Contract Law - Consideration Flashcards
Executory Consideration
A promise to do something
Executed Consideration
Actually doing it
Promisee
Person to whom the promise is made
Promisor
Person making the promise
Consideration must move from the promisee
But does not need to move to the promisor
Consideration must be sufficient but need not be adequate
Court doesn’t ask about adequacy (i.e. the value of the contract)
However, inadequacy of consideration may be evidence of a vitiating factor
Performance of an existing duty
If you promise to do something you are already obliged to do - no consideration and no new contract
UNLESS: the person promises to do something more or confers some sort of practical benefit on the other person
Past consideration
Acts performed or promises made prior to the contract being formed is not good consideration
UNLESS: there was an implied understanding of payment
Promissory estoppel
Unfair for creditor to go back on promise to accept lower amount.
Can’t form the basis of a claim
Suspends creditor’s rights it doesn’t terminate them
Three conditions:
- Must have been a clear promise by the promisor not to rely on existing legal rights
- Promisee must have altered their position in reliance on the promise
- Inequitable for the promisor to go back on their promise
Contracts by deed
Don’t need consideration
Contracts (Rights of Third Parties) Act 1999
Third party can enforce a term if they are named in the contract and if term is for their benefit
Implied understanding of payment
- Act must have been done at promisor’s request
- Parties must have understood act was to be remunerated by payment or other benefit
- Payment or other benefit must have been legally enforceable had the promise been made in advance
Part payment of debt
Debtor can still sue for the remaining money - there has been no fresh consideration because the debtor has not received a benefit
A number of exceptions to this rule
