Consideration, promissory estoppel and duress.

Question 1

What is the definition of Consideration?

Answer 1

Dunlop v. Selfridge: an act of forbearance, or the promise thereof, which is the price for which the promise of the other is bought.

Question 2

What are the five rules of consideration?

Answer 2

Must not be past: Eastwood v Kenyon.

Must pass from promisee to promisor: Tweddle v Atkinson.

Need not be adequate (Chappel v Nestle), only sufficient (White v Bluett).

Existing obligations are not good consideration (Stilk v Myrik).

Part payment of a debt is not good consideration (Foakes v Beer/Re Selectmove).

Question 3

What is the exception to the rule that consideration must not be past?

Answer 3

L. Scarman in PAO ON v LAU YIU LONG: if it is at the promisors request (LAMPLEIGH v BRAINWAITHE);

AND confers a benefit that was understood to be due (courts unlikely to apply if domestic situation: McArdle);

AND the benefit must be legally enforceable.

Question 4

When is a promise to pay more good consideration?

Answer 4

Only if the party has gone above and beyond their existing obligations: HARTLET v PONSONBY (contract Stilk v. myrik).

ALSO: performance of a pre-existing obligation to a third party contract: SCOTSON v PEGG.

ALTERNATIVELY: WILLIAMS v ROFFEY.

Question 5

What are the criteria for a promise to pay more to be legally enforceable as per Williams v Roffey?

Answer 5

Glidewell LJ:

1. Contract to supply services.
2. Reason to doubt performance.
3. The paying party must promise to pay more.
4. The paying party must obtain a benefit/obviate a disbenefit (not defined by glidewell, but in this case involved avoiding a penalty clause).
5. The benefit must be capable of being valid consideration.
6. THERE IS NO DURESS OR FRAUD.

Question 6

What are the three types of duress?

Answer 6

1. Of the person: Barton v Armstrong; need not be the only reason for entering a contract.
2. Of goods: The Siboen: but for test.
3. Economic duress: DSND SUBSEA v GEO PETROLEUM.

Question 7

Economic duress is defined as what?

Answer 7

Dyson J: DSND SUBSEA v PETROLEUM GEO: there must be pressure, resulting in a lack of practical choice that is illegitimate and a significant cause of contract inducement; if plead it renders the contract voidable’.

Question 8

The first requirement of economic duress is a lack of practical choice; give case law examples.

Answer 8

ATLAS v KAFCO: one supplier.

CARILLON v FELIX: duty not to delay.

Question 9

The second requirement of economic duress if that the pressure be illegitimate; what does this include?

Answer 9

Threats to breach: ATLAS.

Bad faith: Universe Sentinel; strike to exploit money/ contrast to CTN v Gallagher, no bad faith.

Protesting/affirmation: DSND; must be immediate (and include something like not paying: B&S v Victor Green) or Atlas: confirm and straight away sue. Atlantic Baron: 8 months too long.

Question 10

The third requirement of economic duress is that it must be the significant cause of inducement, what case holds this?

Answer 10

HUYTON v CREME: ‘but for the duress, would X have contracted with Y’.

Question 11

When is a promise to accept less good consideration?

Answer 11

1. PINNELS CASE: different chattel, different place (Vanbergen v St Edmund) or different time.
2. WELBY v DRAKE: by a third party.
3. Promissory estoppel.

Question 12

What is promissory estoppel?

Answer 12

A doctrine that if established will mean a claimant may be obliged to continue accepting less even when not contractually bound to do so if it would be unjust or inequitable for them to not: Central LDN Properties v High trees house.

Question 13

What are the requirements for promissory estoppel?

Answer 13

HIGH TREES HOUSE:

1. Shield not a sword: COMBE v COMBE.
2. Clear, unequivocal promise: words/conduct (Hughes v Met Rail).
3. Change of position by promisee in reliance: AYAJI v VRISCOE: need not be the only reason for a change (Brikom v Carr).
4. Reliance need not be detrimental: THE POST CHASER.
5. Inequitable to go back on promise; look at purpose of the promise, the maxims apply: D&C BUILDERS v REES.

Question 14

What is the effect of estoppel?

Answer 14

Generally suspends rights (HTH) until either:

1. Reasonable notice is given: TOOL METAL v tungsten, or:
2. When circumstances giving rise to the estoppel cease: HTH.

If money is due in instalments; cannot recover waivered money but CAN future payments.

If due in a lump sum it merely suspends (Foakes v Beer) and can resume right to whole sum after estoppel period ends.