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Contract Law > Consideration > Flashcards

Consideration Flashcards

1
Q

Consideration definition

A

Dunlop v Selfridge - Something of value that is promised in order to enter into a contract

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2
Q

Can a promise be consideration?

A

Yes, no need for anything tangible to be transferred

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3
Q

What is an executory promise?

A

Promises made to perform something in the future after the contract is formed

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4
Q

What is an executed promise?

A

Promises made at the time of the contract: the consideration has already been performed - buying a tele

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5
Q

What kind of value should consideration have?

A

Consideration must have some value at law = sufficient (Chappell v Nestle). This need not be ADEQUATE value.

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6
Q

Is the performance of a pre-existing contractual obligation owed to a third party valid consideration?

A

Yes. The consideration is the direct right to sue for failure to fulfil the promise (Scotson v Pegg)

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7
Q

Which way does consideration move?

A

From the promisee to the promisor (Tweddle v Atkinson).

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8
Q

Can consideration be in the past?

A

Generally: no (Eastwood v Kenyon - man looking after orphan and her future property, she thanks him and says she’ll pay back, never does)

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9
Q

Is the performance of legally imposed public obligations sufficient consideration?
What is the exception?

A

Generally, no (Collins v Godefroy).

Exception: where the public duty has been exceeded (Glasbrook Bros v Glamorgan).

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10
Q

PERFORMANCE OF AN CONTRACTUAL OBLIGATION: promising to accept less - general rule. Can williams v roffey apply?

A

Promise to accept less (part payment of debt) is unenforceable (Foakes v Beer).
Re Selectmove – the practical benefit of Williams v Roffrey does not apply to promises to accept less.

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11
Q

What is the common law exception- of part-payment taking place in a different way- to not being able to promise to accept less?

A

Where payment takes place at a different…
- Place (Vanbergen v St Edmunds)
- Time (Pinnel’s Case)
- Chattel (Sibree v Trip)
…at the creditor’s request
A promissory note is sufficient (Sibree v Trip), a cheque is not (D and C Builders v Rees)

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12
Q

What are the 2 exceptions to not being able to promise to accept less?

A

The common law exceptions (part payment taking place in different ways, part payment by third party) and promissory estoppel.

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13
Q

What happens to rights to payment during promissory estoppel?

A

Periodic payments are extinguished (Tool Metal v Tungsten)
Lump payments are merely suspended (Foakes v Beer)
Right to previous payment is extinguished

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14
Q

Is promising to pay more, yet still performing the existing contract, good consideration?

A

No (Stilk v Myrick - captain offered to give them extra to complete trip, but he didn’t give in the end as they had not provided extra consideration)

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15
Q

What is duress?

A

‘some form of coercion or threat to the person, property, or to the person’s financial interest’ (Poole)

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16
Q

What is economic duress? Test?

A

(The Siboen and Sibotre)
The unlawful use of economic pressure/threats in order to force a person into an involuntary agreement (DSND Subsea v Petroleum, per Dyson J)
Test: the pressure must (DSND Subsea v Petroleum, per Dyson J)
1. Result in a lack of practical choice for the victim
2. Be illegitimate
3. Be a significant reason why the victim entered the contract

17
Q

Is giving up a right sufficient consideration?

A

Only if it is a legal right (Hamer v Sidway (naughty 16y.o) cf. White v Bluett (son IOU)) and the individual genuinely intends to give it up (Arrale v Costain).

18
Q

Which statute considers third parties and consideration?

A

s1 Contract (Rights of Third Parties) Act 1999: can now enforce a contract which benefits a 3rd party, even though 3rd party hasn’t provided any consideration

19
Q

3 examples of going beyond public duties

A

Police providing information to a private individual: (England v Davidson)
Policing a football match: (Harris v Sheffield United FC)
Parental care for a HAPPY child (Ward v Bytham)

20
Q

What are the 2 exceptions to the general rule in promising to pay more?

A

1: where the promisee renders performance greater than his existing contractual obligations (Hartley v Ponsonby - crew continued even though 2/3 of men down)
2: where 5 Glidewell LJ criteria in Williams v Roffey Bros. are met.

21
Q

What is the exception to consideration not being able to be in the past?

A

Where all 3 of L Scarman’s criteria in Pao On v Lau Yiu are satisfied:
1. Act performed at promisor’s request (Lampleigh v Braithwaite - 1600s, getting a pardon for murder then promising £100 for it)
2. There was an understandingthat there was to be some reward for the act
More likely in commercial (Re Casey’s Patents - promising patent money for previous work) than domestic (Re McArdle) contexts
3. All other requirements for a valid contract

22
Q

Promise to pay less: who CAN make a part payment?

A

A third party (Welby v Drake)

23
Q

What are the requirements for promissory estoppel?

A

Must be used as a shield not a sword (Combe v Combe).

Clear and unequivocal (Woodhouse v Nigerian)
- Can be implied through conduct (Hughes v Metropolitan Railway Co.)

The promisee must alter his position in reliance on that promise (Ajayi v Briscoe).

  • It’s up to the promisor to establish that the change was not induced by the promise (Brikom Investments v Carr - roof repairs)
  • The alteration need not be detrimental (Alan v El Nasr), but if it is, it will make the inequitable requirement easier to prove (The Post Chaser)

It must be inequitable for the promisor to go back on the promise (The Post Chaser per Goff LJ).
- He who seeks equity must do so with clean hands (D and C Builders v Rees)

24
Q

When does promissory estoppel end?

A

The period of estoppel ceases to operate (Central London Property v High Trees),
OR
The promisor gives reasonable notice (Ajayi v Briscoe)

25
Q

What are the 3 types of duress?

A

Duress of goods, person and economic duress

26
Q

What is duress to goods? Test?

A

Detaining another person’s goods unlawfully (Kerr J, The Siboen and the Sibotre)
Test: ‘but for’ the duress would the party have entered the contract?

27
Q

What is the test for duress to the person?

A

The duress must be one of the reasons for the party entering the contract. Barton v Armstrong

28
Q

Economic duress test part 1 - a lack of practical choice - test

A

The victim must not have had any ‘realistic practical alternative’ but to submit to the pressure (DSND Subsea v Petroleum, per Dyson J)

29
Q

Economic duress test part 1 - a lack of practical choice - 3 example situations

A 
Time restrictions, i.e. mandatory injunction takes 6 weeks (Carillion Construction v Felix - packages)
Goods urgently required by a third party (Kolmar v Traxpo - despy for methanol)
Financial loss (B and S Contracts v Victor Green - setting up stands, ordered more money just before due)
30
Q

Economic duress test part 2 - when will pressure not be illegitimate?

A

Where a contract is freely entered into (Alec Lobb v Total Oil)
Where ‘overwhelming pressure’ is legitimate, it may or may not constitute duress, depending on how it is exerted (R v AG of England and Wales - army publish, pressure to sign contract but had choice)

31
Q

Economic duress test part 2 - illegitimate - factors considered in assessing legitimate pressure

A
  1. Whether an actual or threatened breach of contract existed
  2. Whether pressure was applied in good or bad faith
  3. Whether the victim protested or affirmed
  4. Did they affirm or seek to rely on the contract?
32
Q

Economic duress test part 3 - Significant cause test

A

The pressure must be ‘decisive or clinching’ in the victim entering into the contract (Huyton v Peter Cremer) – ‘but for’ test.

33
Q

What are Glidewell’s criteria in Williams v roffey bros?

A
  1. Existing contract
  2. Completion problem
  3. Extra payment
  4. Benefit
  5. No duress
34
Q

What is promissory estoppel?

A

An equitable exception that part payment of debt does discharge. When a man, by his words or conduct, has led another to believe in a particular state of affairs, he will not be allowed to go back on it when it would be unjust or inequitable for him to do so’ - Denning (Central London Property v High Trees)

35
Q

Does duress render the contract void?

A

No - just voidable (Pao On v Lau Yiu).

36
Q

What is the proper remedy to duress?

A

Rescission. Affirmation a bar to rescission.

Vitiating factor - equitable remedy.

37
Q

Economic duress test part 2 - illegitimate - factors considered in assessing legitimacy - 1. Whether an actual or threatened breach of contract existed

A

Party no alternative but to accept revised terms that are detrimental to its interest, this overrides the apparent consent to renegotiate terms (Atlas Express v Kafco)
- B and S Contracts v Victor Green

38
Q

Economic duress test part 2 - illegitimate - factors considered in assessing legitimacy - 2. Whether pressure was applied in good or bad faith

A
  • An illegitimate threat for a lawful end in good faith (DSND Subsea v Petroleum). Threatened to breach contract unless insurance situation resolved
  • A legitimate threat for a lawful end will be in good faith (CTN v Gallaher - d sent ciggies top wrong place but wanted money, and the threat was lawful so got it). Threat used to get money they believed to be owed to them
  • A legitimate threat for an unlawful end will be in bad faith (The Universal Sentinel - blocked ship and asked for money)
39
Q

Economic duress test part 2 - illegitimate - factors considered in assessing legitimacy - 3. Whether the victim protested or affirmed

A
  • Failure to protest will constitute affirmation of a contract (The Atlantic Baron - 8 months too long)
  • Protest immediately sufficient (DSND Subsea v Petroleum Geo)
    (Atlas Express v Kafco) – submitted but had protested at time and sued immediately after

Contract Law (4 decks)

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