CONTRACT LAW - Consideration, ICLR & capacity - EXISTING OBLIGATIONS Flashcards
Before entering a contract why might a party already be under an obligation to do the same thing? (3)
Due to an existing contract between the same parties. Due to a public duty or an existing contract with a third party.
What does the case of STILK V MYRICK 1809 demonstrate? (2)
The captain of a ship promise his crew that if they shared the the work of two seamen who has deserted, the wages of the deserters would be shared out between them.
The court held that the promise was not binding because the seamen gave no consideration, they were already contractually bound to do any extra work to complete the voyage.
What does the case of WILLIAM V ROFFEY BROS & NICHOL 1991 demonstrate? (5)
The defendants / roffey had been contracted to build a block of flats and they sub-contracted the plaintiff, Lester Williams to carry out the carpentry work in 27 flats for £20000.
Before the work was completed, Williams got into financial difficulty and was clear he would not be able to finish and would be in breach of contract.
Had the work not been finished in time, Roffey would have been liable for penalties under their contract to build flats so they promised Williams an extra £575 per completed flat.
Roffey bros did not stick to their promise and Williams sued for the additional sum.
The court found consideration by Williams in the form of ‘practical benefit’ that Roffey received which was the avoidance of late completion payment in the main contract.
What is the difference between practical and factual consideration? (1)
Factual acknowledges that nothing new is being promised but the party in receipt of the promise is still getting something out of a reshaped deal.
Does public duty amount to sufficient consideration? (1)
Carrying out public duty imposed by the law does not amount to sufficient consideration.
What does the case of ENGLAND V DAVIDSON demonstrate? (3)
The defendant offered a reward for information leading to the conviction of a particular criminal The police officer / plaintiff gave the relevant information but the defendant refused to pay, alleging the police officer was doing no more than public duty imposed by law.
It was held the duty of a police officer is the prevention of crime and they are not under any public duty to provide information to a private individual.
In doing so he went beyond his pubic duty and thus provided consideration for a promise given by the promiser.
What will be regarded as sufficient consideration for a promise given by the promiser? (1)
The performance of a pre-existing obligation.
What does the case of NEW ZEALAND SHIPPIN CO V AM SATTERTHWAITE & CO 1975 demonstrate? (2)
The claimant made an offer to the defendant that, if the defendant would unload the claimant’s goods from a ship, then the claimant would treat the defendant as exempt from any liability for damage to goods.
In fact, the defendant was already bound to do this by a contract with a third party.
What happens the debtor promises to pay their debt in return for a release from the remainder of their liability? (3)
They are simply offering to do something which they are already obliged to do, they are seeking to offer an existing obligation as consideration - not good consideration. The debtor remains liable eve where the creditor has agreed to release them from further liability.
What does the case of FOAKES V BEER demonstrate? (4)
Mrs Beer obtained a judgement against Dr Foakes for £2090. Dr Foakes requested time to pay and the parties agreed in writing that if he paid £500 at once and the balance by instalments, Mrs Beer would not ‘take any proceedings whatever on the judgement’.
By virtue of the Judgements Act 1838, all judgement debts carry interest until paid.
Foakes paid the whole amount and Mrs Beer then claimed the accrued interest, but Foakes refused to pay on the basis of written agreement ad Mrs Beer claimed the agreement was unsupported by consideration.
House of Lords held that Mrs Beer’s claim should succeed and that the agreement was unsupported by consideration.
When is the rule in FOAKES V BEER applicable? (2)
If the promise of the creditor to accept a lesser sum is unsupported by fresh consideration from the promisee. However, if at the credito’s request, some new element is introduced, then this will amount to good consideration and the court will not enquire as to the value of the new element.
What happens in the event of payment of lesser sum by a third party? (2)
Where a third party enters into an agreement with a creditor, by which the creditor accepts payment by the third party of a lesser sum than the debt in full satisfaction of the debtor’s obligation, the creditor cannot sue the debtor for the difference.
What does the case of MWB V ROCK demonstrate? (5)
A landlord orally agreed to reschedule rental payments under a license agreement to give a tenant longer to pay, varying the license.
Court of Appeal considered whether there had been valid consideration for the variation.
Court acknowledged that part-payment is not normally good consideration, but agreed there was sufficient consideration because the landlord obtained a practical benefit by keeping the tenant in the property.
It was also considered that the landlord was not under economic duress from the tenant.
The court can be seen as applying the terminology of practical benefit and absence of duress from WILLIAMS V ROFFEY.’
What does promissory estoppel effectively do? (2)
It allows a contract to be enforced despite not being supported by consideration, it protects a party’s reliance on a non-bargain promise.
