Consideration Flashcards
Currie v Misa (1875)
Consideration = “some right, interest, profit, or benefit accruing to the party or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other.”
O’Sullivan v Management Agency [1985] Court of Appeal
Consideration consists of either detriment or benefit, however, both promisee-detriment and promisor-benefit do not have to coexist
Chappell v Nestle [1960] House of Lords
The claimants owned the copyright in a piece of music “Rockin shoes”. Nestle arranged for copies to be made into records and would sell these for 1s6d plus 3 wrappers. S.8 Copyright Act 1956 stipulated stipulated 6.25% royalty to be given to claimants. Nestle said only 6.25% of 1s6d. Said 3 wrappers were not consideration. Lord Somervell said it was irrelevant whether wrappers were of no value to Nestle. Said they were consideration
Consideration need not be adequate but must be sufficient
Chappell v Nestle [1960] House of Lords
Thomas v Thomas
Must have some economic value
White v Bluett (1853)
Bluett had leant his son some money. Bluett died and executor of the estate, Mr. White, tried to enforce the obligation. The son said that the father promised he would not have to pay the debt if he stopped complaining about how Bluett had distributed property in will. Court held there was no consideration for discharge of obligation to repay. (public policy reason)
Forbearance (self-restraint) is not good consideration
Hamer v Sidway (1891) New York Court of Appeals
William story promised his nephew, in March 1859, $5000 on his 21st birthday if he stopped drinking, smoking, gambling, swearing until he reached that age. His nephew agreed and performed his part of contract. The court said that the nephew was entitle to the money, as he had a legal right to do all the things he abstained from doing. This was consideration.
Forbearance may be good consideration where legal rights are given up.
Roscorla v Thomas [1842] Queen’s Bench
Roscorla bought a horse from the defendant. Afterwards the D assured him the horse was ‘sound and free from vice’. This untrue. Roscorla sued. The assurance was held to be unenforceable. Roscorla’s consideration was past and thus not good for the promise.
Past consideration is not good consideration
Lampleigh v Brathwait (1615) King’s Bench
Brathwait killed a man and asked Lampleigh to seek a royal pardon for him. Claimant was successful. Brathwait released and promised Lampleigh £100. Promise enforceable.
Exception to rule in Roscorla v Thomas:
Where the act was carried out at promisor’s request
Re Casey’s Patents, Stewart v Casey [1892] Chancery Division
Holders of letters patent employed Casey to promote their invention in the commercial world. Promise that he would receive a one-third share of patents. Later the other patent holders tried to deny this. Court held that it must always have been assumed that Casey’s work would be paid for in some way.
Exception to rule in Roscorla v Thomas:
Parties understood from the outset that the act was to be rewarded in some way
Stilk v Myrick (1809) Assizes
Stilk contracted to work for Myrick on a journey to the Baltic and back to London. At Cronstadt, 2 of 11 crewmen desert. Captain says will split wages equally if rest work the ship home. Did so, but captain refused to pay the money. Court held captain’s promise was unenforceable for want of consideration.
Performance of an existing contractual duty is not good consideration for a promise
Hartley v Posonby (1857)
Most of crew deserted. Remaining sailors who carried on were going beyond what they were contractually bound to do. Conferring extra benefit.
Exception to the rule in Stilk v Myrick (1809):
Performance of existing contractual duty is good consideration if A exceeds his duties in some way, or confers extra benefit on B:
a) is a question of fact and degree
b) Is a question of public policy as well.
Williams v Roffey Bros [1991] Court of Appeal
Exception to the rule in Stilk v Myrick (1809):
If Glidewell Principles satisfied:
1) There is a contract to do work for/supply goods and services in return for payment
2) B doubts whether A will complete his obligations
3) B promises additional payment if A completes his obligations on time
4) As a result of giving this promise, B obtains a practical benefit, or obviates a disbenefit
5) B’s promise to pay extra is not given as a result of economic duress or fraud
Distinguish Stilk v Myrick on basis of alternative public policy basis for the decision in Williams v Roffey Bros (need to protect against extortion). Also EXTRA BENEFIT: avoidance of having to pay compensation on the main contract was significant.
Collins v Godefroy (1831)
The performance of an existing duty imposed by law is not sufficient consideration in exchange for a promise of payment.
Ward v Byham [1956
Father of illegitimate child promised to pay mother if child “well looked after and happy”. Mother had legal duty to look after, so had she given any consideration in return for promise?
Denning said yes, he though a promise to perform an existing legal duty could be good consideration. However, other two judges found consideration by saying the mother had exceeded her legal duty.
Williams v Williams [1957]
Exception to rule in Collins v Godefroy (1831):
Promise to perform existing legal duty is sufficient consideration as long as not contrary to public policy.
Would be contrary to public policy to allow a fireman to use extinguishing a fire as consideration.
Glasbrook Bros v Glamorgan County Council [1925] House of Lords
Owner of a mine during a coal strike, sought assistance from police to protect scabs. Police reasonably suggest mobile force. Owners insist officers billet at premises. Agree to pay council for service. Later, the owners said police had merely carried out legal obligation.
Exception to rule in Collins v Godefroy (1831):
House of Lords: Police had exceeded public duty and this was consideration for an agreed sum.
Scotson v Pegg (1861
Performance of an existing contractual duty to a third party is good consideration for a contract with a different party. (p.71 of book).
Foakes v Beer (1884) House of Lords
Part payment of a debt is not good consideration for a promise by the creditor to forgo the balance.
Pinnel’s Case (1602)
Part payment sufficient if debtor can show he gave something different for creditor’s agreement to accept the lesser sum in settlement (Coke: horse, hawk, robe)
Facts of Central London Property v High Trees Houses [1947] KB, HC
Claimant let flats to defendant for ninety-nine years at 2500 p.a. in 1937. Early part of 1940, due to war, was apparent that flats could not be filled. Agreed that rent would be 1250 p.a. Landlord wrote in 1945 claiming rent at £2500 p.a. and asked for full rent for last two quarters of 1945. The claim succeeded. Denning: the agreement was for the reduced rent to operate during war years when flats could not be filled. This operated down to the early part of 1945. Comments on promissory estoppel were obiter.
Definition of Promissory Estoppel?
Where a promisor has, by words or conduct, made a promise to the other party to forgo a legal right, once the other party has acted on this promise, he will have a good defence to any claim brought by the promisor which is inconsistent with the promise
Conditions for promissory estoppel?
P-Promise. There must be a promise to waive a legal right, which must be intended to be acted upon by the other party (Hughes v Met)
R-Reliance. The promisee must act upon the promise. But – he need not have acted to his detriment – only have altered his behaviour (Ajayi v RT Briscoe, and, Alan v El Nasr)
I – Inequitable. It must be inequitable/unjust for the promisor to go back on his promise and insist on his full legal rights; must have “clean hands’ (D&C Builders v Rees)
D – Defence. Promissory Estoppel will not give rise to a cause of action (Combe v Combe)
E – Effect is to extinguish or suspend legal rights? (see below)
Legal principle in Hughes v Metropolitan Railway Co. (1877) House of Lords?
There must be a promise to forgo a legal right, which must be intended to be acted upon by the other party. This promise can be implied, as was the case in Hughes v Metropolitan Railway
Legal principle in Alan & Co v El Nasr [1972]
(Coffee Case) The promisee must act upon the promise. But – he need not have acted to his detriment – only have altered his behaviour
