Chapter 39 - Consideration

Question 1

Consideration

Answer 1

Defined by Sir Frederick Pollock
“An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable”

When a consideration is performed it is ‘executed’ and if it is yet to be performed it is ‘executory’

Question 2

Rules for consideration

Answer 2

1. Consideration need not be adequate but must be sufficient
2. Past consideration is not good consideration
3. Consideration must move from the promisee
4. Performing an existing duty cannot be the consideration for a new contract
5. A promise to accept part payment of a pre-existing debt in place of the whole debt is not consideration

Question 3

Adequacy of consideration

Answer 3

The idea of adequacy is that the parties to the contract themselves agree that the value of things being exchanged is acceptable
Thomas v Thomas

Question 4

Sufficiency of consideration

Answer 4

-sufficiency means that the consideration must be real and have some value
-Must be definite and having some value means it has at least a nominal amount of value, Chappell v Nestle Co. Ltd

Question 5

Consideration must move from the promisee

Answer 5

-Means that a person cannot sue or be sued under a contract unless they have provided consideration for it

Question 6

Performing a pre-existing duty owed to the promisor cannot be consideration for a new contract

Answer 6

Pre existing duty is something that your already legally required to do. Three ways:
1. Public duty, policemen doing their job. Collins v Godefroy
2. Duty imposed under existing contract, contract of employment. Still v Myrick
3. A promise to make a payment of an already existing debt.

Question 7

Part payment of a whole debt

Answer 7

Established rule in Pinnels Case
-Payment of a lesser sum is not substantial enough for the greater debt.
-Creditor can claim the remainder of the debt, even if there is previous agreement of a part payment

Question 8

What is privity of contract

Answer 8

Where only those who are parties to a contract are bound by it and can benefit from it

Question 9

Rule of privity established

Answer 9

Established in case of Dunlop Pneumatic Tyre Co. Ltd v Selfridge

Question 10

Where can rule of privity not apply

Answer 10

-Where one person would be expected to make contracts on behalf of themselves and others, Jackson v Horizon Holidays Ltd
-Agency, Scruttons Ltd v Midland Silicones Ltd
-Collateral Contracts, Shanklin Pier Ltd v Deutel Products Ltd
-Restrictive covenants, Talk v moxhay