Consideration

Question 1

What are the three elements required for a binding contract?

Answer 1

Offer and acceptance, intention to create legal relations, and consideration

Question 2

Define consideration according to Frederick Pollock.

Answer 2

‘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.’

Question 3

What is the concept at the heart of Pollock’s definition of consideration?

Answer 3

Exchange

Question 4

What are the two types of consideration?

Answer 4

• Executory consideration
• Executed consideration

Question 5

What is executory consideration?

Answer 5

Where contracting parties make promises to each other to perform something in the future after the contract has been formed

Question 6

Provide an example of executory consideration.

Answer 6

A contract for the sale of goods where the seller promises to deliver the goods in the future, and the buyer promises to pay for them

Question 7

What is executed consideration?

Answer 7

Where the consideration has already been performed at the time of the formation of the contract

Question 8

Provide an example of executed consideration.

Answer 8

A unilateral contract where the promise of a reward is made and the price paid is the performance of the act stipulated in the offer

Question 9

List the four important rules concerning consideration.

Answer 9

• Consideration must not be past
• Consideration must move from the promise
• Consideration need not be adequate
• Consideration must be sufficient

Question 10

What does it mean that consideration must not be past?

Answer 10

It cannot generally have taken place prior to the promise to pay

Question 11

What is an exception to the past consideration rule?

Answer 11

If an act was done at the promisor’s request with an understanding that it would be rewarded

Question 12

What are the three conditions outlined in Pao On v Lau Yiu Long for the exception to apply?

Answer 12

• The act must have been done at the promisor’s request
• The parties must have understood that the act was to be rewarded
• The payment or benefit must have been legally enforceable if promised in advance

Question 13

What does it mean that consideration must move from the promisee?

Answer 13

A party who has not provided consideration may not bring an action to enforce a contract

Question 14

What does the case Tweddle v Atkinson illustrate?

Answer 14

The rule that consideration must move from the promisee

Question 15

True or False: Consideration need not be adequate.

Answer 15

True

Question 16

What case illustrates that consideration can be inadequate but still valid?

Answer 16

Chappell & Co v Nestle Co Ltd

Question 17

What must consideration have according to the law?

Answer 17

Some value in the eyes of the law

Question 18

What is the significance of the case Thomas v Thomas?

Answer 18

It established that consideration must have some value, regardless of whether it matches the value of the property

Question 19

What is required for a variation of contract to be binding?

Answer 19

Agreement, consideration, and intention to create legal relations

Question 20

When is an existing obligation considered good consideration?

Answer 20

When a party is already under an obligation to perform the same task

Question 21

What is the ruling in Stilk v Myrick regarding existing obligations?

Answer 21

An agreement to pay extra for work already contractually obligated is not binding

Question 22

What distinguishes the case Hartley v Ponsonby from Stilk v Myrick?

Answer 22

In Hartley, the sailors went beyond their existing obligations, providing good consideration

Question 23

What is ‘factual consideration’ as defined in Williams v Roffey Bros?

Answer 23

Consideration acknowledging that nothing new is promised but the party receiving the promise still gets a benefit

Question 24

What is ‘factual’ consideration?

Answer 24

Acknowledgment that nothing new is promised but the party in receipt of the promise gains something from the reshaped deal

Factual consideration distinguishes from legal consideration.

Question 25

What are the conditions necessary to establish factual consideration set out in Williams v Roffey?

Answer 25

1. A has a contract with B for work or services. 2. B doubts A's ability to complete the contract. 3. B promises A additional payment for timely performance. 4. B obtains a practical benefit or avoids a disbenefit. 5. B's promise is not due to economic duress or fraud. 6. The benefit to B is valid consideration for B's promise.

Question 26

What did the sailors do in Stilk v Myrick in exchange for the promise of extra payment?

Answer 26

They did nothing additional; they fulfilled their existing contractual obligations. ## Footnote The promise of extra payment was unenforceable.

Question 27

What did the sailors do in Hartley v Ponsonby that constituted fresh consideration?

Answer 27

They exceeded their existing contractual obligations by completing the return journey in dangerous conditions. ## Footnote This was in contrast to Stilk v Myrick.

Question 28

What was the outcome in Williams v Roffey regarding consideration?

Answer 28

Williams did not exceed obligations but provided a practical benefit, making Roffey's promise enforceable. ## Footnote The court held that practical benefit constituted factual consideration.

Question 29

Does merely carrying out a public duty constitute good consideration?

Answer 29

No, it generally does not amount to sufficient consideration. ## Footnote This applies even when considering rewards for information provided by police officers.

Question 30

In England v Davidson, why was the police officer's information considered valid consideration?

Answer 30

The police officer went beyond his public duty by providing information to a private individual. ## Footnote This case highlighted the distinction between public duty and providing consideration.

Question 31

What principle applies when a party has an existing obligation to a third party?

Answer 31

Performance of the pre-existing duty owed to a third party can be valid consideration for a promise from another party. ## Footnote This is distinct from obligations owed to the original contracting party.

Question 32

What was the significance of Lord Wilberforce's statement in New Zealand Shipping Co v AM Satterthwaite?

Answer 32

An agreement to do an act already obligated to a third party can constitute valid consideration. ## Footnote The promisee can enforce a direct obligation.

Question 33

What is the rule regarding part payment of a debt?

Answer 33

Part payment is not generally good consideration to discharge the whole debt. ## Footnote This is illustrated in the case of Foakes v Beer.

Question 34

What was the outcome of Foakes v Beer?

Answer 34

The agreement for part payment was unsupported by consideration, and the creditor could claim the full amount. ## Footnote The House of Lords held that the debtor remained liable.

Question 35

What is an exception to the rule in Foakes v Beer?

Answer 35

Introducing a new element into the payment can amount to good consideration. ## Footnote Examples include payment at a different time or place.

Question 36

How does the case of MWB Business Exchange Centres Ltd v Rock Advertising Ltd relate to consideration?

Answer 36

The court found sufficient consideration due to the landlord obtaining a practical benefit by keeping the tenant. ## Footnote This case blurred the lines between promises to accept less and promises to pay more.

Question 37

What is promissory estoppel?

Answer 37

An equitable doctrine allowing enforcement of a promise despite lack of consideration. ## Footnote It protects a party's reliance on a non-bargain promise.

Question 38

What is the origin of the modern doctrine of promissory estoppel?

Answer 38

Derived from Hughes v Metropolitan Railway Co, involving reliance on a promise not to enforce a lease forfeiture. ## Footnote This case set the foundation for the doctrine.

Question 39

What was the outcome in Central London Property Trust v High Trees House?

Answer 39

The landlord sought payment of arrears despite having agreed to reduce rent without consideration. ## Footnote The court acknowledged the absence of consideration but focused on the reliance aspect.

Question 40

What are the key points regarding consideration and existing obligations?

Answer 40

1. Existing obligations typically do not constitute good consideration. 2. Practical benefits can make existing obligations enforceable. 3. Public duties generally do not suffice as consideration. 4. Third-party obligations can be valid consideration. 5. Part payment of a debt is usually not good consideration, with exceptions.

Question 41

In what year did the war commence?

Answer 41

1939

Question 42

What was the reduced ground rent agreed upon by the landlord in 1940?

Answer 42

£1,250

Question 43

What doctrine did Denning J rely on in his judgment regarding the landlord's claim?

Answer 43

Promissory estoppel

Question 44

True or False: Promissory estoppel can be used as a cause of action.

Answer 44

False

Question 45

What must be shown in order to sue upon a promise?

Answer 45

Consideration must be provided in return for it

Question 46

In which case did the Court of Appeal clarify that promissory estoppel cannot be used as a cause of action?

Answer 46

Combe v Combe [1951] 2 KB 215

Question 47

What type of promise must exist for promissory estoppel to apply?

Answer 47

A clear and unequivocal promise

Question 48

What does the doctrine of promissory estoppel primarily act as?

Answer 48

A shield and not a sword

Question 49

What is required for a promise to be binding under promissory estoppel?

Answer 49

Intended to create legal relations and acted upon

Question 50

What is a necessary element of promissory estoppel regarding the promisee?

Answer 50

Change of position in reliance on the promise

Question 51

Fill in the blank: Promissory estoppel is based on principles of _______.

Answer 51

Fairness

Question 52

What must be shown to prove estoppel in equity?

Answer 52

Reliance to their detriment on the promise

Question 53

What did Denning J state about detrimental reliance in High Trees?

Answer 53

Detrimental reliance is not required for promissory estoppel

Question 54

What does it mean if it would be inequitable to allow the promisor to go back on their promise?

Answer 54

The defence of promissory estoppel will apply

Question 55

In D & C Builders v Rees, why could the debtor not rely on promissory estoppel?

Answer 55

The promise was extracted by intimidation

Question 56

What are the two ways a promisor's right to resume strict legal rights may arise?

Answer 56

* Once the period over which promissory estoppel operates ceases * After giving reasonable notice of intention to resume

Question 57

What is the general effect of promissory estoppel on legal rights?

Answer 57

Generally suspends the rights concerned, but does not extinguish them

Question 58

What might happen to a past right in exceptional cases of promissory estoppel?

Answer 58

It might be extinguished

Question 59

What is the most common use of promissory estoppel?

Answer 59

To create an exception to the rule that part payment of a debt without fresh consideration does not discharge the debt obligation

Question 60

What must the promisee demonstrate regarding reliance on the promise?

Answer 60

That it would be inequitable for the promisor to go back on their promise