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Contract > Unit 1.2- Consideration > Flashcards

Unit 1.2- Consideration Flashcards

1
Q

Define consideration

A

The price you pay for another’s promise (The 3 Ps, Pollock)

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2
Q

Chappell & Co Ltd v Nestle Co Ltd

A

Consideration need not be adequate, but must be sufficient

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3
Q

Thomas v Thomas

A

Consideration must have some economic value

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4
Q

Consideration need not be adequate, but must be sufficient

A

Chappell & Co Ltd v Nestle Co Ltd

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5
Q

Consideration must have some economic value

A

Thomas v Thomas

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6
Q

What is the rule in White v Bluett

A

Due to public policy issues, forbearance (not doing something) is not good consideration

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7
Q

What does Roscorla v Thomas tell us?

A

Past consideration is not good consideration

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8
Q

Exception to the rule in Roscorla v Thomas

A

Following 3 must be satisfied:

Lampleigh v Brathwait- the act was carried out at the promisor’s request

Re Caesy’s Patents, Stewart v Casey- the parties understood from the beginning that the act was to be rewarded in some way

All other requirements for a valid, binding contract exist

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9
Q

Is A’s Performance of his existing contractual duties good consideration in exchange for a promise from B to pay more?

A

GENERALLY no

Stilk v Myrick

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10
Q

Exceptions to the rule that performance of an existing contractual duty is not good consideration in exchange for a promise to be paid more?

A

EXCEPTION 1- If A exceeds his duties in some way, or confers extra benefit on B (Hartley v Ponsonby). Question of:

  • Fact and degree
  • Public policy

EXCEPTION 2- provided that all following criteria are satisfied (Williams v Roffey Bros & Nicholls (Contractors) Ltd)

a) There is a contract for goods/ services in return for payment
b) B doubts whether A will compete his obligations
c) B promises additional payment if A completes his obligations on time
d) As a result of giving this promise, B obtains a practical benefit or obviates a dis benefit; and
e) B’s promise to pay extra is not given as a result of economic duress or fraud on the part of A

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11
Q

Is A’s performance of his existing contractual duties to a third party good consideration?

A

Yes

Scotson v Pegg- Even if the promisor is already bound to perform obligation for another party

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12
Q

Is the performance of one’s public/ legal duties good consideration?

A

Generally No

Collins v Godefroy

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13
Q

Exceptions to the fact that performance of one’s public/ legal duties is not considered good consideration?

A

If

  • Contrary to public policy (Williams v Williams)
  • Public duty is exceeded (Glasbrook Bros Ltd v Glamorgan County Council)
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14
Q

Is the party payment of undisputed debts good consideration for a promise by the creditor to forgo the balance?

A

GENERAL RULE- no

EXCEPTION 1 (Pinnel’s case)- part payment is good consideration if the debtor

  • gives something different; or
  • pays early

EXCEPTION 2- promissory estoppel (Central London Property Trust Ltd v High Trees House Ltd)

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15
Q

Define promissory estoppel

A

High Trees

Where promisor has made promise to other party to forgo a legal right. Once promisee has acted on promise he has good defence to any claim brought by promisor which is inconsistent with promise

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16
Q

When will promissory estoppel apply?

A

If following conditions are met (PRIDE)
Promise- must be a promise to waive legal right which must be intended to be acted upon by the other party (Hughes v Metropolitan Railway Company)

Reliance- promisee must act upon promise, but he need not have acted to his detriment only altered his behaviour (Emanual Ajayi v TR Briscoe (Nigeria) Ltd and Alan v El Nasr)

Inequitable- it must be inequitable/ unjust for promisor to go back on his promise and insist on his full legal rights (D&C Builders v Rees)

Defence- promissory estoppel will not give rise to a cause of action- shield not sword (Combe v Combe)

Effect- the effect is to extinguish or suspend legal rights

17
Q

What is the effect of promissory estoppel?

A

Suspend promisor’s legal rights
May resume these rights by giving promisee reasonable notice (Tool Metal Manufacturing Co case)

Where cannot be resumed, permanently extinguishes them (Emanual Ajayi)

Effect on one off debts is uncertain, may possibly operate to waive payment (D&C builders v Rees)

18
Q

What is the case law concerning promissory estoppel?

A

High Trees

Hughes v Metropolitan Railway Company

Emanual Ajayi

Alan v El Nasr

D&C Builders v Rees

Combe v Combe

Tool Metal Manufacturing Co

19
Q

Steps for determining when promissory estoppel will apply?

A 
PRIDE
P- promise 
R- reliance
I- inequitable
D- defence
E- effect
20
Q

Define Agency

A

Relationship that arises where one person acts on behalf of another (principal) and has the power to effect the principal’s legal position with regard to a third party

21
Q

Case that determines how agency is made

A

Freeman and Lockyer v Buckhurst Park Properties

22
Q

What are the two ways that agency can be created via?

A

Freeman and Lockyer v Buckhurst Park Properties

  • actual authority: legal relationship created by express appointment
  • apparent authority
      • Representation (words or conduct) made by the principal to the third party that agent had authority
      • Representation is relied upon by the third party, believing that the agent had authority
      • In reliance of the representation, the third party altered their position e.g. by entering the contract
23
Q

The effects of agency?

A

Agent has authority (actual or apparent)- valid contract between the principal and third party

Agent does not have authority- principal cannot sue or be sued by third party. Third party can sue agent in

  • Tort of deceit if the agent knew he had no authority
  • Breach of an implied warranty of authority
24
Q

‘It is a shield, not a sword’

A

Promissory estoppel

Combe v Combe- it will not give rise to a cause of action

25
Q

What is the rule in Foakes v Beer

A

Partial payment of debt is not sufficient consideration for a promise by a creditor to forgo the debt

I.e. A fully completed obligations and agrees to accept reduced fee from B

26
Q

What is the rule in Stilk v Myrick

A

Performance of an existing contractual duty owed to other party isn’t sufficient consideration for promise to pay more

I.e. A agrees to pay B more money in order to finish a job

Contract (5 decks)

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