Ch.3 Consideration Flashcards
(6 cards)
Dunlop v Selfridge 1915
Dunlop agreed to seek tyres at a discount in return for prompt payment within set timeframe.
Purchaser permitted to resell at discount only to genuine trade companies, who must also agree to resell certain products at full list price.
Terms agreed.
Defendants resold prohibited items at discount.
Dunlop commenced action, claiming defendants to be agents.
Found in favour of Dunlop at first instance, reversed on appeal.
Held (House of Lords): Transaction completed, defendants not acting as agents.
No consideration between Dunlop and defendants, contract unenforcable.
Appeal denied.
Chappell v Nestle 1960
Nestlé offered a record for a discounted price when furnished with three of their chocolate wrappers.
Record company only given royalties for the discount price, not for the value of chocolate sold also, which they claimed was the total retail value given the circumstances.
Held: Part of the consideration of the sale was the acquisition and delivery of the wrappers.
Dissent: Wrappers used to qualify for sale, not part of selling price per se.
Appeal allowed.
Edmonds v Lawson 2000
Claimant accepted offer of 12 month unfounded pupillage at chambers.
Pupils duties were full time application to training, working towards certificates allowing practice.
Claimed that she was owed minimum wage.
First instance: Agreement amounted to apprenticeship, a type of employment contract, entitling her to minimum wage.
Held on appeal: Process was time consuming and expensive for chambers, who were providing an opportunity for gainful employment in future.
Apprenticeships required reciprocal relationship, skills exchanged for service.
Pupil not required to do anything not benefitting themselves, no consideration.
Claimant therefore a pupil, not apprentice, and not entitled to a wage.
Decision reversed.
Glasbrook Bros. v Glamorgan City Council 1925
Following the miners’ strike a colliery imposed new employment terms on its employees, leaving some worse off than beforehand the strike.
They protested, at times becoming violent.
Pump operators required to prevent the mines from flooding would not break picket line.
Manager applied for police protection.
Superintendent offered services which manager claimed were insufficient.
Superintendent offered to meet managers’ terms (Billeting a force within the mine) but that the extra cost would be financed by the mine.
Manager agreed.
After the fact the manager claimed there was no consideration for the offer, as the police were simply doing their duty.
Held (3-2, House of Lords):
The force provided was sufficient, manager chose specific terms for which payment was entitled.
Appeal dismissed.
Dissenting arguments:
Evidence suggested that the proposed force was insufficient and only the garrison gave pump workers the confidence to go back to work.
Therefore the extra force was intra vires, not requiring payment.
Further, to do so would create an undesirable conflict between duty of police force and desire to make gains.
Rebuttal: Extra force drawn from surplus officers and did not interfere with day to day operations.
Pao On v Lau Yiu Long 1980
Plaintiffs agreed to sell shares in company to defendants.
Secured indemnity from defendants in exchange for holding on to shares for one year in order to not depress market value.
In protecting themselves from loss they also denied themselves possible profit on the shares.
Refused to complete main agreement unless terms were changed.
Defendants, fearing lack of confidence in the newly floated company, acquiesced.
Share prices dropped, defendants refused to indemnify plaintiffs.
Defendants argued that they had agreed under economic duress and that the contract was void.
Held, reversed then held at House of Lords:
First that words said could impart terms to a contract.
Further, that using a dominant bargaining position to secure favourable terms was not against public policy and as such the contract was not void.
Damages ordered
Re. McArdle 1951
Plaintiff had carried out improvements on a house promised to five beneficiaries.
Plaintiff’s husband then drew up a contract promising to repay her the cost of the improvements upon sale of the house.
Defendants refused to pay plaintiff attempted to recover.
First instance: Defendants bound to contract.
On appeal: As the contract was drawn up and signed after the fact, there was no consideration, as it was past consideration.
Appeal allowed.
Notable: Judges made comment on the reluctance to hand down decision. Defendants legally entitled to appeal, morally questionable.
