Intention To Create Legal Relations

Question 1

Balfour v Balfour

Answer 1

• social / domestic agreements
• wife promised allowance of £30 a month

The promise was said to be in consideration of the wife not making any other claim against the husband for her maintenance while he was posted abroad. When the parties later separated, the wife sued to enforce this agreement.

Held: this agreement was not enforceable.

between husband and wife are “not contracts, and they are not contracts because the parties did not intend that they should be attended by legal consequences” (Atkin LJ, Balfour v Balfour)

Question 2

Alliance Bank Ltd v Broom

Answer 2

-> implied requests

D owed money to C. C demanded that the D provide security for the loan. D promised to supply documents of title for goods owned by D as security.

When C sought to enforce D’s promise, D argued that there no consideration for it as neither had C promised anything nor had D requested anything in return

Held: there was good consideration as D, by providing the security, was impliedly requesting that C hold back on enforcing the debt.

Question 3

Roscorla v Thomas

Answer 3

• past acts are not good consideration
  D sold a horse to C without making any promise (warranty) as to its fitness. Later, D assured C that it was free of defects.
  Held: D’s assurance was unenforceable – C’s earlier payment for the horse could not be consideration for it

Question 4

Chappell v Nestlé

Answer 4

The consideration-need-not-be-adequate principle applied

The claimant copyright owner sued for unpaid royalties.

•The claim turned on whether the wrappers were part of the consideration paid for the record.

•Held: the wrappers were part of the consideration.

“A contracting party can stipulate for what consideration he chooses. A peppercorn does not cease to be good consideration if … the promisee does not like pepper and will throw away the corn.” (Lord Somervell)

Question 5

Foakes v Beer

Answer 5

Promises to accept “less for the same”: part-payment of the debt

Foakes v Beer (1884) 9 App Cas 605

Court: House of Lords

Issue: Whether part-payment of a debt can discharge the full debt.

Facts:
Foakes owed Beer £2,090 and agreed to pay £500 as part-payment. Beer accepted the £500 but later sought to recover the remaining balance, arguing that part-payment was insufficient to discharge the full debt.

Held:
The House of Lords ruled in favor of Beer. A promise to accept part-payment of a debt is not binding unless there is new consideration (something additional given in exchange for the reduced payment). Foakes’ promise to pay less than the full amount without offering new consideration did not discharge the full debt.

Legal Principle:
A part-payment of a debt is not valid consideration to discharge the entire debt unless something extra is offered in return, as per the doctrine of consideration.

Question 6

combe v combe

Answer 6

Combe v Combe, a wife argued that the husband’s
promise during divorce proceedings to pay her £100 p/a was
supported by consideration in that she did not make a
financial claim against her husband.
Held: there was no consideration for this promise as the
husband had not requested that she not make such

Question 7

Williams v Rofey

Answer 7

• builders told to refurbish 27 flats owned by housing company
• contract had penalty clause for late completion
  -Williams; carpenter, fell behind on work and was offered bonus payment to finish on time -> Williams continued until payment stopped
  -> he sued for breach of contact
  ->

Question 8

Issues in Williams V Rofey

Answer 8

• appellants argued the agreement to pay extra was unenforceable as Williams had provided no considerations; appellants only received the practical benefit in law
• Williams was only agreeing to what he was bound yo do
• appellants relied on Stilk v Myrick 1809; where held performance of an exiting duty was not good consideration

Question 9

Outcome of Williams v Rofey

Answer 9

Held: there was good consideration for D’s promise
of extra payment, consisting of the “practical benefit” of
ensuring C continued to work, avoiding penalties under
the main contract, and not having to find someone else
to do the work

Question 10

MWB v Rock

Answer 10

D owed money to C under an agreement to rent office space
* C agreed to reschedule D’s debt in return for prompt payment of
£3,500 and D agreeing to repay the remaining arrears according
to a revised schedule.
Held: there was consideration via the “commercial advantage” in:
(i) C receiving the immediate payment of £3,500;
(ii) D having the opportunity to overcome its cashflow difficulties (so
C being likely recover more)
(iii) D remain in occupation as a licensee
Court of Appeal’s decision overturned on other
grounds by the Supreme Court.
* Lord Sumption opined that the rule in Foakes v Beer
was “probably ripe for re-examination”