Consideration, Promissory Estoppel & Privity

Question 1

What is meant by consideration?

Answer 1

Each party must gain a benefit and suffer a detriment as a result of entering into a contract

Question 2

How did Sir Frederick Pollock define a detriment?

Answer 2

The price for which the promise of the other is bought

Question 3

What is the necessity for consideration?

Answer 3

Necessary for all simple contracts to be formed

Question 4

What is the difference between executory and executed consideration?

Answer 4

Executory: promise given for a promise (e.g. promise to do work in return for pay)
Executed: occurs when one party has done all they are bound leaving outstanding liability on one side

Question 5

What is meant by need not be adequate but must be sufficient?

Answer 5

Consideration must be something real and have some value in the eyes of the law, however the courts are not concerned whether a good deal exists or not (Chappell v Nestle Co)

Question 6

What is past consideration?

Answer 6

A mere sentiment of gratitude for benefits received after the act has been carried out is not valid consideration

Question 7

What are the requirements in order for past consideration to be valid?

Answer 7

Pao On v Lau Yiu Long, the act must have been done at the promisors request, the parties must have understood the act was to be remunerated and the benefit would have been enforceable had it been promised in advance

Question 8

What is the rule on consideration when there is a pre-existing duty?

Answer 8

Stilk v Myrick, no consideration to carry out a duty that you already had to HOWEVER
Williams v Roffey, where the person derives a practical benefit and the duty has an extra element, this is valid consideration

Question 9

What is promissory estoppel?

Answer 9

A promise that can be enforced in a pre-existing contract without consideration if one party relies on the promise and suffers loss/harm as a result

Question 10

What case laid down promissory estoppel

Answer 10

Central London Property Trust Ltd v High Trees House Ltd, if the landlord had tried to go back on his promise during the wartime he would have been stopped

Question 11

What is the privity doctrine under the common law?

Answer 11

You cannot be sued or sue under a contract unless you are a party to it

Question 12

What cases demonstrate the doctrine of privity?

Answer 12

Tweedle v Atkinson, the agreement was made between the fathers
Dunlop Pneumatic Tyre Co Ltd v Selfridge

Question 13

What happens when a party in a contract also acts for the benefit of a third party?

Answer 13

The party to the contract can claim damages for the third party if they also benefit, Jackson v Horizon Holidays

Question 14

In what ways is Jackson v Horizon Holidays limited?

Answer 14

Woodar Investment Developments v Wimpey Construction UK, contracting party is entitled only to nominal damages where he has personally suffered no loss, view in Jackson is limited to the specific fact pattern

Question 15

What act protects third parties so they can claim in a contract?

Answer 15

Contracts (rights of third parties) act 1999

Question 16

When can a person claim under the act?

Answer 16

Under s1(1) if the contract expressly provides they can or if a term exists to confer a benefit (must be identified expressly or as a class of people)

Question 17

What does the case of White v Jones show?

Answer 17

Duty of care can be owed to a third-party who suffers a loss of expectation as a result of negligence by a professional in the course of a service meant to benefit the third party (in this case a new will)

Question 18

Can a third party enforce an exclusion clause?

Answer 18

The Eurymedon, the third party could rely on an exclusion clause as the wording was designed to cover all parties involved in carrying the goods. The respondents had the benefit of a directly enforceable action, the stevedores had the benefit of the time limit, therefore sufficient consideration had been made even though they were only doing what they had already contracted to do with a third party