formation- consideration

Question 1

what is consideration

Answer 1

what one party gives (or promises to give) in exchange for the other party’s performance

Question 2

3 steps for consideration

Answer 2

1. must be sufficient but need not be adequate
2. must not be in the past
3. performing existing duty is not good consideration

Question 2

what case defines consideration

Answer 2

Dunlop v Selfridge

Question 3

what does it must be sufficient mean

Answer 3

• sufficient means what is promised must be real and of some value
• need not be adequate means it need not be real or the market value

Question 4

case for must be sufficient

Answer 4

Chappell & Co v Nestle

Question 5

Chappell & Co v Nestle facts

Answer 5

• offered music records in return for used sweet wrappers
• wrappers were sufficient consideration even tho it was not of same value

Question 6

case for what was not sufficient

Answer 6

White v Bluett

Question 7

White v Bluett facts

Answer 7

• son owed father money
• father promised not to enforce debt if son promised not to complain
• father died and son was sued for money
• son’s promise was too vague and lacked value
• was not sufficient as he had no legal right to complain

Question 8

what is past consideration

Answer 8

• consideration must not be in the past
• must not be something that was already done

Question 9

what if a promise or payment has already been carried out

Answer 9

it was a gift

Question 10

case for past consideration

Answer 10

Re McArdle

Question 11

Re McArdle facts

Answer 11

• 5 children inherited their mothers house
• one son paid for repairs and improvements, the other sons agreed to contribute
• consideration was past as the work had been done before the promise was made
• promise to contribute towards the costs was not a valid contract

Question 12

exception for past consideration

Answer 12

if one party acted at the other’s request and it was understood all along that payment would be made later, then past consideration will be valid

Question 13

case for past consideration exception

Answer 13

Lampleigh v Braithwaite

Question 14

Lampleigh v Braithwaite facts

Answer 14

-sentenced to death, asked friend to speak to king to get him a pardon
-promised to pay him but did not
-promise came after performed service
-good consideration as actions taken as his request and were so important
-fee must have been implied

Question 15

what is performing an existing duty

Answer 15

if you promise to do something you already have to do it is not good consideration as you are obliged to do it anyways

Question 16

case for performing an existing duty

Answer 16

Stilk v Myrick

Question 17

Stilk v Myrick facts

Answer 17

• during a voyage 2 sailors deserted their ship and the captain promised those remaining extra wages
• captain then refused to pay them
• promise was not binding
• no consideration given in return for promise of extra pay as the sailors were under a contractual duty to sail ship home anyway

Question 18

case for not performing existing duty

Answer 18

Hartley v Ponsonby

Question 19

Hartley v Ponsonby facts

Answer 19

• over half crew deserted
• extra wages offered
• sailors were owed the extra wages as the remaining sailors had gone beyond their contractual duty
• undertaking dangerous voyage

Question 20

case where they did not perform existing duty, it was for payer’s benefit

Answer 20

Williams v Roffey

Question 21

Williams v Roffey facts

Answer 21

• firm of builders hired W to do carpentry work
• W were in financial difficulties so R offered more money to get work completed so avoid payment of a penalty
• when work was completed, R refused to pay
• W was owed extra money as R freely chose to offer them more money and had gained a benefit by avoiding the delay and paying payments

Question 22

exception to performing an existing duty

Answer 22

promise to perform contractual duty owed to a 3rd party is good consideration:

if one party to a contract provides a benefit to 3rd party they are already bound to provide under the contract- this can be good consideration

Question 23

case for exception to performing existing duty

Answer 23

Scotson v Pegg

Question 24

Scotson v Pegg facts

Answer 24

• S made contract to sell coal to B but deliver to 3rd party P
• P promised to unload coal but failed to do so
• S started legal action and P argued S had not provided any consideration in return for promise to unload
• court held that performing an existing contractual duty owed to a 3rd party to the contract can amount to good consideration for new promise by 3rd party