Consideration

Question 1

Consideration definition/ intro

Answer 1

Consideration is the “Thing” that each party puts into the contract. It is the benefit and detriment on both sides (Currie vs Misa) It must be real (White vs Bluett), and must be sufficient, but need not be adequate (Chappell vs Nestle)The parties that give consideration will be privy to the contract and therefore have rights under it (Tweddle vs Atkinson)

Question 2

Consideration side rule 1

Answer 2

• Performance of an existing contractual duty- if you only do what you were already bound to do, then this is not good consideration (Stilk vs Myrick). There are two exceptions:
  1- If you do something extra, then this is good consideration
  (Hartley vs Ponsonby)
  2- If the party gains an extra benefit (Williams vs Roffey)

Question 3

Consideration side rule 2

Answer 3

• Past consideration is not good consideration- By the time that the agreement takes place, the consideration is already done. Where the consideration is past, there will not be a valid contract (Re McArdle)
• Exception- Where there is an implied promise to pay for a particular task before the consideration is done, then this is enforceable (Lampleigh vs Braithwaite)

Question 4

Consideration side rule 3

Answer 4

• Part payment of a debt is not good consideration. This is a rule from Pinell’s Case- if you agree to only part payment of the debt owed to you, then you can still claim the rest. There are three exceptions to the rule:
  1- Accepting something other than money for the debt
  2- Paying a smaller amount on a date earlier than originally agreed
  3- Repay part of the debt on the due date at a different place at the
  request of the debtor.
• Finally, Promissory estoppel can be used which is an equitable remedy, if you make a promise that another person relies on to their detriment the promisor is “Estopped” from breaking the promise.

Question 5

Consideration side rule 4

Answer 5

Privity of contract- only those who give consideration have rights under the contract (Tweddle vs Atkinson)
-Exception- Contracts (Rights of Third Parties) Act 1999- A person who is not a party to a contract can enforce the contract if he is named in the contract or he gains a benefit from it.