Consideration Flashcards
consideration can be described as
as the price paid by the promisee (to the promisor) towards executing a contract
what is a agreement unsupported by consideration called
a naked agreement (nudum pactum)
how do the courts feels without consideration
courts are hesitant to enforce free agreements unless there are exceptional reasons.
Consideration is the price that .
makes a contract enforceable
a party who seeks to enforce a contract must
furnish consideration towards the agreement
why must the party seeking contact provide consideration
ensures that a party seeking to enforce a bargain must have given something in return or paid a price to compel the contract’s performance.
Where the contract is executory….
consideration would usually take the form of a promise to perform at a time in the future
Executory contracts are
formation is made at one date, but performance is to be made at a future date
in terms of VALUE consideration
need not be adequate but sufficient
In what situations might the law assess the value of consideration?
When determining the fairness of a bargain in relevant situations, such as when providing legal relief.
Why can’t a pre-existing duty count as good consideration for extra payment?
Because the person was already supposed to do it, so it doesn’t provide new value for the extra money promised.
What happens when the promisee has a duty to a third party?
If the promisor promises to pay the promisee for performing that duty, the promisee can receive payment even if they are already obligated to the third party.
What are the two types of obligations in contractual variations?
1) Obligations related to past debts
2) Obligations related to ongoing or future duties.
How does the law treat ongoing or future obligations compared to past debts?
The law is generally more flexible with ongoing or future obligations to protect creditors from unfair changes to financial contracts.
What must valid consideration be related to in a bargain or agreement?
Valid consideration must be directly related to a current or future agreement and cannot come from something that happened in the past.
When is consideration not considered past? and example
Consideration is not past if the promisor requested the service or favor, even if the payment agreement was made afterward. For example, emergency legal services provided to someone imply payment is expected, so promising to pay after the service does not make it past consideration.
When is consideration not considered past despite timing? warrant
Consideration is not deemed past just because there’s a delay between a promise (made afterward) and a completed bargain. For example, a warranty about the quality of services or goods given after a sale does not make it past consideration, as it is connected to the original transaction
If a promisee wants to change a contract that has become more difficult for them to perform
they usually need to show fresh or additional consideration for the change to be enforceable. Simply doing a duty they already owed to the promisor is not enough.
Promissory estoppel
equitable principle that allows parties to modify a contract without fresh consideration if one party’s promise leads another to reasonably rely on it, preventing the first party from enforcing strict contract rights.
what is an example of Promissory estoppel
a contractor cannot ask for additional payment if they told the homeowner they would not change extra for the work and the homeowner relied on it and didn’t budget extra money
Two main requirements are expected to be demonstrated by the party seeking to establish contract variation through promissory estoppel. They are—
- A clear promise from the promisor to give up a contractual right,
- the other party relies on that promise.
what is an exception to promissory estoppel
The promisor retains the right to demand payment for future performance, especially if the conditions for the concession no longer apply. They can end the concession by notifying the promisee that they will revert to the original agreement.
what is an example of the exception to promissory estoppel
if a contractor was doing work on a house for 20,000 and then realised he needed more time and resources and promised not to charge more but then finished it in the expected time initially, he can ask for that 20,000
Pinnel’s Case Rule
if a creditor agrees to accept a smaller payment instead of the full debt, they can still demand the rest of the money later. The creditor can always change their mind and ask for the full amount.
