Consideration Flashcards
General Principles of Consideration (11 cards)
In January, a business owner takes a lease on a premises for £2,500 per month. The business owner is unable to keep up with the rent and asks his landlord if he can pay a reduced rent of £2,000 per month from March. The landlord agrees that the business owner can make reduced monthly payments until his business is making a profit. The business owner spends some of the money which he saves on rent on advertising. By June he is making a good profit from the business.
Which of the statements below is the most accurate advice?
(a) The business owner will not be able to rely on promissory estoppel as it can only be used as a shield and not a sword.
(b) The landlord is entitled to the full rent of £2,500 for March, April and May. The business owner will not be able to rely on the defence of promissory estoppel as he has not relied on the promise to his detriment.
(c) The landlord is not entitled to the full rent of £2,500 for March, April and May as the business owner has provided factual consideration by spending money on advertising.
(d) The landlord is entitled to the full rent of £2,500 for March, April and May. The business owner will not be able to rely on the defence of promissory estoppel as the promise was insufficiently clear in its duration.
(e) The business owner can rely on the defence of promissory estoppel to prevent the landlord from recovering the full rent for the months of March, April and May.
(e) The business owner can rely on the defence of promissory estoppel to prevent the landlord from recovering the full rent for the months of March, April and May.
The doctrine of promissory estoppel is likely to act as an equitable exception to the general rule under Foakes v Beer that a promise to accept less than your legal rights is not binding. Although the other answer options sound plausible they are all incorrect. The advertising does not provide factual consideration to the landlord. The building owner would be using promissory estoppel as a shield (defence). The promise is clear and unequivocal. Reliance on the promise need not be to the promisee’s detriment.
A man is walking his dog when the dog runs off and does not return. The man puts a picture on the village notice-board asking for the dog’s safe return. The local vet finds the dog when out walking and returns it to the man. The man is so relieved that the dog has been found, he promises to transfer £100 into the vet’s bank account as a gesture of thanks. A day later, the man changes his mind.
Is the man’s promise enforceable by the vet?
(a) Yes. Consideration is sufficient but it need not be adequate.
(b) Yes. Performance of an existing obligation owed to a third party is good consideration.
(c) No. Consideration is past and the promise would not be enforceable if made in advance.
(d) No. The vet was under an existing contractual obligation to return the dog to its owner.
(e) No. Consideration is past and it was not understood that the act was to be rewarded by a payment.
(e) No. Consideration is past and it was not understood that the act was to be rewarded by a payment.
The offer of payment came after the act of finding the dog therefore consideration is past. The exception in Pao On v Lau Yiu Long is unlikely to apply as it was not understood that the act was to be rewarded by a payment. Had the promise of payment been made in advance of the act, it is likely that the promise would have been enforceable. The vet is not under an existing contractual obligation to find and return the dog to its owner. While it is correct that consideration is sufficient and it need not be adequate, the fact that consideration is past means the promise is not enforceable. While it is correct that performance of an existing obligation owed to a third party is good consideration, there is no third party here to whom an existing obligation is owed.
Which statement correctly describes executory consideration?
(a) Executory consideration is consideration that is adequate.
(b) Executory consideration is consideration that has been promised but not yet provided.
(c) Executory consideration is consideration that is clear and certain.
(d) Executory consideration is consideration that has already been provided.
(b) Executory consideration is consideration that has been promised but not yet provided.
Executory consideration is where contracting parties make promises to each other to perform something in the future after the contract has been formed.
Which of the following is a rule governing consideration?
(a) Consideration must move from the promisee.
(b) Consideration must move from the promisor.
(c) Consideration must be adequate.
(d) Consideration need not be sufficient.
(a) Consideration must move from the promisee.
What does the rule that consideration must move from the promisee mean?
(a) Consideration must move to the promisor.
(b) Only a person who is party to a contract may sue or be sued on that contract.
(c) A party who has not provided consideration may not bring an action to enforce the contract.
(d) Consideration must have some value in the eyes of the law.
(c) A party who has not provided consideration may not bring an action to enforce the contract.
A person to whom a promise is made can only enforce the promise if they have provided consideration for the promise.
Which case is concerned with a promise to pay more, not a promise to accept less?
(a) Foakes v Beer
(b) Williams v Roffey
(c) Pinnel’s Case
(d) MWB v Rock
(b) Williams v Roffey
A woman pays a cat sitter £70 to feed her cat while she and her flatmate are on holiday. Unknown to the woman, her flatmate had already paid the cat sitter £100 to feed the same cat. The woman is demanding that the cat sitter returns the £70 she paid him, but the cat sitter is refusing to return the money.
Which of the following statements is most accurate?
(a) The cat sitter is obliged to return the money to the woman as consideration must be sufficient.
(b) The cat sitter is not obliged to return the money to the woman as performance of an existing obligation owed to a third party is good consideration.
(c) The cat sitter is obliged to return the money to the woman as performance of an existing contractual obligation is not good consideration.
(d) The cat sitter is not obliged to return the money to the woman as past consideration is not good consideration.
(b) The cat sitter is not obliged to return the money to the woman as performance of an existing obligation owed to a third party is good consideration.
Performance of the existing duty owed to Jack is good consideration for the promise by Polly.
Which of the following is an example of good consideration?
(a) Performance of an existing duty owed to a third party.
(b) Performance of an existing obligation in a contract between the parties.
(c) Part payment of a debt.
(a) Performance of an existing duty owed to a third party.
Which rule of consideration does promissory estoppel provide an exception to?
(a) Consideration must not be past.
(b) Consideration must be sufficient but need not be adequate
(c) Consideration must move from the promisee.
(d) Part payment of a debt without fresh consideration does not discharge the debt obligation.
(d) Part payment of a debt without fresh consideration does not discharge the debt obligation.
Promissory estoppel provides an equitable exception to this rule.
A restaurant owner owes a vegetable supplier £2500. The restaurant owner knows that the supplier is experiencing financial problems. The restaurant owner gives the supplier a cheque for £1000 in full and final satisfaction of the debt owed. The supplier accepts the cheque but later sues the restaurant owner for the balance of £1500.
Which of the following statements is correct?
(a) The supplier cannot recover the balance of £1500 as their acceptance of the cheque for £1000 discharged the debt.
(b) The supplier cannot recover the balance of £1500 as it would be inequitable for them to go back on their word.
(c) The supplier cannot recover the balance of £1500 because their acceptance of the cheque for £1000 is binding.
(d) The supplier can recover the balance of £1500 as it is not inequitable for them to go back on their promise.
(d) The supplier can recover the balance of £1500 as it is not inequitable for them to go back on their promise.
The supplier’s promise to accept less was obtained as a result of pressure on the supplier, therefore the restaurant owner is unlikely to successfully rely on the equitable doctrine of promissory estoppel as it is unlikely that it would be considered inequitable for the supplier to go back on his promise.
A tenant has lost his job and he is struggling to pay his rent. Keen to help, the landlord informs the tenant that she is willing to accept half the rent due each month until he finds a new job. The tenant pays half rent for two months and uses some of the money he saved to buy new shoes to wear at interviews. The landlord is now having second thoughts.
Under what circumstances can the landlord demand full rent?
(a) The landlord cannot demand full rent before the tenant has found a new job.
(b) The landlord can demand full rent after the expiry of reasonable notice.
(c) The landlord cannot demand full rent as the tenant has accepted her offer therefore she is bound.
(d) The landlord can demand that full rent is paid immediately.
(b) The landlord can demand full rent after the expiry of reasonable notice.
A promisor may resume his full legal rights after giving reasonable notice - Tool Metal v Tungsten.
