Consideration, Promissory Estoppel and Duress

Question 1

Consideration is “the price for which a promise is bought”

Answer 1

Dunlop v Selfridge

Question 2

Part payment of the debt is not good consideration

Answer 2

Pinnel’s Case; Foakes v Beer

Question 3

Promise to pay more

Answer 3

Williams v Roffey

Question 4

Promise to pay less

Answer 4

Pinnel’s Case

Question 5

Re Selectmove

Answer 5

no agreement because there was no consideration

Question 6

Where payment of a lesser amount discharges an obligation to pay more

Answer 6

1. where payment at different form, place or different time - Pinnel’s Case
2. payment of a lesser amount was made by 3rd party - Welby v Drake

Question 7

Promissory estoppel (equitable exception to the general rule)

Answer 7

Central London Property Trust v High Trees House - plaintiffs were not able to recover the rent for the 1940-1945 period even though there was no consideration for the promise to accept reduced rent. The reason for this was a general equitable principle: A promise intended to be binding, inteded to be acted on and in fact acted on, is binding as far as its terms are properly apply.

Question 8

Elements of promissory estoppel

Answer 8

1. A shield not sword (Combe v Combe)
2. A clear and unequivocal promise (Woodhousse v Nigerian Produce Marketing)
3. the promisee must have altered their position (Emmanuel v R.T. Briscoe)
4. the promisee mustn’t act to his detriment (Alan v El Nasr Export&Import)
5. it is inequitable for the promisor to go back on his promise (D&C Builders v Rees - he who comes to equity must do equity)

Question 9

Promissory estoppel is merely suspensory and and the promisor can resume his full legal rights under the contract after giving reasonable notice of his intention to do so

Answer 9

Tool Metal Manufacturing v Tungsten Electric

Question 10

Economic duress - there must be pressure

Answer 10

1) resulting in compulsion or lack of practical choice,
2) which is illegitimate, and
3) which is significant cause of the victim entering into the contract
“But for” test should be used. The illegitimate pressure must have been such as actually caused the making of the agreement, in the sense that it would not otherwise have been made either at all or, at least, in the terms in which it was made (Huyton SA v Peter Cremer)
DSND Subsea v Petroleum Geo Services

Question 11

Duress, Illegitimate crtiteria (DSND Subsea v Petroleum Geo Services)

Answer 11

a. Was it actual or threatened breach of contract?
b. Whether the pressure was applied in good or bad faith
c. Did the victim protest? (The Siboen and the Sibotre - victim ensures that it takes action to protest at time or shortly thereafter and seeks to reopen the issue)
d. Did the victim affirm? (B & S Contracts v Victor Green cf The Atlantic Baron)

Question 12

Generally, illegitimate threat for illegitimate purpose to get more money that one couldn’t ask to pay will be considered by the court as economic duress

Answer 12

Atlas Express v Kafco

Question 13

If the pressure resulting breach of contract was made in good faith for lawful reason it will not be illegitimate pressure

Answer 13

DSND Subsea v Petroleum Geo Services - But a “reasonable behavior by a contractor acting in bona fide in a very difficult situation”

Question 14

lawful act of duress will not amount to duress

Answer 14

CTN Cash and Carry Limited v Gallaher Limited - the defendant used a legitimate threat (not to enter into future contracts) resulting an unlawful end (he was obliged to pay for insurance) but in good faith (he bona fide thought that the goods were at the risk of plaintiffs and they owed him the sum in question)

Question 15

Economic duress and Consideration: in order to establish whether the promise to pay more binding I need return to first principles

Answer 15

1) performance of an existing obligation owed to the promisor is not good consideration for a promise to pay extra (Stilk v Myrick)
2) if performance appears to go beyond the requirements of the existing obligation it may thus constitute fresh consideration, so the general rule will not apply (Hartley v Ponsonby)
3) If Hartley did not apply as there is originally contractual obligation I shall apply test in Williams v Roffey:
1) There is an existing contractual obligation in return for payment;
2) Paying party has reason to doubt other party will perform the existing obligation.
3) Party promises additional payment in return for existing obligation.
4) Promisor obtains a practical benefit (or obviates a disbenefit).
5) No duress.

Question 16

Legal effect of duress

Answer 16

The contract is voidable and the proper remedy is one of recession (Pao On v Lau Yiu Long)

Question 17

Duress to the Person

Answer 17

Williams v Bayley - a wrongful threat is a duress to person.
Causation test for duress – the duress need be only one factor influencing the wronged party’s behavior (Barton v Armstrong).