Formation of a Contract- Consideration Flashcards
What is consideration and what case defined it?
Defined in Currie v Misa (1875)
“A valuable consideration…may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility given, suffered or undertaken by the other.”
Give a simplistic definition.
What is provided by way of consideration, whether it be a promise or an act, should benefit the person receiving it, or being a detriment to the person giving it.
Sometimes both will be present.
What did Dunlop Pneumatic Tyre Co. Ltd v Selfridge & Co. [1915] say?
“an act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought.”
It is the price one party pays for the other party’s promise.
What is a contract without consideration?
Not a contract but a bare gift.
What is executed consideration?
Executed – when a party performs his or her part of the contract at the time of entering into the contract.
What is executory consideration?
Executory – when the parties exchange promises to do something in the future.
What is consideration under executory and executed?
It is the promises themselves which form the consideration and the agreement is binding once they have been exchanged.
What happens if one party fails to carry out their promise?
If one of the parties fails to carry out their promise, the other can sue for breach of contract.
What is past consideration?
Performance was prior to the agreement so invalid.
What are the rules around consideration?
Consideration must move from the promisee;
Consideration must not be past;
Consideration need not be adequate; and
Consideration must be sufficient.
Explain Consideration Must Move From the Promisee?
In order to sue, and enforce a promise, a claimant must usually show that they supplied consideration for that promise.
They generally cannot sue if the consideration was provided by another person, even if the promise was intended for their own benefit.
Central to the concept of Privity to Contract.
Give cases for consideration must move from the promise.
Dunlop v Selfridge – Dunlop could not sue Selfridge because Dunlop had not provided any consideration for the contract between Selfridge and the wholesaler.
See Tweddle v Atkinson
What is consideration must not be past? What is the test?
Generally, promises in a valid contract are made in exchange for each other and this is not the case if one is made after the event.
For example, if A promises to pay B for something that B has already done (without prior agreement), this is not valid consideration and there is no obligation to pay.
Past consideration is not the same as executed consideration, where a promise is made in return for an Act.
The test for deciding if something is ‘past’ is whether the act occurs before the promise is made.
Give a case for past consideration.
Re McArdle [1951]
What is the exception to the past consideration rule?
Doctrine of Implied Assumpsit
