L2 consideration and promissory estoppel Flashcards
what is consideration?
‘a valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss, or respinsibility, given, suffered, or undertaken by the other’
example of consideration
When you buy a DVD recorder from a shop, the benefit you receive is the DVD recorder, and the detriment is the money you pay the shop.
gratuitous promise
a promise given in exchange for nothing is a gratuitous promise and this is not binding except when contained in a deed
gratuitous promise case example
Re Hudson (1885) - gratuitous promise is not a legal contract
executory consideration
a promise made in return for a promise - where both parties are still to be performed
executed consideration
occurs when one of the two parties has done all that they are reqiured to do, leaving any outstanding liability on the other party
past consideration
past consideration is no consideration, consideration must be given in return for the promise
case for past consideration
Roscorla v Thomas 1842
past consideration example
past consideration (mary will drive bob to Manchester, conferring a benefit) - alleged contract formed (promise made, bob will pay mary £50) - enforcement (mary tried to sue bob for the £50, but she will fail)
Past consideration exception - Pao on v Lauyiu Long
the three stage test -
1. that an act done ebfore the giving of a promise could be valid consideration for that promise if the act had been done at the promisers request
2. the parties had understood that the act was to be remunerated either by payment or by conferment of a benefit
3. the payment or conferant of benefit would have been enforceable had it been promised in advance
earlier implied promise exception
Request ( bob (impliedly) that he would pay mary for driving him) - consideration (mary drives bob) - express promise (bob expressly promises to pay Mary £50, thereby fixing the amount to be paid in pursuance to the earlier understanding) - enforcement ( mary sues bob for £50, successfully)
performance of existing duties
in general a promise to perform a public duty cannot be consideration however, if the promise is to do more then is required by law, this may well amount to consideration
existing contractual duties owed to third parties
Shadwell v Shadwell 1860 - uncle to nephew - ‘marry and i will pay’ (breach or promise to marry actions existed then)
obligation already owed
a promise to perform a contractual obligation already owed to the other party will not constitute good consideration
the doctrine of promisory estoppel
- the promisor made a promise
- the promisor should have reasonably expected to induce the promisee to rely on the promise
- the promisee actually relied on the promise and engaged in an action or forebearance of a right of a definite and substantial nature
- injustice would be cuased if the promise were not enforced
estoppel
estoppel restricts a person’s ability to ‘go back on’ a belief of assumption that they induced in another person. the doctrine has the effect of making some kinds of promises binding even where they are not supported by consdieration
promissory estoppel
certain situations where a partyu to a contract promises something which is at variance with the original terms of contract and where the other party to the contract alters his/her behaviour in reliance of that promise. in such situations, english law will often prevent the former party from enforcing the original terms of the contract
requirements for promissory estoppel
there must be an existing legal relationship between the parties whihc is being altered by the promissory estoppel
requirements for promissory estoppel
there must be an existing legal relationship between the parties whihc is being altered by the promissory estoppel
intention to create legal relations
it must be shown that the parties to the agreement intended legally bound by the agreement - it is an objective test based on what the reasonable person would have intended
commercial agreements
in a business context - there is a presumption that parties intend to create legal relations and it should be easy to spot this as it will be a company or business trying to sell to either an individual or another company
domestic arrangemnts
the law also presumes that where people make arrangements between family or friends then they do not wish to form a legal contract, and this should be easy to spot as there will be no companies or businesses involved or the persons are closely related
summary
consideration must be executed or executary but not past
consideration must move from the promise though not necessarily to the promisor
consideration must be sufficient thought not necessarily accurate
