In equity the law said you made a promise that you and they know you rely on it so you will be estopped from going back on said promise.

Question 38

Combe v Combe (1951)

Answer 38

There must be an existing legal relationship between the parties. Agreement to pay wife maintained. When the payments stopped the wife sought to enforce them based on promissory estoppel but there was no legal agreement. There must be a contract and legal agreement in order for promissory estoppel to take place. You can only use it as a shield against someone using it to defend against someone asserting their legal rights against you.

Question 39

Builders v Rees (1966)

Answer 39

‘He who comes to equity must come with clean hands’ Equity is a body of law used as a discretion against the courts and the courts will not allow you to use it yourself if you yourself have been behaving inequitably.
The effect of promissory estoppel it is suspends the legal rights of the other party whilst the conditions continue to exist, it does not extinguish your rights indefinitely.

Question 40

Intention to create legal relations

Answer 40

means that when people make an agreement, they both must intend for it to be legally binding. In simple terms, it’s the idea that the people involved in a deal must genuinely want the agreement to be enforceable by law.

Question 41

Domestic Agreements

Answer 41

Presumptions of the court - there is NO intention to create legal relations.

Question 42

Commercial agreements

Answer 42

Presumption of the court - there IS an intention to create legal relations. The parties intended legal ramifications to flow from not just presumptions but starting points that be rebutted with evidenced on the contrary of the parties burden of proof

Question 43

Burden of Proof

Answer 43

Is on the party that wishes to displace the presumption. The party that wants to displace that has to bring evidence.

Question 44

Social and Domestic Agreements: Balfour v Balfour (1919)

Answer 44

Two parties were husband and wife, husband went to live and work in sri lanka, and before he left he promised to pay her 30 pounds per month as maintained, they fell out and divorced, and she sought to enforce the promise of 30 pounds per month. The courts revealed they sided in the husband because this was a domestic agreement where the courts will not give its legal ramifications. Decision was correct on policy grounds, unless there is very strong evidence to the contrary the courts will not take legal consideration into domestic agreements.

Question 45

Jones v Padavatton (1969)… Rebutting the presumptions

Answer 45

Jones v padvatton (mother & daughter). The daughter was living in America and mother in England wanted her daughter to come study for the bar, agreement was reached that if she came to England with her young child mother would okay for legal education, mother buys house and tells her she could live there, there was a fallout because house needed maintained, daughter spends 5 years in school and not doing well, buys her a house and pays for maintained, and mother now seeks compensation, a reasonable amount of time had passed. Majority followed Balfour: no intention to create legal relations. Minority: reached the same conclusion, but different reasoning. First promise may well have given rise to an intention to create legal relations, but only for a reasonable amount of time.

Question 46

Parker v Clarke (1969)

Answer 46

agreement between elderly couple and their niece. Involved the niece selling her house and moving in with the old couple and sharing household expenses in exchange for that when they die the house would be hers, there was a fallout and she brought an action against them for breach of contract (she sold her house), seriousness for agreement and whether there was certainty or reliance

Question 47

Commercial Agreements

Answer 47

• Party seeking to rebut that there is no legal intention for legal ramification.
  Edwards v skyways, plaintiff made redundant he was promised an ex-gratia (an act of goodwill) payment from employer, payment was not forthcoming, so plaintiff has an action to enforce the promise company argues that this was an act of goodwill and we never wanted legal ramification to flow from it. Moral obligation not legal. This is a commercial context because the burden of proof is on defendant to show they had no legal ramification. Court said the ex-gratia thing was not to imply legal context
  Carliil v carbolic smoke. Defedent said this was just a ad and no legal intention but because they deposited 1,000 pounds in alience bank account was proof they did have intention.