Intention To Create Legal Intentions

Question 1

Social + domestic agreements

Answer 1

• S+D -> presumption that parties do not intend to be legally bound
• Commerical -> is a presumption that they do not

Question 2

Rebutting the presumption in social/domestic cases

Answer 2

• the presumption can be rebutted by evidence to the contrary

The onus of rebutting the presumption of intent to create legal relations in a commercial context is a “heavy one”: Edwards v Skyways Ltd.

In Edwards, a promise to make “ex gratia” (goodwill, no obligation) payments to employees was held to be enforceable (the presumption had not been rebutted)

Question 3

Presumption in social/domestic cases

Answer 3

1.Law must “leave space for people to trust each other”. It would damage personal relations if every promise was legally enforceable.

2.Less need, perhaps, for “artificial trust” among people who are close – and so less of a role for the law

3.Opening the floodgates to litigation: “the small Courts of this country would have to be multiplied one hundredfold” (per Atkin LJ in Balfour v Balfour).

Question 4

Against the presumption in social/domestic cases

Answer 4

Based on patriarchal assumptions (home as a private domain, a man’s castle); arguably disadvantages women and informal carers.

2.Out of step with a wider trend for more state intervention into the realm of personal relationships (eg Domestic Abuse Act 2021).

3.Should at least monetary promises made in domestic contexts be taken to be intended to be legally enforceable?

Question 5

Considerations legal relevance

Answer 5

Consideration is an additional requirement beyond agreement (offer & acceptance), certainty of terms and intention to create legal relations.

Promises made in deeds (Lecture 3) do not have to be supported by consideration, however.

Promissory estoppel (Lecture 3) is also (sometimes) a way of getting around the requirement of consideration
?

Question 6

Basic idea

Answer 6

The transaction must have some element of reciprocity or exchange.

•The presence of an exchange element is a signal that a binding contract is intended by the parties.

•Alternatively, some people think promises that are given as part of exchanges are more worthy of legal enforcement

Question 7

Consideration defined

Answer 7

A benefit to the promisor or a detriment to the promisee (ie who is trying to enforce the promise) …

• … which is given in return for the promise …

• and which is given or incurred by (“moves from”) the person seeking to enforce the promise.

Question 8

Consideration must move from the claimant

Answer 8

Traditionally, the consideration requirement determined:

•Which promises are enforceable, and

•By whom – ie the person who has provided consideration

Question 9

Privity rule

Answer 9

The “privity” rule is the common-law rule that a person is not a party (a “third party”) cannot sue on a contract to which they are not party and have not provided consideration.

Question 10

Ways around the privity rule

Answer 10

The privity rule can be circumvented if it is possible to assert that:

•the person to whom the promise is made and who supplies the consideration was agent for the other party;
•there is an implied collateral contract between the promise and the third party
•the promisee can sue on behalf of the third party in respect of the third parties’ losses

Question 11

CRPTA 1999

Answer 11

• allows a third party to enforce a contract term where
  -> the contract expressly provides that he may or
  -> the term purports to confer a benefit on him
  -» consideration is still required but it need not to be supplied by the claimant/third party

Question 12

consideration must be in return for the promise

Answer 12

the need for a connection between the promise and the benefit to the promisor means
-> the benefit, if not counter promised by the promisee, must have been requested by the promisor
-> past consideration (benefits/detriments conferred or incurred before the promise) is not good consideration

Question 13

the need for a request

Answer 13

• the benefit must be at request of the promise
  (combe v combe)

Question 14

implied requests

Answer 14

(alliance bank ltd v broom)

Question 15

when will a request be implied?

Answer 15

line between no request for benefit + an implied request seems regular
he greater the likelihood that
the promisee would have acted differently had the promise
not been made, the more likely it is that the promisee’s act
will be deemed impliedly requested:
* In Broom, the bank would almost certainly have sued
straightaway if D had failed to provide the security.
* But in Combe, it was unlikely that W would ever have
applied for maintenance as she was richer than H.

Question 16

valuable consideration defined

Answer 16

Lush J: Currie v Misa
A valuable consideration, in the sense of the law, may
consist either in some right, interest, profit, or benefit
accruing to the one party [the promisor], or some
forbearance, detriment, loss, or responsibility, given,
suffered, or undertaken by the other [the promise].”

Question 17

how large is a benefit/detriment

Answer 17

Adequate” (equivalent / roughly equivalent) value is not
required.
Consideration can be nominal – of very small or even trivial
value.

Question 18

why are promises for nominal consideration enforced?

Answer 18

Market freedom, Individuals, not the state, decide how
much goods and services are worth.
* Signal of intention to be bound

Question 19

abandoning/forbearing to enforce a legal right

Answer 19

Giving up, or forbearing to enforce, a legal claim is good
consideration. Giving up a claim is called a “release” of
the claim, or, often, where it is being done to avoid a
dispute a “compromise” or “settlement” of the claim
A release is valid consideration even if the claim was
invalid as a matter of law, so long as it was being
advanced in good faith: Cook v Wright

Question 20

3 types of pre-existing duty:

Answer 20

was imposed by the general law (non-contractual)
b) was part of a contract between the promisee and a
third party (not the promisor)
c) arose from a contract with the promisor.

Question 21

general/public duties

Answer 21

erformance of (or promise to perform) a duty imposed
by the general law is not good consideration.
But a promise to do more than is strictly necessary may,
though, amount to good consideration:
* Glasbrook Bros v Glamorgan CC (promise to pay for
extra policing at a colliery upheld)
* Ward v Byham (mother’s promise to ensure her child
was “well looked after and happy” upheld)

Question 22

contractual duties owed to third parties

Answer 22

By contrast, performance of a
contractual duty owed to a third party
is regarded as good consideration

Question 23

pre-existing duties under contract with the promisor

Answer 23

This issue is closely connected
with the question of what amounts
to a valid contract variation.
A contract variation is
uncontroversially valid if:
* Both parties undertake
additional obligations (eg The
Atlantic Baron)
* One party’s obligations are
replaced by different ones (eg
an apple for an orange)

Question 24

problematic contract variations:

Answer 24

Situations where the requirement of consideration
causes problems:
* One party agrees to pay more for the same. Eg: A
promises to pay an extra 40p for an apple B had
already agreed to sell to A for 60p.
 One party agrees to accept less for the same. Eg: B
owes A the sum of £100 payable today. Now A agrees
to accept £80 in satisfaction of the debt (promising not
to sue for the remaining £20)

Question 25

“more for the same” promises

Answer 25

“More for the same” promises
The general rule (although now
heavily qualified) is that a promise
to pay more for the same is not
good consideration.
Stilk v Myrick (1809): a ship’s
master promised to distribute the
wages of deserting sailors among
the remaining crew.
Held: there was no
consideration for this promise; the
remaining sailors had done no
more than they had been engaged
to do.“More for the same” promise

Question 26

incoherence in the law?

Answer 26

Despite strenuous efforts to the contrary, Roffey
clearly overturns the pre-existing duty rule for which
Stilk v Myrick is authority” (Chen-Wishart, 1997)

Question 27

Can the “practical benefit” of a part
payment be good consideration

Answer 27

unclear:
* On the one hand, in Re Selectmove (1995), the
Court of Appeal held that Foakes v Beer meant that
a taxpayer could not argue that a deal to give it time
to pay a tax debt was supported by consideration,
despite the practical benefit to Revenue of the
taxpayer not being put into liquidation.
* But in MWB v Rock (2016), the Court of Appeal
seemed to treat such a practical benefit as good
consideration .

Question 28

A distinction between re-promising
and performing existing obligations

Answer 28

Chen-Wishart argues that we should distinguish between
a mere re-promise to perform an existing contractual duty,
and actual performance of such a duty. The latter
plausibly constitutes a real benefit to the other party, since
a “bird in the hand is worth two in the bush”…
But merely (re-)promising what
you have already promised to
do does not constitute a benefit,
and treating this as a benefit
leads to absurd results.

Question 29

consideration: criticisms

Answer 29

Excessively technical, artificial and open to judicial
manipulation?
* Incoherent pattern of decisions (?) Can Combe v
Combe (no request) be reconciled with Alliance Bank v
Broom (implied request)? Maybe. Can Roffey be
reconciled with Stilk v Myrick or MWB v Rock
reconciled with Foakes v Beer? Probably not…
* Invalidates agreements contrary to parties’ intentions,
interferes with freedom of contract

Question 30

defending doctrine of consideration

Answer 30

Perhaps limiting freedom of contract is no bad thing?
Why should parties not be allowed to change their mind
if no one else would be harmed by this?
* Although the requirement might invalidate some
agreements intended to have legal force, it may be that
on the whole the requirement makes the law more
responsive to parties’ intentions, because it provides a
conventional way of signalling those intentions.
* Relatedly, it is not hard to get around the requirement if
one wants: use nominal consideration or a deed.
Defending the doctrine…