Doctrine of Consideration

Question 1

Thomas v. Thomas (1842), 2 Q.B.
(Peppercorn Theory)

Issues:
- Is there valid consideration?

Answer 1

Rules:
- Consideration means something which is of some value in the eye of the law (mutuality), not necessarily economic terms.
-You can promise to do something or promise not to do something, it doesn’t really matter what is promised, so long as there is value in the eyes of the law (mutuality/conditional) to both parties.
-Does not matter if the house was worth far more than what the wife was paying.
- Peppercorn Principle: Consideration must have value in the eye of the law, not economic value, you can give a mansion in exchange for a peppercorn if there is mutual agreement.
- If you mutually agree to an unfair deal, that is not the law’s problem.
- Consideration must flow from both parties.
-Here it did as both parties were promising something in exchange.

Question 2

Governors of Dalhousie College at Halifax v. The Estate of Arthur Boutilier, Deceased [1934] S.C.R. 642
(One Promise Must be Conditional on the Other)

issues:
- Is Boutilier promising to give money in exchange for the College doing something and are they conditional on each other?

Answer 2

Rules:
- Naked voluntary promises are gratuitous gifts and are not binding agreements.
- There needs to be a conditional relationship between the two parties where one party does something on the condition of the other party doing something.
- “I will give you “x” as long as you give me “y” in exchange.
- There has to be a promise that flows from one party to another, rather than a gratuitous gift by one party (Boutilier’s $5,000)
- Each party has to do things for each other, and also on condition of each other, otherwise this is just an exchange of gifts without any consideration.