Consideration Flashcards
Another way to describe consideration.
The badge of enforceability - Professor McKendrick
Rationale for consideration.
It is to enforce a promise, indicating that the promisor is intended to be bound.
(Currie v Misa) definition of consideration. Go.
A valuable consideration in the eyes of the law may consist of either some right interest, profit or benefit to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other
Combe v Combe. Facts and principle.
In C v C, it was held that there was no consideration given for the defendant’s promise to pay his ex-wife £100 per year even though in reliance on that promise she had not applied to the divorce court for maintenance, and in that sense she had suffered a detriment.
The reason why the detriment did not constitute consideration as that there was no request by the husband, express or implied, that he should forbear from applying for maintenance. There was no ‘exchange’
3 rules of consideration. Shoot.
Consideration must move from the promisee.
Consideration must not be past.
Consideration need not be adequate.
‘Consideration must move from the promisee’.
Definition and authority.
Only a person who had provided consideration in return for a promise can enforce that promise as a contract.
Tweedle v Atkinson, 1861
Tweedle v Atkinson.
Facts and principle.
In T v A, Guy agreed with John Tweedle that they would pay a sum to Tweedle’s son William, who was Guy’s prospective son-in-law. Guy’s executors failed as no consideration had moved from him.
‘Past consideration is no good consideration’.
Definition and 2 authority.
Something already completed before the promise is made cannot generally amount to consideration.
Roscorla v Thomas, 1842
Re McArdle, 1951
Re McArdle.
Facts and principle.
In Re McArdle, a promise made ‘in consideration of your carrying out certain improvements to the property’ was held by the COA to be in enforceable as all the work had been done before the promise was made.
3 exceptions to past consideration laid down by Lord Scarman.
Case and exceptions.
Pao On v Lau Yiu Long, 1980.
Exceptions:
- It was at the request of the promisor
- there is an understanding that payment will be made
- The payment, or conferment of a benefit must have been legally enforceable had it been promised in advance.
Peppercorn rule.
Explain.
The peppercorn rule essentially states that the consideration provided by one part need not equal to the value that the consideration provided by the other party.
Provided that there is some value, the courts would not question it’s adequacy.
Peppercorn rule.
2 authority and facts.
Chappell v Nestlé, 1960
Mountford v Scott, 1975
In Chappell, 3 wrappers from the defendant’s chocolate bars were held to be sufficient consideration.
In Mountford, £1 was held to be good consideration for an option to buy a house.
Therefore, from this 2 cases, we can see that the purpose of consideration is designed to show that the promise is intended to be legally binding and enforceable, whether it creates any economic advantage is therefore irrelevant.
Forbearance or withdrawal of threatened legal proceedings will amount to consideration, even if the claim has no legal basis, so long as the parties themselves believe that the claim is valid.
2 authority that states this.
Alliance Bank v Broome, 1993
Pitt v PHH Asset Management, 1993
Stop being a nuisance.
Case & principle.
White v Bluett, 1853.
The promise to stop complaining about his father’s will was held to be insufficiently tangible to amount to good consideration.
“Well looked after and happy.” Intangible good consideration.
Case and principle.
Ward v Byham.
A mother’s promise to keep her illegitimate child ‘well looked after and happy’ in return for money towards the child’s upkeep from its father was held to be sufficient consideration, since there is no legal duty to keep a child happy.
Pinnel’s Case, 1602.
Principle and rationale.
Part-payment is not good consideration for a promise to forgo the balance.
I.e. Payment of a smaller sum will not discharge the payment of a larger sum.
Why?
Since no consideration was moved from A to enforce the promise of B to accept part payment.
4 instances where part payment of a debt will discharge the full debt.
1) Where the promise to accept a smaller sum in full settlement is made by deed or in return for a consideration.
2) where the debtor does smth different. E.g. Made payment earlier at the creditor’s request, change location, or use a different method. (Pinnel’s Case)
3) Part payment by a 3rd party. (Hiranchand Punamchand v Temple, 1911)
4) Promissory Estoppel.
Performance of existing contractual duty may amount to good consideration.
Authority and facts.
The Eurymedon, 1975.
The Privy Council held that the removal of certain goods from a ship at the request of a consignee was good consideration for the promise to provide the stevedore the benefit of an exclusion clause, even though the stevedore in removing the goods was only performing his contractual duties owed to the carrier.
Part payment by a 3rd party can discharge the full debt.
Authority and facts.
Hiranchand Punamchand v Temple, 1911.
In HP v T, the defendant was indebted to the plaintiff. The plaintiff agreed with the defendant’s father to accept part-payment by the father in full satisfaction of his son’s debt.
The money have been paid, but the plaintiff sought to recover to the rest. It was held that the plaintiff could not recover the balance from the defendant, as by suing the defendant, the plaintiff would be committing fraud on the father.
Doctrine of Promissory Estoppel.
Establishing authority and root authority.
Central London Property Trust Ltd v High Trees House Ltd, 1947.
He drew the principle from the case of Hughes v Metropolitan Railway, 1877
The 2 HOL cases that are seen to be in conflict with the doctrine of PE.
1) Jordan v Money, 1854
HOL stated that estoppel only applies to statements of fact and not to promises.
2) Foakes v Beer, 1884
HOL confirmed that payment of a smaller sum will not discharge the liability for a larger sum.
The irony in Lord Denning drawing the principle from Hughes.
Hughes states that it only applies to representation of existing fact and not from a promise as to future conduct or intention, confirming the earlier case of Jordan v Money, 1854.
The doctrine of PE.
Explain.
The DOPE operates where there has been a representation by one party (the promisor) that he/she does not intend to enforce his/her strict legal rights, made with the intention that the other party (the promisee) will rely on the representation, and the other party does in fact rely upon the representation without providing consideration. The party making the representation will be estoppel from enforcing his or her strict legal rights, in so far as it is equitable to do so.
Or in essence, the DOPE provides a means of making a promise binding, in the absence of consideration.
Scope of PE.
Hint: Dr. Pres.
DR. PRES
Duration. Reliance.
Promise. Relationship. Equitable. Sword.
(Remember:
when you think of dope, think of Dr. Pres)
