Consideration, variation, ICLR & Capacity Flashcards
Define ‘consideration’
Requires EXCHANGE (reciprocity) between parties - in order to be able to enforce a promise made to you, you must be able to show that you agreed to provide something in return for that promise. The ‘something in return’ is known as consideration.
‘An act or forbearance of one party, or the promise thereof, is
the price for which the promise of the other is bought, and the
promise thus given for value is enforceable’ (Dunlop v Selfridge adopts definition by academic Frederick Pollock)
Important rules in relation to consideration
Consideration …
(a) must not be past (it cannot generally have taken place prior to the promise to pay)
(b) must move from the promisee (a party who has not provided consideration may not bring an action to enforce a contract)
(c) need not be adequate (the court will not assess the adequacy of the consideration)
(d) must be sufficient (it must have some value in the eyes of the law)
Case - Hartley v Ponsonby
A (S1) (S4)
Case - Stilk v Myrick
A (S1) (S4) KEY CASE
If a party is already contractually bound to Party A to do something, then agreeing with Party A again to do that thing is NOT GENERALLY GOOD CONISIDERATION for a new contract.
Case - Williams v Roffey Bros
A (S1) (S4)
Practical benefit ? - Factual rather than legal consideration ??
Sets out conditions necessary to establish factual consideration ?
Case - Foakes v Beer
A (S1) (S4) KEY CASE
Case - Pinnel
A (S1) (S4)
Case - Welby v Drake
A (S1)
Case - MWB v Rocky
A (S1) (S4) KEY CASE!
Define ‘promissory estoppel’
A (S1)
Application of ‘promissory estoppel’
A (S1) (S5)
As an equitable doctrine is at the discretion of the courts?
Most commonly, promissory estoppel is relied on to create an exception to the rule that part payment of a debt without fresh consideration does not discharge the debt obligation.
The effect of promissory estoppel is generally to suspend the rights concerned, but not to extinguish theme.
The key principle is that the court will order an outcome which is just and equitable and in some cases this might mean a past right is extinguished.
?? Exceptionally rights might also be extinguished where it has become impossible for the other party to meet the obligation concerned or it would be clearly inequitable to require them to do so??
Case - Combe v Combe
A (S1) (S5)
Promissory estoppel can only act as a defence to an action; it cannot be used as a cause of action.
Case - Hughes v Metropolitan RW
A (S1)
Case - Woodhouse v Nigerian Produce Ltd
A (S1) (S5)
There must be a clear and unequivocal promise or representation that existing legal rights will not be fully enforced.
The promise must be intended to affect legal relations and not simply amount to a gratuitous privilege given to the promisee?
A promise can be express or implied (for example by conduct).
Case - Ajayi v Briscoe
A (S1)
Case - Alan v El Nasr
A (S1)
From MCQ - In Alan & Co. v El Nasr Export & Import Co., Lord Denning MR stated that, although it was essential that the promisee should have acted on the promise, it was not essential that he should have acted on it to his detriment.
Case - The Post Chaser
A (S1) (S5)
(Use of promissory estoppel). Doctrine only applies where it would be inequitable for the creditor to go back on their promise.
Case - D&C Builders v Rees
A (S1) (S5)
Even if the other elements of the doctrine are made out, promissory estoppel may still not be applied because it would be inequitable in the circumstances to do so???
Elements necessary for binding contract are …
(1) Offer and acceptance
(2) Intention to create legal relations
(3) Consideration
Define ‘executory consideration’
DC Slide 3
Where contracting parties make promises to each to perform something in the future after the contract has been formed.
Eg. Contract for sale of goods where the seller promises to deliver the goods at some time in the future and the buyer promises to pay for them either on delivery or by some other credit arrangement. AT THE TIME OF THE AGREEMENT, NEITHER SIDE has done anything towards the performance of the promises made but the agreement still has contractual force and a party who fails to carry out their promise can be sued.
Usually a bilateral contract ???
Define ‘executed consideration’
DC Slide 3
Where at the time of the formation of the contract, the consideration has already been performed.
The classic example is a unilateral contract where the promise of a reward is made and the ‘price paid’ in exchange for that promise is performance of the act stipulated in the offer (Carlill v Carbolic Smoke Ball). The required act is both the acceptance of the offer (and thus the time when the contract is formed) and the executed consideration).
Case - Eastwood v Kenyon
Slide 3
Consideration must not be past
Exception to the past consideration rule
Exception to the past consideration rule exists where:
(a) some prior act or service was provided by the promisee at the promisor’s request (b) and it was always understood that payment would be made for that act or service.
E.g. taking car to garage and leaving the ultimate price to be decided after completion of the repairs.
Case - Pao On v Lau Yiu
Slide 3
Exception to the past consideration rule
Three conditions to the past consideration rule outlined by Lord Scarman (Pao On v Lau Yiu)
Slide 3
Difference between ‘doctrine of privity of contract’ and ‘consideration must move from the promisee’
Slide 3
Case - Tweddle v Atkinson
Slide 3
Illustrates the rule that consideration must move from the promisee
Case - Chappell & Co v Nestle Co Ltd
Slide 3
Consideration need not be adequate
Case - Thomas v Thomas
Slide 3
Consideration must be sufficient
Define ‘existing obligations’
Define ‘factual considerations’
Different to legal considerations! (?)
Term acknowledges that nothing new is being promised but the party in receipt of the promises is still getting something out of the reshaped deal. (? DC Slide 4)
Extra slide 4
Extra slide 4
Case - New Zealand Shipping Co v AM Satterthwaite & Co (The Eurymedon)
Slide 4
Existing obligations to a third party ?
Lord Wiblerforce in The Eurymedon held that performance of an existing obligation owed to a third party is good consideration as the promisee obtains the benefit of a direct obligation which he can enforce.
