Formation of a contract: Consideration Flashcards
What does every contract contain?
Consideration
What does consideration mean?
Both parties give must give something
What case defined consideration?
Currie v Misa
What did Currie v Misa define consideration as?
‘Some right, interest, profit or benefit’ which is given to one party
What is excuted consideration?
Consideration has already been carried out
What is executory consideration?
Consideration will be performed in the future
Intro AO3
P - Although criteria is vague, it is clear as judges determine it
DP - Ensures outcomes are fair as both parties are mutually treated the same, lowers the possibility of one party taking control of other
WDP - However, encourages judicial creativity
What will the courts ensure both parties have done?
Exchanged something of value
When will the courts not interfere?
If one party has made a bad bargain
What must consideration be?
Real, it must exist
Thomas v Thomas
Facts: Mrs Thomas had a contractual agreement with husband that she could continue to live in family home after his death for £1 per year
Held: Though it was a nominal amount, was valid consideration
Thomas v Thomas AO3
P - Courts will agree agreement exists and enforce it when parties give something on basis of agreement, upholds wishes of both parties/ freedom of contract
DP - Increased confidence in justice system by lay people of courts follow through with agreements made
WDP - However, difficult to prove what was said if one party of contract dies
When are the courts likely to find consideration?
If what is being exchanged has some value
Chappel v Nestle
Facts: Nestle ran promotion that allowed consumers to send chocolate wrapper in return for record
Held: Wrappers were valid consideration as they had economic value
Chappel v Nestle AO3
P - Judicial creativity
DP - Conflicts with 3P’s
WDP - No value as people throw them in bin
White v Bluett
Facts: Son owed father money, when father died, claimed that they agreed if son stopped complaining, debt would be wiped, son stopped complaining
Held: Stop complaining is not consideration, son had to pay debts, father natural love and affection was not valid consideration
Ward v Byham
Facts: Father agreed to pay £1 a week to mother of daughter to contribute to her upbringing, failed to make payments, claimed mother had duty to maintain child herself
Held: Valid consideration, mother provided consideration through natural love and affection and happiness for child so father had to pay
Is past consideration valid consideration?
Nope
What does past consideration state consideration has?
No value if occured before agreeement is made
Re McArdle
Facts: Family members repaired aspects of house, other family members signed saying thye would contribute to repairs, agreement signed after work was carried out, never paid money
Held: Past consideration has no value, money couldn’t be recovered
What are the exceptions to past consideration?
Implied promise to pay
Matter is important
Re Casey’s Patent
Facts: Manager was promised 1/3rd share in patents, company refused to pay claiming it was past consideration
Held: Implied from when he began to work he would receive some kind of payment, was an exception to rule of past consideration
Implied promise to pay AO3
P - Cases aren’t different enough to justify different outcomes, rule and exceptions aren’t known by many lay people
DP - Rely on legal advice, expensive
WDP - Judges are experienced
Lampleigh v Braithwait
Facts: Braithwait about to be hanged for murder, requested friend to obtain pardon from King, he did it. Braithwait never paid him, claiming it was past consideration
Held: Important matter, fair for Lampleigh to presume he would be paid, wasn’t past consideration, Braithwait had to pay
If there is already a pre-existing requirement for something to be done, will it be valid consideration?
Nope
Stilk v Myrick
Facts: Crew members agreed to set sail for £5 per month, 2 left, workers did extra work on basis they would be paid share of collagues wages
Held: No consideration by crew members, they agreed to act in emergencies so was a pre-existing duty
What will be valid consideration with pre-existing duty?
If extra element is provided
Hartley v Ponsonby
Facts: 19/36 crew members remained, promised to be paid wages of deserted crew members
Held: Extra amount of work due to reduction in crew members, was valid consideration, had to be paid extra wages
Pre-existing duty AO3
P - ‘Extra is undefined’, subjective from judge to judge
DP - Lawyers
WDP - S v M is justified, prevent floodgates opening, frivolous claims overwhelming courts
If one party allows other to avoid detriment what will they have likely provided?
An ‘extra’ element
If one party allows other to avoid detriment, will it be valid consideration?
Yus
Williams v Roffey
Facts: Williams underquoted, Roffey had to get it finished in time, otherwise would get fine, Roffey offered Williams an extra £10,300 as incentive to finish on time, never paid it
Held: Williams consideration was completing work, allowing Roffey to avoid fine
Detriment AO3
P - Subjective, judicial creativity
DP - SOP
WDP - Didn’t do extra work, shouldn’t be paid extra
