Consideration, Promissory Estoppel And Economic Duress Flashcards
What are the rules of consideration?
- Consideration must not be past
- Consideration must move from promisee to promisor
- Consideration must be sufficient, but need not be adequate
- Performance of an existing obligation is not good consideration
- Part payment of a debt is not good consideration
Case authority: Consideration must not be past
Eastwood v Kenyon
Case authority: Exception to the general rule that past consideration is not good.
Pao On v Lau Yiu Long
What are the conditions that must be met for past consideration to be good consideration (Pao On v Lau Yiu Long)
- Was it at the request of the promisor? (Lampleigh v Braithwait)
- Was payment understood to be due? (Re Casey’s Patents)
- Would the contract be enforceable apart from this issue?
Case authority: Both parties must provide consideration
Tweddle v Atkinson
Authority: 3rd parties can enforce a contract between others benefitting the 3rd party without consideration.
S. 1 Contract (Rights of Third Parties) Act 1999
Case authority: Consideration must have some value to be sufficient, even if it is far less than the promise is worth.
Chappell & Co v Nestle
Case authority: Giving up a legal right is sufficient, but promising not to enforce one that you do not have is insufficient (e.g. promise not to complain)
White v Bluett
Case authority: Giving up a legal right is sufficient consideration
Hamer v Sidway
Case authority: Performance must go above and beyond their existing duties in order to be good consideration.
Collins v Godefroy
Case authority: Promising to do something you are already obliged to do under contract to a 3rd party is good consideration.
Scotson v Pegg
Case authority: General rule - performance of an existing contractual obligation is not good consideration.
Stilk v Myrick
Case authority: Going above and beyond existing obligations is good consideration.
Hartley v Ponsonby
What are the criteria for the Williams v Roffey Bros exception to the general rule that performance of a contractual obligation is not good consideration.
- A already has a contract with B
- B has reason to doubt that A will complete
- B approaches A and promises to pay A extra to complete on time.
- A obtains a ‘practical benefit’ / avoids a disbenefit
- B’s promise was not the result of duress or fraud
- The benefit to B is capable of being consideration, so B’s promise to pay more is binding.
Define: Duress
“Some form of coercion or threat to the person, property, or to the person’s financial interests” (Poole)
What is the test for duress to the person?
The duress need only be ‘a’ reason for entering into contract. (Barton v Armstrong)
What is the test for causation for duress to goods?
‘But for’ test (The Siboen & The Sibotre)
Define: Economic duress
“There must be pressure, resulting in (a) a lack of practical choice for the victim, (b) which is illegitimate, and (c) which is a significant cause inducing the claimant to enter into the contract.” (DSND Subsea v Petroleum Geo)
Case authority: Lack of practical choice
B&S Contracts v Victor Green Publishing
Case authority: Threatened breach of contract is likely to constitute illegitimate pressure.
Kolmar Group v Traxpo Enterprises
Case authority: Threat not to contract in future was legitimate and not in bad faith - I was based on a genuinely mistaken reading of the contract
CTN v Gallagher
Case authority: Freely negotiated hard bargain is not duress
Alec Lobb v Total Oil
Case authority: Refusing to continue dangerous diving work without insurance was not bad faith
DSND Subsea v Petroleum Geo
Case authority: Victim must protest as soon as duress is lifted.
B&S Contracts v Victor Green
Case authority: If a claimant delays in claiming after the duress has been lifted, they may be deemed to have affirmed the contract by not acting.
The Atlantic Baron
Case authority: Part payment of a debt is not good consideration
Foakes v Beer
Case authority: Payment in kind will be good consideration for a debt.
Pinnel’s Case
Case authority: Part-payment of a debt by a third party is good consideration
Welby v Drake
Which case established the doctrine of promissory estoppel
Central London Property Trust v High Trees House
What are the 5 elements of promissory estoppel?
- Must be a shield not a sword
- A clear and unequivocal promise
- Change of position by the promisee in reliance on the promise
- The reliance need not be detrimental
- It must be inequitable for the promisor to go back on the promise
Case authority: Promissory estoppel must be a shield not a sword.
Combe v Combe
Case authority: Promissory estoppel requires a clear and unequivocal promise
Woodhouse Cocoa v Nigerian Produce
Case authority: Change of position by the promisee must be in reliance on the promise for promissory estoppel to have effect.
Ajayi v Briscoe
Case authority: Reliance need not be detrimental for promissory estoppel to have effect
The Post Chaser
Case authority: It must be inequitable for the promisor to go back on the promise for estoppel to have effect
D&C Builders v Rees
Case authority: Rights waived under promissory estoppel may be resumed on reasonable notice
Tool Metal v Tungsten Electric
Case authority: Rights waived under promissory estoppel may be resumed when the circumstances giving rise to the estoppel cease
CLP v High Trees
Define: Consideration
“An act or forbearance of one party, or promise thereof, is the price for which the other is bought” (Dunlop v Selfridge)
