week eight

Question 1

what does sufficient and insufficient consideration relate to?

Answer 1

consideration must be of a sufficient type - the courts must recognise it as consideration

Question 2

what does Patterson J say about the sufficiency and insufficiency of consideration

Answer 2

consideration means something which is of some value in the eye of the law

Question 3

is performance and promise sufficient consideration

Answer 3

yes

Question 4

is conditional promise sufficient consideration

Answer 4

yes

Question 5

is forbearance sufficient consideration

Answer 5

yes

Question 6

is forbearance to sue sufficient consideration

Answer 6

yes

Question 7

is entering into another contract (collateral contracts) sufficient consideration

Answer 7

yes

Question 8

does promise have to be absolute, or can it be conditional?

Answer 8

it can be conditional - the exchange of an absolute payment for a conditional payment

Question 9

what is forbearance

Answer 9

a promise not to do something

Question 10

what happened in Hamer v Sidway - case about forbearance

Answer 10

the uncle promised his nephew $5000 if he abstained from drinking liquor, using tobacco, swearing and playing cards or billiards for money until he was 21. the nephew agreed and requested payment. Uncle said he would hold onto the money at the time but then the uncle died.

this was a case between the executor of the uncles will and the person who had been assigned the right to the money by the nephew.

Question 11

what is forbearance to sue

Answer 11

forbearance to bring a civil action

Question 12

in a settlement agreement, one party is agreeing to pay an amount and in exchange the other is agreeing not to bring suit. In doing so, they are giving up their right to?

Answer 12

legally enforce that dispute

Question 13

what is an issue with forbearance to sue?

Answer 13

what happens if it is clear that the suit would not have been successful? If there is no way they could have succeeded, what are they really giving in relation to that settlement agreement?

Question 14

what happened in Couch v Branch Investments - relates to forbearance to sue

Answer 14

a company owned by Mr Couch purchased a boat, financed as a hire purchase through Branch Investments. Mr COuch guaranteed personally.

Boat sank and they couldn’t get insurance. Purchaser stopped making payments so Branch looked to enforce against Couch.

Branch entered into an agreement with Mr and Mrs Couch that it would forbear from suing Mr Couch for 1 month in exchange for a mortgage over the Couch’s home.

Couch did not pay, he was declared bankrupt and the couple separated.

Branch attempted to enforce that agreement against Mrs Couch’s share of the home

Question 15

why was there an issue of consideration in Couch v Branch Investments

Answer 15

the suit against Mr Couch as guarantor could never have succeeded because the original agreement breached hire purchase regulations in force at the time. So what are they actually giving under that arrangement since they are offering to forbear to sue when the suit could never have succeeded?

Question 16

what is the courts response to the issue regarding consideration in Couch v Branch Investments

Answer 16

they laid out a very high standard that has to be met for forbearance to sue to not be considered good consideration under this approach.

Question 17

what was the result of Couch v Branch Investments

Answer 17

Branch Investments representatives genuinely believed the initial arrangement was enforceable and legal. The forbearance to sue was good consideration and Mrs Couch was unsuccessful.

Question 18

what is collateral contracts with respect to consideration

Answer 18

one party agrees to enter into a different contract.

Question 19

what are each of the agreements called with collateral contracts

Answer 19

where one party is agreeing to enter into another contract = collateral contract

the agreement they are agreeing to enter into = the main contract

Question 20

what did Shanklin Pier v Detel Products concern

Answer 20

Pier in Isle of White was in disrepair. Contract was formed between Shanklin and third party for them to repair and repaint the pier.

Shanklin representative talked to Detel director about the work, who said Detel DMU paint would be good for the job.

So Shanklin, under the contract they’d already entered into, specified that DMU paint would be used for repainting, which they were entitled to do.

The paint was not satisfactory and Shanklin attempted to recover the loss caused by the failed paint

Question 21

what was the outcome of Shanklin Pier v Detel Products

Answer 21

there was a contract between Shanklin and Detel even though the third party purchased the paint. Under that contract, Detel promised the paint would be good and in exchange Shanklin Pier agreed to specify that the paint would be used.

They were able to recover their losses

Question 22

what are discretionary promises

Answer 22

where one party promises to do something, but it is at their discretion whether they actually perform

Question 23

generally, are discretionary promises good consideration?

Answer 23

no

Question 24

what did Clyne v Final Touch 2001 concern regarding discretionary promises

Answer 24

agreement to sell multiple franchise operations. the purchase was conditional upon the purchasers satisfaction. this satisfaction was at the purchasers discretion, but they did have to carry out a due diligence investigation

Question 25

what was decided in Clyne v Final Touch 2001 (about discretionary promises)

Answer 25

there was consideration - the requirement to carry out a due diligence investigation - this wasn’t conditional. this was the only proper obligation as it was a pre-condition to determining whether they were satisfied by the business or not.

therefore, a contract was formed here, with the only absolute obligation on the purchaser being to carry out the due diligence investigation

Question 26

what is past consideration?

Answer 26

where one parties performance occurs before the agreement was reached

Question 27

is past consideration generally good performance

Answer 27

no

Question 28

what did Re McArdle concern (past performance)

Answer 28

a man died and left his assets to his children subject to a life interest granted to his wife.

one of his sons was living in a house that was part of the fathers estate and undertook improvements, paid for by his wife. following the improvements, the son went to his siblings and they all signed a document for the wife to be paid 488 pounds for the improvements upon the distribution of the estate.

when it came time, the siblings resisted this agreement

Question 29

what was the result of Re McArdle

Answer 29

the promise to pay the money in the future had good consideration. But when this agreement was entered into, the improvements had already been completed. this was past consideration and therefore the agreement was not enforceable

Question 30

what is the general case for if there is consideration when there is an existing public duty

Answer 30

under an agreement, a promise to do something that the person already has a public duty (generally statutory) to do, is not good consideration

Question 31

what happened in Black White and Grey Cabs v Reid

Answer 31

there was a dispute between this taxi operator and a couple of the taxi drivers, with the operator fining the drivers for a breach of its rules.

but was the agreement in place between the drivers and the operator contractual - was there consideration?

BWG cabs did not have much obligation under the contract, only one clause was an obligation and the drivers argument was there was no consideration because BWG were already obliged to this clause by the Transport Act 1962

Question 32

what did the court have to decide in Black White and Grey Cabs v Reid

Answer 32

was the taxi cab organisation obliged under the agreement to do more than it was required to do under the Act? If they weren’t there is no consideration. If the clause was broader and requires BWG to do more than required, this will be good consideration

Question 33

what was the CA decision in Black White and Grey Cabs v Reid

Answer 33

the contractual obligation is broader than the statutory obligation because the contractual obligation required the taxi cab organisation to allow the driver to use the system whenever it was operating and the taxi cab organisation could operate the system even though it would not be necessary to meet the reasonable public demand.

this meant there was consideration for the contract here.

Question 34

what is the traditional rule of whether there is consideration where there is an exisiting contractual duty owed to the promisor

Answer 34

there isn’t consideration for the second agreement/variation agreement to pay more. the other party has already promised to do whatever they are re-promising to do

Question 35

what is the problem with the traditional idea that there isn’t consideration for the second agreement to pay more (where there is an existing contractual duty owed to the promisor)?

Answer 35

often in a commercial setting, rearrangements of contracts are very common and often reflect a good faith attempt to address changes, mistakes, uncertainties etc.

Question 36

what was the situation in Cook Island Shipping Co Ltd v Colson Builders

Answer 36

Colson Builders were to build an aircraft hanger in Rarotonga and entered into a contract with Cook Island Shipping to ship all the building materials. The materials took longer to load onto the ship than was anticipated and said it would only continue to load if an extra amount was paid which Colson agreed to.

Colson refused to pay and claimed there was no consideration for that agreement to pay the extra amount

Question 37

what was the decision in Cook Island Shipping Co Ltd v Colson Builders

Answer 37

there was no consideration and they would not enforce the second agreement

Question 38

what approach does Cook Island Shipping Co Ltd v Colson Builders reflect in regards to there being or not being consideration where there is an existing contractual duty owed to the promisor

Answer 38

the traditional approach (no longer the law in NZ)

Question 39

what was the situation in Williams v Roffey Bros & Nicholls 1991

Answer 39

Roffey entered a contract to refurbish 27 flats and subcontracted carpentry work to Williams for 20,000 pounds.

Roffey bros were concerned about progress because if they didn’t finish on time they would be subject to penalties under the main contract. they agreed to pay Williams an extra 10,300 pounds.

Roffey bros refused to pay any of the additional amount. Williams stopped work and sued Roffey bros for the additional payment while Roffey claimed no consideration for the secondary arrangement

Question 40

what did the court find in Williams v Roffey Bros & Nicholls

Answer 40

it was enforceable because they said there was a practical benefit which is enough for consideration, even though there is no legal benefit - which consideration does actually require

Question 41

in what ways did Lord Justice Glidewell say Mr Williams potentially provided a practical benefit in Williams v Roffey Bros & Nicholls

Answer 41

1. benefits Roffey Bros as it is making it more likely Williams will perform under the original contract
2. Roffey Bros don’t need to get rid of Williams and hire someone else to do the job; or
3. benefit comes from finishing on time and so avoiding paying the penalty under the main contract

Question 42

what are the benefits and negatives of the ‘practical benefit’ approach to consideration where there is an existing contractual duty owed to the promisor

Answer 42

it allows the court to enforce these types of arrangements that are sensible reactions to changes.

Negatives: completely destroys consideration because it isn’t even really consideration anymore

Question 43

does the ‘practical benefit’ approach to consideration where there is an existing contractual duty owed to the promisor still apply as law in the UK

Answer 43

yes

Question 44

what was the background situation in Her Majesty’s Attorney-General for England and Wales v R

Answer 44

a member of the SAS fought in the Gulf War and was part of a group that were involved in a failed mission and subsequently were captured, tortured and later escaped.

some members of that group started publishing stories about the mission - including books and a movie ‘Bravo 2 0’

an nz member of that squad was asked to either sign the confidentiality agreement or he will lose his SAS posting and be returned to his unit.

later R was going to publish a book on the mission.

This case is an attempt by the England and Wales Attorney-General to prevent publication of that book in the NZ Courts 0 questions the enforceability of the confidentiality agreement?

Question 45

what did the court find in Her Majesty’s Attorney-General for England and Wales v R

Answer 45

the court found there was consideration for the agreement under the normal understanding of consideration - in return for confidentiality, R avoided being returned to unit, which he was anxious to avoid - supportive of the Williams v Roffey Bros approach

Question 46

Tipping J, in Her Majesty’s Attorney-General for England and Wales v R, outlines that normal consideration requires what?

Answer 46

a legal benefit