Contract Law - Consideration Flashcards
What is consideration
A promise to pay, do or give something in return for the other party’s promise
Both parties must gain and lose something
What are the two types of considerations and explain
Executory - an exchange in a contract that has not yet been completed, a promise for the future
Executed - Where the offeror doesn’t promise anything but does do some act, as soon as the offeree performs
What are the 4 rules of consideration
SPEM
Sufficient - exchange must be sufficient but need not be adequate
Past- consideration must not be past
Existing duty : is not good consideration
Moves : consideration must move from the promisee
Explain rule 1 and support with cases
Consideration must be sufficient but need not be equal
It has to have real and some actual value even when that value is minimal. The courts wont interfere if one party has made a bad bargain
Thomas v Thomas
Man promised his wife she could live in his house after he died, she paid his executors £1 per yr in rent.
Held: £1 was good consideration
POL- as long as it has some value it is sufficient to support a contract
What is not sufficient consideration (cases)
White V Bluett
POL - promising not to complain is not consideration, he wasn’t giving up any ‘right’ as there isn’t a ‘right to complain’ to give up so it wasn’t real
Ward v Byham
POL - Mother by law had to look after the child but its the ‘happy’ that was added as an extra that caused the courts to stretch the concept of consideration and said care and affection was part of it so father owed money
Give a case that illustrates some value
Chappell V Nestle
POL - used chocolate wrappers were good consideration - they had some value- consideration must be real but doesn’t need to be of equal value.
Explain Rule 2 and support with cases
Past consideration is not good consideration
This isn’t valid because it was something that had already been done at the time of the agreement (promise comes after the act)
Re McArdle
Held: Court held that a promise to pay for work that had already been done voluntarily was not consideration. It was past consideration and therefore did not form the basis of a valid contract
What is the exception to rule 2 and support with a case
When one party requests a service (train, hairdressers, gardeners, taxis) but without mentioning payment, the law assumes there is an implied promise to pay for it
Lampleigh v Braithwaite
Held: it was consideration because it was directly linked to his earlier request as both understood payment would be made (payment was implied)
Explain Rule 3 and support with cases
Existing duty is not consideration
Carrying out existing duty will not be consideration for a new promise, if there is a legal requirement to do something, it is known as pre-existing duty
Stilk V Myrick
Sailors had existing contract to sail ship, 2 deserted, captain promised remaining crew extra money to sail the ship, he refused to pay them extra he had promised, they sued
Held: They done nothing ‘extra’ except their duty
POL- doing what you’re already contracted to do is not consideration for a new promise
What if you do something extra, support with a case
Hartley V Ponsonby
Same facts as Stilk but 19 of the crew deserted which made ship unsafe. Captain promised money to sail ship home, he refused to pay, they sued
Held: They won, they had a contract to sail a SAFE ship
POL: If you do something extra than what you’re already contracted to do this will be good consideration to support a new promise
What is the Rule that stretches the doctrine of consideration
If one party is doing their existing contract, but the other party benefits extra in some way then it will be good consideration for a new promise
Williams V Roffrey Bros and Nicholls Contractors
Made sure the work was done on time so Roffrey didn’t get penalties
Where else may consideration be found ? Support with a case
Consideration may be found where contractual duties are owed to a 3rd party
Shadwell v Shadwell
Agreement to pay claimant an income if he married a particular person, promising to marry this 3rd party was consideration for the agreement for the income
Where can consideration not be found ,support with cases
A promise to accept part payment of an existing debt instead of the whole debt is not consideration
Case of Foakes v Beer and D&C Builder’s v Rees
What was decided in Pinnel’s case ?
agreeing to instalments or part-payments of a debt is not consideration, this was decided in Pinnel’s case however it will be allowed if the parties voluntarily agree to end the contract with a satisfactory compromise , e.g. the debt is paid off with something else that may not be of equal value
Explain the cases mentioned earlier
Foakes V Beer
Under the Pinnel’s rule she was entitled to the interest/full payment as it was held that the agreement reached amounted to part-payment of a debt and this was not good consideration
D&C Builder’s V Rees
Rees owed £482 for work done for her, Rees knew builders were in financial difficulty, she offered t pay £300 and they agreed , court then allowed builders to claim the rest of the money owed
