Intention/Consideration

Question 1

How should intentions be interpreted?

Answer 1

Objectively

Question 2

Do domestic/family and social agreements have intent?

Answer 2

They are presumed to lack intention for a legal relation but some of them could still be enforceable if intention is proven from the facts
Balfour v Balfour
Merritt v Merritt
Simpkins v Pays

Question 3

Balfour v Balfour

Answer 3

A husband was stationed abroad and took a period of leave with his wife in England. When they were due to return, his wife was advised by her doctor to remain due to ill health. The husband promised to pay the wife £30 a month in his absence. Two years later the payments stopped and the wife sued him. It was held that there was no intention to enter a legal agreement.

Question 4

Merritt v Merritt

Answer 4

A husband left his wife and three children to live with another woman. He promised to pay his wife £40 a month to pay the mortgage. He also promised that once paid, he would transfer the house to her. Then he stopped sending the money and the wife sued. The Court of Appeal acknowledged that usually such a relationship would lack the intention needed, but in this case the agreement was enforceable since at the time the promise was made the couple were no longer living in amity so therefore the presumption was rebutted.

Question 5

Simpkins v Pays

Answer 5

A grandmother, her granddaughter and a lodger entered a Sunday newspaper competition. They all contributed to the details of the entry but it was in the name of the granny. They agreed that if they won they would split the winnings. When they did win £750 the granny refused to split the money claiming it was merely a domestic agreement. The court held the facts rebutted the presumption and there must have been an intention to a legal agreement.

Question 6

What is a clause denying legal intent?

Answer 6

Such a clause operates to rebut the presumption of legal intent that normally exists in the context of commercial contracts
Rose and Frank Co v Crompton Bros Ltd

Question 7

Rose and Frank Co v Crompton Bros Ltd

Answer 7

Under an agreement, RF was the exclusive agent of C for the sale of C’s goods. The agreement had a term that stated the agreement was not intended as formal and was binding in honour only. C terminated the agreement without the required notice and refused to carry out orders already placed by RF, so they sued for breach. The facts rebutted the presumption. House of Lords held that when an order was placed there was a legal relation for that order, once it was placed it had to be done.

Question 8

What is consideration?

Answer 8

For a promise to be binding, the parties must intent the promise to be legally binding and the promise must be contained in an agreement either made by deed or be supported by consideration ‘something of value’

Question 9

Past consideration

Answer 9

Even if something of value is given, it must be in return to the promise. Past consideration is no consideration.
Re McArdle

Question 10

Re McArdle

Answer 10

Mr and Mrs M lived in a house owned by Mr M’s father. Mrs M spent £488 decorating the house. Mr M and his brothers and sisters then wrote and signed a document promising that when the house became theirs under the father’s will the money would be given to Mrs M. The promise was held to not be enforceable since it wasn’t in response to the value. It was past consideration.

Question 11

Previous requests

Answer 11

For a previous request to be an implied promise of payment between the parties there has to be an understanding of payment between the parties (objective). The act needs to be in response to the previous request. It has got to be the kind of promise that would ordinarily be enforceable (with intention to be a legal relationship).
Lampleigh v Brathwait
Re Casey’s Patents

Question 12

Lampleigh v Brathwait

Answer 12

B had killed a man and he requested that L should try to get him a pardon from the King. L did as requested which involved making journeys at his own expense, but did manage getting that pardon. After that B promised to pay L £100 for his effort. B failed to pay and L sued him. The promise was enforceable because it was a response to a request.

Question 13

Re Casey’s Patents

Answer 13

The claimant wrote to C saying, “in consideration of your [past] services as practical manager” they would give him a one third share in certain patents. The past services addressed in the letter had been at the prior request of the claimants. It was held that the promise was enforceable because the act of value was in response to a request. It was made clear that in the request there is an implied promise of payment. The payment is then later a clarification of the value.

Question 14

Adequacy

Answer 14

adequate consideration means of market value (the market value of the promise being bought). Consideration doesn’t need to be adequate. Rolls Royce for a penny
Mountford v Scott

Question 15

Mountford v Scott

Answer 15

In this case, an option to purchase property worth £10 000 was secured in return for ‘token consideration’ of £1. The Court of Appeal held that the agreement was enforceable. It was stated that, there is a “mass of English authority to the effect that anything of value, however small the value, is sufficient consideration to support a contract at law”.

Question 16

Sufficiency

Answer 16

Consideration needs to be legally sufficient

Question 17

Is performance or a promise to perform an existing statutory obligation sufficient consideration?

Answer 17

No it is not sufficient consideration
Collins v Godefroy
Glasbrook Bros v Glamorgan

Question 18

Collins v Godefroy

Answer 18

During a case between G and another party, G had C subpoenaed to appear at the trial and give evidence as a witness. G promised to pay C a fee for attending each day, C did not get paid so he sued. The promise was not enforceable because it was something he had to do anyway.

Question 19

Glasbrook Bros v Glamorgan

Answer 19

During a miner’s strike, the mine requested a police presence. The police felt it was only necessary to have a mobile force ready to attend the mine if trouble broke out. The mine agreed to pay the police in return for a stationary force on the site. Later they did not pay the police saying the police was simply performing their statutory duty. Since the police had discretion to determinate what their duty was, their legal duty was their mobile force. They went beyond their legal duty by providing the stationary force, therefore there was consideration.

Question 20

Is performance or a promise to perform an existing contractual obligation sufficient consideration?

Answer 20

Traditionally it is not sufficient consideration.
Stilk v Myrics
Hartley v Ponsonby
William v Roffey Bros & Nicholls

Question 21

Stilk v Myrick

Answer 21

The claimant was one of the crewman on a ship. Under his contract, he would be paid £5 a month for sailing to the Baltic and back. When the ship arrived in the Baltic, two of the crewman deserted. The captain promised to divide the wages of the deserters with the remaining crew in return for them sailing back. They weren’t payed what was promised. It was held that all they did was their contractual duty so the promise was not enforceable since there wasn’t consideration.

Question 22

Hartley v Ponsonby

Answer 22

Here the facts are like the ones in STILK V MYRICK, but in this case half of the crew had deserted. The captain promised $40 extra to the crew if they continued from Australia to Bombay. The extra money was not payed. In this case, the promise was enforceable since the crew was never expected to sail in such dangerous conditions. They went beyond their contractual duty and therefore provided good consideration.

Question 23

Williams v Roffet Bros & Nicholls

Answer 23

R had contracted to refurbish a block of 27 flats. Under this contract, if R failed to complete the work on time, they would have to pay a penalty clause to their employer. R sub-contracted with W for the carpentry for £20,000 to be paid in instalments. After some of the work had been completed and W had been paid £16,200, W encountered financial difficulties. Worried that the carpentry would not be completed, R promised to W an extra £10,300 to complete the work as agreed. Since only £1,500 more was paid, W refused to continue and so R brought in other carpenters for the work. W then sued R. R argued that W simply promised to perform their existing contractual duty. The Court of Appeal held that the promise was enforceable. W performed his contractual duty but in doing so, performance would have given R a practical benefit, that benefit was good consideration. That benefit was avoidance of the penalty clause to R’s employer.

Question 24

Is performance or a promise to perform an existing contractual duty owed to a third party sufficient consideration?

Answer 24

It is sufficient consideration

Shadwell v Shadwell

Question 25

Shadwell v Shadwell

Answer 25

In a letter from an uncle to his nephew he stated that he was happy the nephew was engaged and promised to pay him an income of £150 a year. This payment was to continue for the rest of the uncle’s life unless the nephew annual income reached 600 guineas. When the uncle died, the nephew sued the estate for the arrears from not being paid in full. At the time, being engaged to be married was a legally binding contract. Performance of an existing contractual duty owed to a 3rd party is a sufficient consideration for a promise, it does not seem to matter if the promisee cannot prove that s/he has suffered a detriment or that the promisor has earned a benefit.

Question 26

Is part payment of a debt sufficient consideration?

Answer 26

It is a very long standing rule of English law that part payment of a debt does not release the debtor from the obligation to pay the debt in full. The rule can stated to be that part payment of a debt is normally not sufficient consideration to enforce a promise by a creditor to release debtor from the remainder of the debt.
Foakes v Beer
Pinnel’s case

Question 27

Foakes v Beer

Answer 27

F owed £2090 to Mrs B under judgement debt. She was entitled to interest until the sum had been paid. F wanted time to pay, so B agreed to allow payment of debt by instalments. B promised that if F kept up the repayments, B would not take any further action to enforce the debt. F paid the debt owned but not the interest so B sued for the interest. F was liable to pay the interest. The agreement reached amounted to part payment of a debt and under the rule in PINNEL’s case this was not good consideration for a promise not to enforce the full amount due.

Question 28

Pinnel’s case

Answer 28

The claimant was owed £8 10 shillings. The defendant paid £5 2 shillings and 2p. The claimant sued for the amount outstanding. It was held that the claimant was entitled to the full amount even if they agreed to accept less. Part payment of a debt is not valid consideration for a promise to forebear the balance unless at the promisor’s request part payment is made either:
a) before the due date or,
b) with a chattel or,
c) to a different destination
It means that in general, however clearly and unconditionally a creditor promises to release a debtor from the balance of a debt, or from interest payments (if a debt ‘rescheduling’ scheme can be arranged) he can always go back on the promise because it is not supported by consideration.

Question 29

The doctrine of promissory estoppel

Answer 29

Allows a promise to be enforced without consideration. It's a discretionary power and is meant to be used as a defence only. 
Rules of promissory estoppel:
1. Who seeks equity must do equity
2. Must come with clean hands
3. A delay defeats equity
Central London Property Trust v High Trees House Ltd
Combe v Combe
D&C Builders v Rees

Question 30

Central London Property Trust v High Trees House Ltd

Answer 30

In 1937, the claimant landlord leased a block of flats to the defendant (tenant) for 99 years with an annual rent of £2500. However, many people left London with the Second World War on the horizon. This meant it was very difficult for the tenant to sub-let the individual flats. So in 1940 it was agreed that the rent would be reduced to £1250. This was paid until the start of 1945. Then a claim was made for the full amount for the future (since the war ended) and some arrears. It was held that the rent would be returned to the originally agreed price for the future only. CLP could not claim back the arrears accrued during the war years. This case is important as Denning established the doctrine of promissory estoppel. Promissory estoppel prevented CLP going back on their promise to accept a lower rent even though the promise was unsupported by consideration.

Question 31

Combe v Combe

Answer 31

This concerned a married couple that that commenced a divorce. The husband promised to pay the wife an allowance of £100 a year once the divorce was complete. He didn’t pay, so years later, the wife sued relying on estoppel (since she provided no consideration). Her action failed. There was no pre-existing agreement which was later modified by a promise. The wife sought to use promissory estoppel as sword and not a shield.

Question 32

D&C Builders v Rees

Answer 32

Mrs R owed £482 to the claimants for building work that had been done. When the money was demanded, Mrs R complained about the work and wrote a cheque of £300 to settle the debt. The claimant was facing bankruptcy and so with reluctance, agreed and accepted the lessor sum (thereby promising not to sue for the remaining balance. They then sued for the remaining balance. The claimants were successful. Mrs Rees could not rely on estoppel as there was no true agreement to accept less and because Mrs Rees had taken advantage of the builder’s position and mislead them as to her financial position.