Consideration Flashcards

Question

I – Consideration C - Pre-existing Duty Rule (Good consideration to promise to do something you’re already bound to do?) ϖ 2 - Performance of a contractual duty owed to the promisor → not clear → Williams v Roffey [1990] 1 All ER 512 (may be good consideration if practical benefit and no economic duress or fraud) - Glidewell J:

Answer 1

o At the time of Stilk v Myrick there was rigid adherence to a doctrine of consideration, but subsequent developments make it less relevant: ♣ Promissory estoppel → possible for a person who relies on a promise to make an additional payment for services which he is in any event bound to perform, to show that the promisor is estopped to rely on the absence of consideration ♣ Economic duress → if a contractor declines to continue contracted work unless the other party agrees to pay an increased price, the former may be guilty of securing the promise by taking unfair advantage of the difficulties he will cause if he doesn’t complete → policy arguments undermined o Thus, the current state of the law is that where A and B have a contract for goods/services in exchange of money, and before completion B has reason to doubt whether A will complete, and B promises additional payment as a result of which B obtains a practical benefit or obviates a disbenefit, then absent economic duress or fraud, the benefit is capable of being consideration. o This is not contrary to Stilk but merely refine and limit it, leaving the principle (where B secures no benefit from his promise) unscathed.

Answer 2

o Advantages accruing to D: D recognized that the price originally agreed on was less than a reasonable price, and wanted to retain the services of C so that work would be done without need to employ another subcontractor. There was a need to replace the hitherto haphazard method of payment with a more formalized scheme. o True that C did not undertake to do any additional work, but the terms were varied, and that variation was supported by consideration which a pragmatic approach to the true relationship between the parties demonstrates. o Does not displace Stilk (a gratuitous promise remains unenforceable) but where a party undertakes to make a payment because it will gain an advantage arising out of the continuing relationship with the promisee, the new bargain will not fail for want of consideration.

Answer 3

o Stilk v Myrick remains valid as a matter of principle (a contract not under seal must be supported by consideration), so that where extra payment is promised in exchange for work done that the payee is already obliged to do, then unless some other consideration is detected then the agreement will not be enforceable. o At the time of Stilk there were strong public policy reasons (not allowing crews to hold their masters to ransom) but modern cases rely on economic duress to deal with these situations. o In this case, there was a clear commercial advantage to both sides from a pragmatic point of view. There was a risk that without the extra payment C would not or could not comply with existing obligations. Thus D secured their position commercially through the payment. o Thus the modern position is that where both parties benefit from an agreement it is not necessary that each also suffers a detriment.

Answer 4

1) Scope of the case – all judges mentioned the “practical benefit”, what is that? a. Not breaking the contract (Purchas LJ)? This would give no regard to the fact that D had purchased the right to C’s performance under the original contract, so that in the eye of the law they were already entitled to that performance. b. Replacing the haphazard method of payment (Russell LJ)? This probably does amount to consideration so that the result of the case is rightly decided, but it is the dicta that consideration is provided by the work and not breaking the contract that are problematic. 2) Relationship with Stilk – all judges discuss it but don’t overrule it – on what basis? a. Absence of duress or possibility of duress? → Then Stilk must be interpreted as deciding that there was consideration but the case was set aside for duress or public policy reasons. b. No practical benefit? → Then Stilk must be interpreted as deciding that there was no consideration. 3) Role of duress – if the real fear in contractual modification cases is the fear that one party would exploit the vulnerability of the other to extract a promise of more pay, then should a distinction between modifications that are freely negotiated (enforceable) and those as a result of illegitimate pressure (non-enforceable) be drawn instead? a. US v Stump Homes (US, Posner CJ): the requirement of consideration has a distinct function in the modification setting (though one it does not perform well) – to prevent coercive modifications. The rule that modifications are unenforceable unless supported by consideration strengthens one party’s position by reducing the other’s incentive to seek a modification, but it does so feebly, because the law does not require that consideration be adequate. The sensible course would be to enforce modifications regardless of consideration and use duress to deal with the problem. i. NB UCC § 2-209(1) (only applies to sale of goods) makes modification of contracts not dependent on consideration (but other contractual modifications need consideration) b. If this is correct, then does that mean we should (1) be readier to find the existence of consideration or (2) abolish consideration or (3) not apply consideration to modification cases so that consideration at the conclusion stage is enough? i. Difficulty with (2) is that there is a difference between a promise to make a gift of £X and a promise to pay an extra £X in modifying a contract, because in the latter case there is already a contract and the danger of mistaking casual promissory language for an intention to be legally bound is slight. ii. But difficulty with (3) is that the current doctrine of duress is unstable and it’s hard to determine whether duress has been applied to the facts of particular cases. 4) Abandonment of old contract? – Purchas LJ refers to the US case Watkins v Carrig (holding that there was no variation but an abandonment of the earlier contract and replacement by a second contract on real terms, both supported by consideration): a. Applied by CoA in Compagnie Noga v Abacha (No. 2) per Tuckey LJ: i. The difference is that if a rescinded agreement is replaced by a new agreement to perform the same obligations, it is not the original agreement which compels performance, but the new agreement. Stilk v Myrick only applies where there is variation and not rescission. ii. There does not need to be a scintilla temporis between rescission and new agreement. b. The distinction might be difficult to draw on the facts but important legal consequences. 5) Role of estoppel – all three judges make reference to estoppel and Russell LJ said he would have welcomed an argument that Ds were estopped from taking the position that their promise was non-binding. But note that here C did not need to rely on estoppel because his primary argument (consideration) succeeded – the wider a doctrine of consideration, the less the need for estoppel and vice versa. 6) Relationship with cases on third party and duty imposed by law – the judges drew on caselaw from both areas: a. Glidewell J analysed Ward v Byham as where consideration is found in the father obtaining a “practical benefit” from mother’s promise that the child would be happy. i. Thus this shifts attention away from the mother (and whether she was doing no more than contractual obligations) to the father ii. But can’t take this argument too far – because if in Glasbrook the HL had concluded that the police had only done their legal duty, they probably wouldn’t have been entitled to charge the manager on the basis of a practical benefit! b. Glidewell LJ also drew from Pao On v Lau Yiu (performance of a contractual obligation to third party) but this reliance was criticized by Colman J in South Caribbean v Trafigura because in Pao On consideration moved from the promisee because he has made himself liable to an additional party, whereas in two-party cases he has not undertaken anything that he wasn’t already obliged to do. 7) Relationship with part payment of a debt cases?

Answer 5

- ‘We are satisfied that Stilk v Myrick can no longer be taken to control such cases as Roffey Bros… where there is no element of duress or other policy factor suggesting that an agreement, duly performed, should not attract the legal consequences that each party must reasonably be taken to have expected. On the contrary, a result that deprived Mr Smith [the plaintiff] of the benefit of what Antons [the defendants] promised he should receive would be inconsistent with the essential principle underlying the law of contract, that the law will seek to give effect to freely accepted reciprocal undertakings. The importance of consideration is as a valuable signal that the parties intend to be bound by their agreement, rather than an end in itself. Where the parties who have already made such intention clear by entering legal relations have acted upon an agreement to a variation, in the absence of policy reasons to the contrary, they should be bound by their agreement. Whatever option is adopted, whether that of Roffey Bros or that suggested by Professor Coote or other authorities, the result is in this case the same.’

Answer 6

Traditionally, not good consideration (Collins v Godefroy per Lord Teterden CJ), but:

Answer 7

- Facts: Father of illegitimate child agreed to pay 1 pound weekly allowance provided the child is cared for and happy. Mother remarried and father stopped allowance. Mother tried to force the continuance of payment, and father argued that there was no consideration supporting his promise. - Held: There is good consideration for the father’s promise. - Lord Denning: The mother is only doing what she is legally bound to do. But a promise to perform an existing duty, or the performance of it, should be regarded as good consideration, because it is a benefit to the person to whom it is given. - In this case, the father would get as much benefit from the mother as from a neighbor; he can’t get out of the promise by saying that the mother was under a duty to maintain the child. - This is a case of unilateral contract (promise in return for an act) – once the mother embarked on the task of looking after the child, there was a binding contract. - Morris LJ: The father was saying effectively that irrespective of the strict legal position, he asked that the child would be well looked after and happy, and that the child would be allowed to decide for herself whether or not she wanted to live with the mother. Upon these terms, the contract became operative. There was sufficient consideration.

Answer 8

In Williams v Williams, Lord Denning once again came to the same conclusion, but not the other judges: - Facts: a wife claims sums under a maintenance agreement where husband agreed to pay the wife a weekly sum so long as the wife (1) shall lead a chaste life, (2) indemnify the husband of all debts to be incurred by her and will not in any way thereafter pledge the husband’s credit, and (3) not sue the husband. The husband argued that there was no consideration, since clause 2 is worthless and clause 3 is unenforceable. - Lord Denning: o Clause 3 is void and is therefore not consideration. o Clause 2: the husband claims that since the wife deserted him she would not be entitled to pledge his credit in any way so Clause 2 is worthless to him. However: ♣ Basis 1: a promise to perform an existing duty is sufficient consideration to support a promise, so long as there is nothing in the transaction which is contrary to the public interest. • In this case, she might have sought to pledge her husband’s credit, in which case he might have been summoned before the magistrates or sued in the county court – he would have an answer to all these claims, but nevertheless be put through all the trouble, worry and expense of defending himself. The added safeguard against this worry, trouble and expense is good consideration. • Thus, the promise to maintain herself during the time she is living separate from her husband constitutes good consideration. ♣ Basis 2: desertion is never irrevocable, so her right to pledge his credit is only suspended and not forfeited, and would be resurrected if she made an offer to return to D. Therefore, the forfeit was good consideration. - Hodson and Morris LJJ concurred but on Basis 2 only. Thus, though Lord Denning attacked the pre-existing duty rule, the other judges were more circumspect (Morris LJ in Ward and Hodson and Morris LJJ in Williams) and both cases can be explained by the fact that C had done more than her existing legal duty (keep the child happy; suspension not forfeit). But the question of whether one has done more than their legal duty can be difficult:

Answer 9

- Facts: A colliery manager applied for police protection for the colliery after a national coal strike, where the workers stopped work out of fear for their safety for want of police protection. The police superintendent thought that the level of protection asked for was unnecessary, so the manager promised to pay a sum for it, and the superintendent agreed. The manager then argued that there was no consideration. - Held: there was consideration because the police had done more than their legal duty.

Answer 10

- Viscount Cave LC: The question is whether the police authorities considered in good faith the level of protection asked for to be unnecessary (i.e. whether the superintendent, in refusing special protection unless paid, made a decision that a man in his position and with his duties could reasonably take). - In this case it was additional and not substituted or alternative means of protection, so there was good consideration. - Lord Carson (dissenting): In this case the demands of the manager was nothing in the nature of a luxury – the workers left and only came back after police protection started, and in this way a great disaster was avoided. It is difficult to define “special services” when there is actually being carried on an open invasion of the rights of subjects and where rights to property and work are threatened. But if it is so difficult to define whether one has done more than their legal duty, then why not accept Lord Denning’s opinion? - Why can’t performance of a legal duty amount to consideration? (1) It is against public policy that the performance of a public duty shall be a matter of private purchase, and (2) a promise to pay accepted in times of nervous alarm or anxiety would fail anyway on the ground of duress.

Answer 11

The second rationale is narrower than the first (and would not hold in a case where a citizen freely agrees to pay the police for performance of his legal duty). But the public policy rationale applies with less force to Ward and Williams where no “public duty” is being turned into a matter of “private purchase”. In either case this group of cases will probably come under pressure from the cases on performance of contractual obligations owed to the claimant.

Answer 12

- Facts: C obtained judgment against C for a sum, and was entitled to interest on the sum. Later, D asked C for more time to pay, and C made an agreement with D for immediate payment of part of the sum due and then £X periodically until the sum of the judgment (without interest) is entirely paid, in exchange for not taking any proceedings against D. One of the issues was whether, if as a matter of construction C had agreed to forego her claim to interest, the agreement was supported by consideration. - Held (HL, by majority): it was not supported by consideration so C was entitled to recover interest.

Answer 13

Earl of Selborne LJ: - On the face of the agreement no consideration is expressed except the present payment of a sum on account and in part of a larger debt then due and payable by law under the judgment. He did not contract to pay the future instalments, nor give any new security. o Whether the promise of instalments could be consideration (NO): payment at those deferred dates, by the forbearance and indulgence of the creditor, of the residue of the principal debt and costs could not be a consideration for the relinquishment of interest. o Whether the immediate part payment could be consideration (NO): payment of a lesser sum on the day (or after the day) in satisfaction of a greater cannot be any satisfaction for the whole (rule in Pinnel’s case), as by no possibility a lesser sum can be a satisfaction to C for a greater sum. - It might be preferable to treat release of a whole debt on payment of a sum that the creditor might be content to receive as generally binding, but it would be impossible without refinements which practically alter the sense of the word, to treat such a release as supported by new consideration. Lord Blackburn: - merchants or tradesmen do everyday recognize and act on the ground that prompt payment of a part of their demand may be more beneficial to them than insisting on their rights and enforce payment of the whole. [But he doesn’t dissent] Note that the issue of construction might have influenced the findings on consideration:

Answer 14

- What seems to have happened was that the Debtor’s solicitor dug a technical trap for the Creditor (i.e. the rule that recitals cannot control “clear” words in the operative provisions of a contract, i.e. “£2090 19s” not “£2090 19s plus interest”), and the HL arranged an equally technical rescue (Pinnel’s rule) – probably she did benefit in fact from the agreement (Lord Blackburn stressed this and was critical of the rule, and the other judges were unprepared to overrule it because it ‘has been accepted as part of the law of England or 280 years’ (unconvincing)). Sometimes the antiquity of a rule is a justification for retaining it (ex. legitimate expectations), but this rule is not – do people really rely on it, and if they do, should the law encourage them to?

Answer 15

1) It is generally of benefit to the creditor to accept part payment (Lord Blackburn) 2) It is easy to evade so encourages artificial behaviour (if you pay a day early it would be good consideration) 3) It is out of step with recent developments like Williams v Roffey Brothers

Answer 16

1) It is useful in protecting creditors from unscrupulous debtors (Foakes v Beere, D and C Builders v Reese) 2) It is precedent from the HL so only the SC can overrule it (In Re Selectmove) 3) It is consistent with the general common law rule that a promise to perform an existing duty owed to the promisor does not generally constitute good consideration for a fresh promise given by the promisor

Answer 17

- Facts: C did building work for D and D only paid a partial amount. C faced bankruptcy if D didn’t pay the rest; D telephoned saying work was bad and only paid another partial sum in cheque, and C was forced to take it and issue a receipt stating completion of payment. Later sued D. - Held: The later sum was claimable – payment of a lesser sum is no discharge for a greater sum. D had effectively held C to ransom and any subsequent allowance was void.

Answer 18

- The principle that payment of a lesser sum cannot discharge a greater sum applies the same if the lesser sum is paid in cash or in cheque, because the cheque is conditional payment, once cashed, becomes actual payment and the same as cash. - The principle that a smaller sum cannot discharge a greater has come under much criticism, so that an equitable principle developed whereby when a creditor and a debtor enter upon a course of negotiation, which leads the debtor to suppose that, on payment of a lesser sum, the creditor will not enforce payment of the balance, and on the faith thereof the debtor pays the lesser sum and the creditor accepts it as satisfaction, then the creditor cannot enforce payment of the balance when it would be inequitable to do so (example – Central London Property Trust v High Trees House). - However, this is only true if it would be inequitable for the creditor to insist on the full amount (where there has been a true accord between creditor and debtor – i.e. the creditor voluntarily agrees to accept a lesser sum in satisfaction, and the debtor acts upon that accord by paying the lesser sum and the creditor accepts it). - In this case there was no true accord as the debtor knew the creditor needed money and so held him “on ransom”.

Answer 19

- In Foakes v Beere Lord Selborne said that by giving negotiable paper or otherwise there had been some new consideration for a new agreement distinct from mere money payments. But IJO giving a cheque is very different from the “gift of a horse, hawk, or robe” evoked in Pinnel’s Case – a cheque from some other person than the debtor, in the appropriate circumstance, may be sufficient, but the debtor’s own cheque for a smaller sum cannot be better than payment of the whole amount of the debt in cash. - There was also no true accord – D knew of C’s financial difficulties and used the awkward situation to intimidate them. C did not wish to accept the smaller sum, but were desperate to get some money. D also misled C as to their own financial situation.

Answer 20

1) No distinction between cash and cheque – in both cases there would be no new consideration. 2) Difference in reasoning between Denning and Danckwerts – Danckwerts (and Winn) LJ reached the conclusion by a straightforward application of Foakes v Beer whereas Lord Denning resorted to equity to confine Foakes, so that the reason why C were entitled to sue for the balance was that D had behaved inequitably. 3) Why did D behave inequitably? – Lord Denning relied on the tort of intimidation (emphasizing D’s wife’s threat to break the contract unless C agreed to discharge of the entire debt. Winn LJ emphasized that D knew of C’s financial difficulties and had misrepresented their own financial position. 4) Consideration vs. estoppel – whether or not C entered into the new agreement freely or under duress, there is no consideration. But this factor can be important in estoppel (CF Collier v Wright (infra), which has potential to severely limit Foakes v Beere though what effect it actually had remains to be seen)

Answer 21

- Facts: C owed income tax to the Inland Revenue. C’s manager met with a tax collector and agreed to pay off arrears at a rate of £X per month, and pay future liabilities as they fell due. The tax collector said that he would have to seek approval from his superiors and would revert to the manager if the proposal was unacceptable. He didn’t revert back, until the Inland Revenue demanded payment of the entire arrears threatening a winding-up petition if payment wasn’t made. C argued that an agreement had been reached and it was supported by consideration. - Held (CoA): no agreement had been reached, and in any case there was no consideration.

Answer 22

- the promise to pay the future instalments was merely promise to pay what was due anyway and not good consideration. As to the promise to pay arrears, Foakes v Beere has been followed and applied in numerous cases since, and though C argued that Williams v Roffey Brothers should be extended where B’s obligation is to pay A (≠do services or supply goods to A), doing so would leave the principle in Foakes v Beere without any application. - Where a creditor and debtor at arm’s length reach agreement on payment of debt by instalments to accommodate the debtor, the creditor will always see a practical benefit to himself in doing so. This was however held not to constitute good consideration in Foakes v Beere. - It would be impossible, consistently with the doctrine of precedent, for this court to extend the principle in Williams to the circumstances governed by the principle in Foakes v Beere – this would have to be by the HL or more appropriately, Parliament. Thus Re Selectmove establishes that Foakes v Beere is still good authority and has not been undermined by Williams v Roffey Brothers. But it also seems clear that were it not for authority, Peter Gibson LJ would have reached a contrary conclusion.

Answer 23

NOTE Peel, “Part Payment of a Debt is no Consideration” (1994) 100 LQR 353 - If the Law Commission does decide to deal with the question of consideration and the performance of an existing obligation, it is interesting to dwell briefly on the possible options available to it. o The least attractive option is to do nothing → the question of whether a promise to perform an existing obligation may be good consideration is to be determined upon the arbitrary basis of the nature of the obligation in question: i.e. is it an obligation to pay money or to perform services? o Nor is it clear that it would be enough to overturn Foakes v. Beer and apply Williams v. Roffey to any existing obligation → concentration solely on the issue of consideration would fail to address the real problem of distinguishing between those renegotiated contracts which should be enforced and those which should not. o Consequently, a third possibility is simply to abolish the requirement of consideration in cases of renegotiated contracts and to test their enforceability on the basis of economic duress → a more sophisticated approach under which bona fide renegotiations would be enforceable whereas those obtained by exploitation would not. o A fourth possibility, but one which would produce much the same result as the third, would be to extend the scope of promissory estoppel. But a plea of promissory estoppel is subject to a number of other restrictions which severely limit it as a means of giving effect to renegotiated contracts (esp. shield not sword). But it is still significant that payment of money will always constitute a “practical benefit” to the creditor, so that extending Williams to part payment of debt would leave Foakes without any application. But where does this leave Foakes –vs- Williams? The latter didn’t consider Foakes so we don’t know of the relationship… But what is the relevant difference between them? One is a promise to pay more, whereas the other is a promise to accept less → but is this a distinction in principle? CF Treitel – might there be a difference in principle between an “increasing pact” and a “decreasing pact”?

Answer 24

i. e. the non-underlined part is the Williams v Roffey test and the underline parts are the NSW recasting, stating in particular that Australia should adopt the Williams test but with a few revisions, especially because conceptually it can make no difference whether B promises A an additional payment for A’s promise to perform, or grants A the equivalent concession of promising a reduction in A’s payment obligations, where these pre-exist: - Santow J: ‘(i) if A has entered into a contract with B to do work for, or to supply goods or services to, B in return for payment by B, and (ii) at some stage before A has completely performed his obligations under the contract B has reason to doubt whether A will, or be able to, complete his side of the bargain and - (iii) B thereupon promises A an additional payment or other concession (such as reducing A’s original obligation) in return for A’s promise to perform his contractual obligation on time and - (iv) (a) as a result of giving his promise B obtains in practice a benefit, or obviates a disbenefit provided that A’s performance, having regard to what has been so obtained, is capable of being viewed by B as worth more to B than any likely remedy against A (allowing for any defences or cross-claims), taking into account the cost to B of any such payment or concession to obtain greater assurance of A’s performance, or - (b) as a result of giving his promise, A suffers a detriment (or obviates a benefit) provided that A is thereby foregoing the opportunity of not performing the original contract, in circumstances where such non-performance, taking into account B’s likely remedy against A (and allowing for any defences or cross-claims) is capable of being viewed by A as worth more to A than performing that contract, in the absence of B’s promised payment or concession to A, and - (v) B’s promise is not given as a result of economic duress or fraud or undue influence or unconscionable conduct on the part of A nor is it induced as a result of unfair pressure on the part of A, having regard to the circumstances, then (vi) the benefit to B or the detriment to A is capable of being consideration for B’s promise, so that the promise will be legally binding.’

Answer 25

1) This test expands the scope of the Williams principles to concessions and thus undermines any contention that there can be a principled difference between promise to pay more and promise to accept less. 2) This test enlarges the defences available to the promisor beyond economic duress.

Answer 26

- Facts: D, licensee of C’s property, could not pay the licence fee and it accumulated arrears. C purported to terminate the licence agreement but D sought to rely on an oral agreement to ‘re-schedule the licence fee payments over the period from February to October 2012’ so D would pay less in the early months but more towards the end of the year so that the arrears would be paid off by the end of the calendar year. D sought to deny effect to the agreement on the ground that it was not supported by consideration, relying on Foakes v Beere. - Judge Moloney rejected this submission and held that it was good consideration because there was a ‘possible commercial benefit’ to the claimant in retaining an existing tenant in the hope of perhaps recovering some of the arrears.

Answer 27

- upheld the decision and distinguished Foakes on the ground that the benefit which the claimant derived from the defendant’s agreement to enter into the oral variation was not simply a promise to pay part of the debt which it owed but that the claimant secured a better prospect of recovering the arrears which had built up and that the defendant would remain a licensee and continue to occupy the property so that it would not be left standing empty for some time at further loss to the claimant → practical benefit, following Williams. - Kitchen and McCombe LJJ reached this conclusion by an application of the practical benefit test of consideration derived from Williams v Roffey Bros. - Arden LJ preferred to adopt the analysis of Professor Chen-Wishart in terms of a ‘collateral unilateral contract’ according to which the original bilateral contract between the parties was supplemented by a unilateral contract under the terms of which the claimant agreed to accept less by way of payment in the early period of the variation of the agreement provided that the defendant adhered to the revised payment schedule (Kitchen and McCombe declined to adopt this analysis not because they disagreed but because it had not been argued)

Answer 28

Heppel and Matthews argue that in the event of conflict, Foakes v Beere must give way to Williams v Roffey and courts should focus on the presence or absence of practical benefit or detriment. But others disagree:

Answer 29

- the practical benefit test should not be applied to part payment of debt because it is too easy to satisfy, and the defences (ex. duress) may not provide adequate protection to the creditor.

Answer 30

- certainly, the protective function of Foakes in cases like D and C Builders v Rees can be served by other doctrines like duress, but there is nothing wrong with the outcome in Foakes, and I don’t see how the case could be brought within even the expanding concept of duress, nor is it obvious what other legal machinery could be used to achieve the same end.

Answer 31

NB does NOT require the consideration to move to the promisor (sufficient that it moves from the promisee and not third party) – thus promise to confer a benefit on a third party at the request of the promisor is good consideration (Bolton v Madden).

Answer 32

In order to constitute consideration, the act must have been performed at the request (express or implied) of the promisor. This point bears on the scope of consideration – the more ready the court is in finding an implied promise, the wider the scope of consideration and the less the court has to resort to estoppel (and vice versa).

Answer 33

- Facts: following divorce, D (husband) promised to pay C (wife) £X annually, then did not make any of the payments. She didn’t apply to the court for maintenance, and then sued for six years of arrears. - Byrne J held that though there was no consideration, it fell within the High Trees principle so she was allowed to recover. - CoA: there was no consideration, and that the High Trees principle could NOT be used to confer a cause of action on C.

Answer 34

- Rejecting estoppel argument: the High Trees principle cannot create new causes of action where none existed before, only prevents a party from insisting upon his strict legal rights where it would be unjust to do so. Seeing that the principle never stands alone as giving a cause of action in itself, it can never do away with the necessity of consideration when that is an essential part of the cause of action. - Rejecting that there is consideration: o There was no express or implied promise by the wife to forbear from applying to the court for maintenance (but even if there was it would not have been good consideration because such an agreement would be unenforceable) o The actual forbearance on the part of the wife cannot be consideration because unilateral promises can only be enforced if the act or forbearance is done on the faith of the promise and at the request of the promisor (express or implied). This act would be sufficient consideration even though it arises ex post facto. In this case, however, the promise was not intended to be acted upon because the husband didn’t request (expressly or impliedly) that the wife should forbear to apply to the court. Why didn’t the CoA hold that there was an implied request on the part of the husband for the wife to refrain from applying for maintenance?

Answer 35

- TO suggest that this might be an offer of a generous gift would be to place a considerable burden on one’s credulity. It cannot be believed that the husband was promising to pay even though she should make an application for maintenance. It is not unreasonable to suggest that the husband was offering to pay in return for the wife’s forbearance.

Answer 36

- The CoA didn’t find consideration on the facts not because it couldn’t have, but because justice did not require it as it was against C: because C had a bigger income and because C was trying to enforce £600 in arrears and not the promise to pay £100 annually.

Answer 37

- It is suggested in Chitty on Contracts that there is little point in now preserving any separate category of estoppel by deed, since the basis of the estoppel appears now to be covered by estoppel by representation or by convention. That may be going too far. Consideration is still ordinarily a requirement of a contract. In Johnson v Gore Wood & Co [2002] 2 AC 1 , Lord Goff expressed reservation about attempting to encapsulate the many circumstances capable of giving rise to an estoppel within a single formula, in part because consideration remains a fundamental principle of the law of contract and is not to be reduced out of existence by the law of estoppel. A particular characteristic of a deed is that consideration is not ordinarily required for it to be effective as between the parties.

Answer 38

- If consideration is to be abolished, its function must be fulfilled by alternative doctrines (ex. promissory estoppel, economic duress, undue influence, unconscionability…), which appear more clearly suited not only to modern commercial circumstances but also to situations where there has been possible “extortion”. There is also the UK Committee’s proposal that consideration is merely evidence of a serious intention to contract (so should not be required when promise is in writing). - But these alternatives are subject to their own difficulties (estoppel can only be used as a shield, unconscionability is a “fledgling” doctrine…). No doctrine is free from its own difficulties, though from a relative perspective, the courts would be wise to utilize only those doctrines with relatively fewer difficulties. - From a pragmatic point of view, consideration is part of the common law landscape. It cannot be ignored, but because it suffers from some basic weaknesses, it almost certainly needs to be reformed. Some legal mechanism is necessary to guide the courts as to what promises are enforceable and what are not – if consideration is abolished, it will need to be replaced by something else, and it is important to note that the various alternatives above are (apart from writing) already part of Singapore law. Therefore, the maintenance of the status quo (consideration + alternative doctrines) may be the most practical solution in that it affords the courts a range of legal options to achieve a just and fair result in the case concerned.

Answer 39

- Radical proposals for wholesale review of the doctrine of consideration are not necessary. Few modern cases fail for want of consideration (and such claims could have been decided on other grounds anyway). In any case modern courts hold that the rigidity of the doctrine must yield to practical justice and the needs of modern commerce, so that in commercial contexts serious intention to enter into legal relations + concluded agreement = presumption of consideration.

Answer 40

- There is a doctrine of consideration, which means: o There is one consideration, not multiple considerations o It is a doctrine, which means it is artificial and not rooted anywhere except possibly insofar as it might be argued that gratuitous promises should not be enforced - IAO the court has never set out to create a “doctrine of consideration” – instead, it has always been concerned with the much more practical question of whether the promise in question should be enforced. - It is probable that when the courts use “consideration”, they mean no more than the reason for enforcement. This must be the historical and analytical truth. - Treitel argues that judges can invent consideration… But: o If invented consideration is the same as ordinary consideration, then it’s not invented. o If invented consideration is not the same as ordinary consideration, then it either (1) violates the rules of law or (2) becomes ordinary consideration, albeit modifying its significance. - Though Atiyah would qualify one point: consideration is a reason for recognizing an obligation, rather than a reason for enforcing a promise (because there are other reasons for recognizing obligations (ex. reliance), and because a lot of consideration cases are based on implied promises that appear fictitious at best) - It would be better if courts recognized that the reliance necessary for estoppel also be sufficient for consideration, though this would necessitate the courts to be more sophisticated about when expectation protection is and is not justified. - Thus we cannot abolish consideration, because consideration means a reason for recognizing an obligation, and we can’t simply enforce all promises. Even understood in a narrower sense, abolishing consideration would still mean starting all over again to look for reasons to enforce promises. - IAO the problems arising from the enforcement of gratuitous promises are too complex to be adequately dealt with by either rules of consideration or intention to create legal relations – if we are to suggest that the law should be more willing to enforce gratuitous promises, it would be necessary to start by asking about the concept of a “gratuitous” promise. It is difficult to generalize about gratuitous promises in advance because so much depends on the context where they arise.

Answer 41

Argues that Atiyah’s proposal (that the courts should look to the reasons that make it just or desirable to enforce promises or obligations) is too vague to provide a workable standard. - According to Atiyah, consideration means a reason for the enforcement of a promise. - Agrees with Atiyah in adopting Corbin’s view that the doctrine of consideration is not a single doctrine, and that “when a court refuses to enforce a promise despite actual benefit or detriment on the ground that there is none in the eyes of the law, it is merely asserting that there are other reasons for refusing to enforce the promise” → the status quo might conceal the real reason for decisions. - A restatement is needed, but Atiyah’s restatement would not help solve the problem. Saying that courts will enforce promises when the justice of the case requires it points to a difficulty but doesn't solve any problems. Because of all of the criticisms, it is unlikely (according to McKendrick) that were English law to start afresh, it would adopt the doctrine. Indeed there is no place for consideration in international restatements of contract law:

Answer 42

- A contract is concluded if: (a) the parties intend to be legally bound; and (b) they reach a sufficient agreement, without any further requirement. But English law does not get to start afresh, and for reasons given by Lord Steyn, it is unlikely to abolish the doctrine, but more likely to follow along the path of Williams v Roffey Brothers. One consequence of this might be giving a more prominent role to intention to create legal relations.

Answer 43

- Scholarship that wants to abolish consideration are based on three incorrect assumptions: o The function of consideration is to act as evidence of the promisor’s intention to be bound → though it might incidentally perform an evidential function, its primary purpose is not evidential (indeed, gratuitous promises aren’t necessarily harder to prove, and even if I promise before witnesses in writing, it would still not be enforceable for want of consideration). o Consideration should not defeat that intention where it is otherwise clear → if enforcing voluntary promises were the only value, then contract law would only be a fraction of its length. Also, if we should have freedom to make promises, then why enforce the past intention rather than our present intention (when we changed our mind). o Other doctrines are also aimed at ensuring the presence of valid intention, and therefore already render consideration redundant → this wrongly assumes that all seriously intended promises should be enforced, which should not and cannot be done. - Those who want to enforce all seriously intended promises base themselves on a negative conception of autonomy, whereas a richer, positive conception of autonomy yields other values that are worthy of being protected: the protection of valuable social forms, the need for respectful dealing, tracking the instinct of reciprocity that preserves social stability and meeting the demands of administrability. - Consideration means that informal gratuitous promises will not be enforced, and this is necessary for o (i) the trust- and solidarity-building functions of such promises in the social forms in which they generally occur; o (ii) the respect that is due from promisees to promisors (since enforcement of gratuitous promises would allow the promisee to treat the promisor as a means to her ends without also respecting the promisor’s ends by forgiving, releasing or otherwise accommodating the promisor’s change of mind); and o (iii) the fluid, open-ended reciprocity implicit in such relationships. o This is reinforced by (iv) the serious practical problems of enforcement (including the necessity and difficulty of recalibrating the excuses and remedies for nonperformance), particularly when affective motivations and extra-legal sanctions render enforcement largely unnecessary, and when the formalities device makes enforceability possible. - It means that informal but explicitly reciprocated undertakings are enforced, and this should be the case because: o (i) this secures and extends a practice which facilitates cooperation and coordination, and enhances autonomy and welfare by bridging the gap in trust and sanctions between relative strangers; o (ii) reciprocation ensures that each party treats the other respectfully, since each party treats the other not merely as a means of enhancing her own ends, but also as an end which she simultaneously serves; o (iii) this tracks the instinct of reciprocity that is the mark of just dealing, and a preserver of social stability; and o (iv) the problems that tell against the enforcement of gratuitous promises do not arise in this context, and, moreover, the reciprocity manifest in consideration provides the best justification for contract’s expectation remedies and the limited excuses for non-performance.

Answer 44

Estoppel is used where one cannot establish that another’s promise was supported by consideration.

Answer 45

Estoppel: deals with situations where A made a representation relied on by B and is not allowed to deny the truth of that representation. It is not part of the law of contract; it does not give effect to any promise or agreement, but aims at protecting individuals who have been induced detrimentally to rely on another’s representation. This can arise from a promise, but the key is not the promise but reliance. However, there is a strong argument that in estoppel cases the courts really are just enforcing ordinary promises or agreements (particularly proprietary estoppel, where though the court is clearly not treating the case as contracts because there are none (want of formalities), the court is also clearly just enforcing the agreements as if they were contracts).

Answer 46

- Estoppel is a mechanism for enforcing consistency, a principle of justice and of equity: 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 (citing Lord Denning). But this definition lacks precision:

Answer 47

- “Estoppel” is a common law word, but High Trees set equity on the path of supplementing the doctrine of consideration by extending the common law notion of “estoppel” so that “equitable estoppel” [promissory estoppel] has been more prominent than its common law original. - “Estoppel” is difficult to define (like Rylands v Fletcher), so that a huge caselaw has developed while we have never known what we were talking about

Answer 48

- Lord Cairns LC: if parties who have entered into definite and distinct terms involving certain legal results, afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one party to suppose that the strict rights arising under the contract will not be enforced (or will be kept in suspense), the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties. - In this case no intention to trap/lull into false security those whom he was dealing with is attributed to A, but by entering upon the negotiation that the parties entered upon, made it an inequitable thing.

Answer 49

- Facts: C let a block of flats to D, and because many people let London on the outbreak of WWII D couldn’t let all the flats. Thus, the directors of both companies agreed that C would reduce the rent. By 1945 the flats were fully let and D. Subsequently, C tried to recover arrears. - Denning J: - On the legal principles applicable: o without regard to recent developments in the law: ♣ the original deed was not varied because a lease under seal cannot be varied by an agreement by parol ♣ Equity stepped in to give effect to variations of deeds by simple contracts, but cannot apply in this case because of want of consideration ♣ Estoppel can’t assist because representations not of an existing fact but as to the future (i.e. intentions) must be embodied in a contract or be nothing (Jorden v Money) o But the law has moved on in recent years, and though courts have not gone so far as to give a cause of action for breach of seriously intended promises, the court has refused to allow the party making it to act inconsistently with it. In this sense and in this sense only does the promise give rise to an estoppel. o This is the logical consequence of the fusion of law and equity: a promise to accept a smaller sum in discharge of a larger sum, if acted upon, is binding notwithstanding the absence of consideration. This was not considered in Foakes v Beere, but today, when law and equity have been joined for 70 years, principles must be reconsidered to gauge their combined effect. - On the scope of the promise in this case: o In this case it was understood by both parties that the promise was to apply under the conditions prevailing at the time when it was made (flats partially let) and did not extend any further than that (so that in 1945 it ceased to apply)

Answer 50

Note that the beginning of the judgment suggests that High Trees might not be an estoppel case at all, in the Denning J suggests that he has to get around Jorden v Money, and relies on cases like Hughes v Metropolitan Railway which he describes as “not cases of estoppel in the strict sense” but cases of “promises intended to be binding, intended to be acted upon, and in fact acted on”. He then distinguished Jorden on the ground that the promisor there didn’t intend to be bound. This is then apparently in conflict with Foakes v Beere, though Denning J said that this aspect was “not considered” in that case…

Answer 51

- Would be surprising if the HL in Foakes were unaware of Hughes (because two members sat on both cases), more likely that the HL didn’t consider it because it thought it irrelevant because Hughes is concerned with suspension of a right whereas Foakes is about extinction of that right. Perhaps indeed the two cases are concerned with very different things: - Hughes: if I tell you that you don’t have to perform your contractual obligation so you don’t perform it, I can’t sue you in damages for not performing it - Foakes: if I tell you that you don’t have to perform your contractual obligation so you don’t perform it, I can change my mind and say “now you must perform your obligation!” Note that the effect of Denning J’s holding that the estoppel only applied until 1945 is that the effect of the “estoppel” (if it is indeed a case of estoppel) is sort of extinctive and sort of suspensive – the right to demand full rent returned in 1945 (suspensive), but C’s right to demand arrears until 1944 was not suspended but lost (extinctive).

Answer 52

Notwithstanding Denning J’s statement that High Trees wasn’t a case of estoppel in the strict sense, it was subsequently regarded as a landmark case of development into “promissory estoppel”:

Answer 53

- Lord Hodson: The principle of “quasi estoppel” or more accurately “promissory estoppel” is that when one party to a contract in the absence of fresh consideration agrees not to enforce his rights, an equity will be raised in favour of the other party, subject to the qualifications that: o the other party has altered his position o that the promisor can resile on giving reasonable notice, giving the promisee a reasonable opportunity of resuming his position o that the promise only becomes final and irrevocable if the promisee cannot resume his position The promise also has to be clear and unequivocal.

Answer 54

- Facts: C, one of three partners who between them owed £X to D under joint liability. C alleged that he had made an oral agreement with D under which it was agreed that his liability should be limited to 1/3 of the judgment debt, which he paid. D then claimed he was entitled to recover the balance of the judgment debt, relying on Foakes v Beer to argue that he was not bound by the agreement. - Held (CoA): there was an arguable case that promissory estoppel might afford him a defence. - Arden LJ: relying on Lord Denning in D and C Builders, concluded that if a debtor offers to pay part only of the amount he owes, the creditor voluntarily accepts, and in reliance on the acceptance the debtor pays that part in full, the creditor will, by virtue of the doctrine of promissory estoppel, be bound to accept that sum in full and final satisfaction of the whole debt, for resiling will of itself be inequitable. Here, promissory estoppel has the effect of extinguishing the creditor’s right to the balance of the debt. ⇒ It would seem on this basis that he who pays (≠promises to pay) will be bound by promissory estoppel - Longmore LJ: three concerns about the principle set up by Arden LJ – the agreement to give up the balance must be clearly established on the evidence (court will not lightly infer that a creditor has promised to give up his right to recover the balance), debtor must establish an agreement to give up the right on a permanent basis and not suspend his right for a period of time, and it must be inequitable for the creditor to go back on his promise.

Answer 55

- Kitchin LJ, on (Hughes, High Trees, Collier): all of these cases are best understood as illustrations of the broad principle that if one party to a contract makes a promise to the other that his legal rights under the contract will not be enforced or will be suspended and the other party in some way relies on that promise, whether by altering his position or in any other way, then the party who might otherwise have enforced those rights will not be permitted to do so where it would be inequitable having regard to all of the circumstances. - It may be the case that it would be inequitable to allow the promisor to go back upon his promise without giving reasonable notice…; or it may be that it would be inequitable to allow the promisor to go back on his promise at all with the result that the right is extinguished. All will depend upon the circumstances. - It follows that I do not for my part think that it can be said, consistently with Foakes v Beer and In re Selectmove, that in every case where a creditor agrees to accept payment of a debt by instalments, and the debtor acts upon that agreement by paying one of the instalments, and the creditor accepts that instalment, then it will necessarily be inequitable for the creditor later to go back upon the agreement and insist on payment of the balance. All will depend upon the circumstances.’

Answer 56

The promise must be intended to affect the legal relations between the parties and that clearly demonstrates that the promisor was giving up his strict legal rights against the promisee.

Answer 57

- Facts: C and D had a contract for payment in Nigerian currency. Then C requested D to temporarily pay D in Pound Sterling, and D, in a letter, said that they could pay in Sterling. Later, Sterling was devalued and C insisted that the letter (i) amounted to a variation of the contract allowing them to pay in Sterling (at a 1:1 rate), or that (ii) D was estopped from refusing to accept payment in Sterling. - Held: To found a promissory estoppel a representation had to be clear and unequivocal, i.e., so expressed that, farfetched or strained interpretations apart, it would be understood in the sense required. On the facts, not sufficiently precise to amount to a variation of contract, so equally not sufficiently clear and unequivocal to found a claim of estoppel. - Lord Hailsham: It would be astonishing if, in the case of a genuine misunderstanding as to the meaning of an offer, the offeree should obtain by means of the doctrine of promissory estoppel something that he must fail to obtain under the conventional law of contract.

Answer 58

Reliance is necessary, but not necessarily detrimental reliance (thus, in High Trees, it is not clear that the tenants suffered any detriment because they were only being asked to pay what they were contractually obligated to pay anyway).

Answer 59

- Goff J: the principle is that stated in Hughes (the representor will not be allowed to enforce his rights where it would be inequitable having regard to the dealings which have thus taken place between the parties). It is not necessary to show detriment, indeed, the representee may have benefited from the representation while it would still be inequitable (at least without reasonable notice) for the representor to enforce his rights. o Example – on the facts of High Trees the tenants benefited from the reduced rent but it still would have been inequitable for the lessor to insist on his legal right because the lessee has conducted his affairs on the basis that he would only have to pay lower rent. - In such cases, it would be open to the court to conclude that only after reasonable notice could the lessor return to charging rent at the higher rate.

Answer 60

- Lord Denning: - The principle in High Trees applies only if it would be inequitable for the creditor to insist on the full amount (where there has been a true accord between creditor and debtor – i.e. the creditor voluntarily agrees to accept a lesser sum in satisfaction, and the debtor acts upon that accord by paying the lesser sum and the creditor accepts it). - In this case there was no true accord as the debtor knew the creditor needed money and so held him “on ransom”. - Danckwerts LJ: - There was also no true accord – D knew of C’s financial difficulties and used the awkward situation to intimidate them. C did not wish to accept the smaller sum, but were desperate to get some money. D also misled C as to their own financial situation.

Answer 61

The effect of estoppel is generally suspensory so that giving reasonable notice would revive it (thus in Hughes the effect of estoppel was only to suspend the tenant’s repair obligations, not extinguish them), but can be extinctive of past obligations (as in on the facts of High Trees in relation to the rent up to 1944).

Answer 62

- Facts: D infringed a patent held by C, so that C waived all infringements in return for payment. During the war years, the parties agreed to waive part of the payments until a new agreement could be reached. Later, proceedings commenced between the parties and C counterclaimed the payments, but failed because the waiver was still operative. In the present proceedings, C seeks to recover the payments for the period commencing after the last action. - Held: the counterclaim was sufficient notice of C’s intention to stop the waiver.

Answer 63

- Denning LJ: - Rejecting estoppel argument: the High Trees principle cannot create new causes of action where none existed before, only prevents a party from insisting upon his strict legal rights where it would be unjust to do so. Seeing that the principle never stands alone as giving a cause of action in itself, it can never do away with the necessity of consideration when that is an essential part of the cause of action. But this must be qualified:

Answer 64

The estoppel spectrum: 1) Estoppel can only be used as a defence → lease ambitious claim 2) Estoppel can be used by a party seeking to enforce a claim based on a recognized cause of action to defeat the defence/counter-claim of the other party → supported by academic authority a. Ex – if landlord lends to a tenant and agrees to lower rent, and then distrains the tenant’s property in order to recover the balance of the rent, the tenant can bring an action for conversion, and use estoppel to defeat the landlord’s defence of rightful distraining. 3) Estoppel can be used by a party seeking to enforce a claim to prove one element of a recognized cause of action → seems to be the effect of estoppel in Robertson v Ministry of Pensions a. In that case, C was relieved of the burden of having to prove the issue of causation in a statutory tort because the defendant was estopped from denying the causal connection (though C still had to prove all the other elements) 4) Estoppel can be used by a party seeking to enforce a claim to prove all the elements of a recognized cause of action → seems to be the effect of estoppel in The Henrik Sif a. In that case, it appeared that all of the elements (consideration, agreement…) of a recognized cause of action were proved by the estoppel 5) Estoppel has created a new cause of action → this would have been the effect of the first instance judgment in Combe v Combe (though disclaimed strongly by Denning LJ in the CoA saying that it can’t stand alone as giving a cause of action in itself) ⇒ MI (IMPORTANT) but why would Combe v Combe be an example of the fifth element in the spectrum, as opposed to the third?? Enforcing the right to contractual performance is a recognized cause of action (and elements that you have to prove include offer, acceptance, consideration, intention to enter into legal relations…). The claimant still has to prove everything else, just does not have to prove consideration, because the other party is estopped from denying that there was consideration. But why can promissory estoppel never give rise to a cause of action? Because this would undermine the doctrine of consideration (Combe v Combe)? This was rejected in Walton Stores where the High Court of Australia recognized that promissory estoppel could (in an appropriate case) create a cause of action. Also, this is not true of all estoppels – proprietary estoppel can create a cause of action but other estoppels cannot… Why? Also, it is doubtful whether Halson is right about his points 3 and 4, in that some courts appear to interpret the maxim that estoppel cannot be used as a sword to encompass these points (ex. Riverside Housing Association v White).

Answer 65

- Facts: D (bank) provided a loan to a subsidiary company of C and C provided D with a guarantee, and when the bank tried to enforce the guarantee, C tried to argue that its liability was to the subsidiary and not to the bank so that it could not be liable under the guarantee. - Held (CoA): C was estopped by convention from denying that it was bound to discharge the debts of its subsidiary because the parties had entered into the transaction on the assumption that C was so liable, and the parties acted on that assumption when giving effect to the transaction and the effect of the estoppel was to hold them to the validity of that assumption.

Answer 66

o Equitable estoppel is surely one of the most flexible of all doctrines. There have emerged so called doctrines of “acquiescence”, “encouragement” and “promissory estoppel”. But all these have been statements of aspects of a wider doctrine; none has sought to be exclusive. It cannot be right to restrict equitable estoppel to certain defined categories. o In all cases, the inquiry is simply whether, in all the circumstances of the case, it was unconscionable for the defendants to seek to take advantage of the mistake. - In this case, what is significant is that: 1) […] 2) It is not of itself a bar to an estoppel that its effect may be to enable a party to enforce a cause of action which, without the estoppel, would not exist (≠give rise to a cause of action). As Lord Denning M.R. pointed out in Crabb v. Arun District Council[1976] Ch. 179 , 187, an estoppel may have the effect that a party can enforce a cause of action which, without the estoppel, he would not be able to do. This is not, of course, true of all estoppels. Thus a promissory estoppel is concerned with a representation by a party that he will not enforce his strict legal rights; of its very nature such an estoppel cannot enable a party to enforce a cause of action. But in other cases an estoppel may do so, as, for example, in cases of estoppel by acquiescence. 3) However, what I have just said has to be reconciled with the general principle that a purely gratuitous promise is unenforceable at law or in equity (Combe v. Combe[1951] 2 K.B. 215). This doesn’t mean that no cause of action in contract could be created by an estoppel – there are at least three groups where this is not true. The basis of all these groups of cases appears to be the same - that it would, despite the general principle, be unconscionable in all the circumstances for the encourager or representor not to give effect to his encouragement or representation. a. [Proprietary estoppel] b. Promissory estoppel, in which one party represents to another that he will not enforce his strict legal rights under a legal relationship between the parties. The representation may be no more than a gratuitous promise; but it may nevertheless be unconscionable for the representor to go back upon it, because a representee may reasonably be expected to act in reliance upon such a forbearance, without going to the extent of requiring a contractual variation. c. Cases where one party has represented to the other that a transaction between them has an effect which in law it does not have. 4) Where the estoppel is founded upon a representation by a party that he will not enforce his legal rights (ex. promissory estoppel), it is a prerequisite that there should be an existing legal relationship between the parties. But where, for example, the estoppel relates to the legal effect of a transaction between the parties, it does not necessarily follow that the underlying transaction should constitute a binding legal relationship.

Answer 67

- The doctrine of estoppel is one of the most flexible and useful in the armoury of the law. It has evolved during the last 150 years in a sequence of separate developments (proprietary estoppel, promissory estoppel…) with limitations by various maxims. - All these can now be seen to merge into one general principle shorn of limitations. When the parties to a transaction proceed on the basis of an underlying assumption - either of fact or of law - whether due to misrepresentation or mistake makes no difference - on which they have conducted the dealings between them - neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so. - That general principle applies to this case.

Answer 68

- A party cannot in terms found a cause of action upon an estoppel, but he may, as a result of being able to rely on an estoppel, succeed on a cause of action on which, without having been able to rely on that estoppel, he would have failed.

Answer 69

≠ promissory estoppel because the representation is a statement of fact and not a promise → one who makes a representation as to an existing fact which induces the other to act to his detriment in reliance may not be permitted to act inconsistently with that representation. This is a rule of evidence that permanently prevents a representor from asserting facts contrary to his own representation

Answer 70

A type of estoppel: - Founded on an agreed statement of facts the truth of which has been assumed, by the convention of the parties, as the basis of a transaction into which they are about to enter. - If they acted in their transaction on the agreed assumption of facts, then as regards that transaction each is estopped as against the other from questioning the truth of the statement (Brandon LJ, Amalgamated Investment) Most widely used in interpretation of documents cases (ex. Amalgamated Investment).

Answer 71

There needs to be a representation or assurance made to C relating to the acquisition by C of an interest in property, reliance, and detriment in consequence of his reasonable reliance (Thorner v Major).

Answer 72

Estoppels are governed by different rules: - Promissory estoppel requires a clear and unequivocal promise whereas proprietary estoppel the understanding between the parties can be more imprecise - Estoppel by representation only applies to statements of fact, is permanent and needs detrimental reliance Some have attempted to formulate a broad overarching principle (ex. Amalgamated Investment), but the overall judicial response has not been positive: 1) Some differences are established as a matter of authority (ex. promissory estoppel cannot be a sword) 2) Which rules should prevail if we unify them? And perhaps at the risk of “cross-infection and cross-sterilization” (Treitel)? 3) Any general principle would have to be at a very high level of abstraction so uncertainty.

Answer 73

- Facts: C had been supplying D with clothes until, suddenly, D cancelled their order. C sued D that they should have been given reasonable notice; D argued that there was no contract – C said that a contract should be implied through their course of dealings or otherwise that D were estopped from terminating without reasonable notice. - Held: o No implied contract because it was not sufficiently precise (indeed D had deliberately refrained from making an express contract) o Estoppel by convention could not give rise to the type of obligation sought (that during the subsistence of the relationship D would acquire garments from C in quantities and at prices which were reasonable in all the circumstances) because it was not sufficiently certain. o Estoppel by convention could not give rise to a cause of action. - Mance LJ: estoppel is a flexible doctrine, and broad equitable principles underlie its application in different fields (ex. unconscionability), and that one should avoid rigid classification into exclusive categories. However, we are bound by previous authority on the scope of particular types of estoppel, and it is inherent in the doctrine’s very flexibility that it may take different shapes to fit the context of different fields. As an alternative, should we remove unnecessary differences between the estoppels, such as the rule that proprietary estoppel can be a sword and not promissory estoppel?

Answer 74

- Facts: C owned land that had two access points, and since C thought that they would both remain open, he sold off part of his land with access point A so he only had access to access point B. He padlocked the access point and the D removed it, replacing it with a fence, and said they would open the point again for 3000 pounds. C then sued D for the amount in that there was assurance that the gates would remain open. Trial judge found that there was no assurance, and even were there, C had not given any consideration in return so it wasn’t enforceable. - Held (CoA): C was allowed a right of access by proprietary estoppel. - Lord Denning: Some estoppels do give rise to a cause of action and others don’t – proprietary estoppel does. - Scarman LJ: the extent of the equity is the minimum equity to do justice to the plaintiff.

Answer 75

1) Though this is supposed to be a case of proprietary estoppel (because it involves an exchange of land) Scarman LJ said he didn’t find the distinction (proprietary/promissory) helpful, and both Atiyah and Mason/Wilson CJ in Walton Stores regarded it as a case of promissory estoppel. 2) The remedy had the effect of protecting C’s expectation interest:

Answer 76

- In this case the court awarded the right of way (expectation interest) – normally C would have had to pay for the right of way but in this case court decided C didn’t. But D keeping C landlocked for seven years would have caused him much more loss than any amount that they could have agreed to pay, so that C’s expectation interest was not merely a right of way for the future but also the benefit of having had the right of way in the past – holding that C didn’t have to pay was an attempt to correct that deficiency.

Answer 77

CoA could have decided the case on orthodox contractual reasoning and didn’t need to resort to equitable estoppel to render the agreement enforceable. - C could have encountered some difficulties if tried to argue on contract (it might have required a more positive promise, consideration, writing), but it is difficult to understand why any of these three difficulties need have proved insurmountable in a claim overtly based on contract any more than in a claim based on estoppel. - On consideration, C could have argued: o That the agreement was based on a price to be fixed (this would not have meant that C would have had to pay – for there would have been a breach of contract and damages would have been ≥ the price → this is what the court essentially decided though on a different conceptual basis) o That the consideration was the action of the plaintiff in selling the northern portion of the land (since consideration does not have to be a benefit to the promisor, but can be a detriment to promisee). It is true that this wasn’t requested by the promisor, but IAO this restriction on the doctrine of consideration makes little sense in itself, and still less sense when it is seen that the Courts are willing to bypass the limitation by expanding estoppel. - A sufficient action in reliance to justify holding a party bound by a promise or expectation created by him cannot be magically wafted away by calling the case estoppel instead of contract. - A parallel phenomenon in the US is “threatening to engulf the entire law of contract”, and is motivated by a desire to escape from the rigidity that is thought to be inevitably tied to contract – ex. the thought that a C is always entitled to expectation damages for loss of bargain → estoppel when justice is better served with reliance damages.

Answer 78

- Atiyah argues that the Court reached the right conclusion but for the wrong reasons – C had a remedy in contract and there was no need to consider PE → NO: the original claim was in contract but there were four objections: (i) no agreement, (ii) no consideration, (iii) no writing and (iv) the other party had no authority. - With regards to consideration, Atiyah thought that disposing of the northern portion of the land (which deprived the remaining portion of access) was sufficient consideration → NO: this suggestion would deprive consideration of any meaning. C’s disposal of his own land is of “complete indifference to the council” – it was not sought nor known by the council, and in no way formed part of the arrangement for the new access. - This case is an important one, precisely because there was no contract and yet the plaintiff’s claim succeeded. It does no service to the law to proclaim that it “ought” to have succeeded in contract. Both contract and equity seek the same result, to do justice by refusing to allow a party to disappoint the legitimate expectations of another. But not all expectations are legitimate, and the law and equity do not necessarily draw the line at the same place. The law draws the line between bargains (enforceable) and voluntary transactions (not). Equity is focused on prejudice, not bargain. - The apparent similarity in result is deceptive – the claims are different, require different facts to be proved, and have different consequences – the consequences in a contractual claim will always be stronger (parties are bound ab initio and C will get what the terms of the contract give him, and whether or not he prejudiced his position).

Answer 79

- I protest at the “absurdity” of a conceptual analysis which states that the agreement was not enforceable because the detrimental reliance was not requested and therefore railed to comply with the requirements of consideration, and then to add that the “agreement” was nevertheless enforceable because the element of reliance did satisfy the doctrine of promissory estoppel. - Would be simpler if the law made up its mind what kind of detrimental reliance was sufficient to justify the imposition of some kind of obligation, without regard to whether the case was consideration or estoppel.

Answer 80

- Facts: C negotiated a lease with D where the parties understood that C would demolish an existing building and build a new one for D to occupy. Agreement was reached, a draft lease was sent, changes discussed, and a revised lease sent. Later, D started to have reservations and when 40% of the building work was completed D informed C that they didn’t want to go ahead with the lease. C brought action to enforce agreement. - Held: Though formal contracts hadn’t been exchanged, C was entitled to assume that the exchange was merely a formality and could rely on promissory estoppel. - Mason CJ and Wilson J: the principle that promissory estoppel can only be a shield does not mean that Cs cannot rely on an estoppel. Even according to traditional orthodoxy, a C may rely on an estoppel if he has an independent cause of action – an estoppel “may be part of a cause of action, but not a cause of action in itself” (Denning LJ, Combe v Combe) - Principal objection to taking it further (and enforcing it directly as a cause of action) is that it would outflank the principles of contract…

Answer 81

1) Clearly, promissory estoppel was here used to give C a cause of action, and this isn’t a case of proprietary estoppel because the work was done on Maher’s land. 2) It is not clear how English courts would decide this case, except that:

Answer 82

- Mance LJ: there was in Walton Stores complete agreement on the terms of the lease; the agreement was merely unenforceable for want of compliance with the statute. Recognition of an estoppel here arguably would not be “giving a cause of action in itself”, and not undermine the necessity of consideration, it would merely preclude the potential lessee from raising a collateral objection to the binding nature of the agreed lease. This might allow English courts to reach the same results without being so broad in scope, with its problems:

Answer 83

- This gives rise to difficulties in that there appear to be no clear limits to its scope → uncertainty. It is hard to reconcile with a number of fundamental principles in English law (non-enforceability of informal gratuitous promises, no right to damages or a wholly innocent non-contractual misrepresentation). MI but this isn’t a “gratuitous promise” in Walton Stores – it was just an agreement that didn’t satisfy the formality requirements for being a binding contract (in that it was during the stage of negotiations). This shows that estoppel plays functions other than filling the gaps created by a lack of consideration. 1) Disagreement as to the remedy: a. Mason CJ and Wilson J say that the doctrine extends to the “enforcement of voluntary promises” so protection of the expectation interest? b. Brennan J says that the aim of the remedy is to compensate the promisee for detrimental reliance

Answer 84

- Mason J.: "A central element of the doctrine is that there must be a proportionality between the remedy and the detriment which is its purpose to avoid"…“[i]t would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption”. In England, Pascoe v. Turner demonstrates that the remedy for estoppel there is not always related to detrimental reliance, but may concern the fulfilment of the promise. However, other English cases such as Burrows v. Sharp [1991] Fam. Law 67 and Baker v. Baker [1995] 2 F.L.R. 829 are consistent with the reversing detrimental reliance approach.

Answer 85

Expectation measures are the presumptive remedy in estoppel: “often the only way to prevent the promisee suffering detriment will be to enforce the promise”. - A promised their son, R, that if R stayed on the farm he would receive part of the property for his underpaid labor, and that if he built a property on their land at his own expense, it would be his. He refused outside employment because of the promise. When R got remarried and because As did not like the new partner, they made him choose either the farm or the new partner, and brought an action claiming what was promised to him. - Held (High Court): there was an estoppel based upon the promise regarding the non-pursued career path as it constituted detriment, and imposed a constructive trust. The appellants contested the remedy. o The appellants argued that in Verwayen it was held that the purpose of estoppel was to rectify detrimental reliance, rather than to make good the promise → no constructive trust possible as this went beyond rectifying the detrimental reliance. The High Court rejected this argument, holding that estoppel could lead to a remedy either reversing detrimental reliance or fulfilling the expectation. o The appellant argued that the Full Court had failed to consider certain matters in awarding a constructive trust → High Court accepted the argument and awarded a monetary remedy rather than the constructive trust.

Answer 86

1) The High Court has merged, without discussion, proprietary and promissory estoppel while refusing to decide whether there was a single overarching doctrine of estoppel. a. This process is evident in other High Court decisions (Waltons Stores, Verwayen) b. Dicta in England also suggest that the distinction between the various forms of estoppel should not be maintained: for example, Crabb v. Arun District Council [1976] Ch. 179 at 193 per Scarman L.J. 2) The Court indicated that estoppel is not exclusively based upon reversing detrimental reliance: the prima facie remedy for estoppel is the fulfilment of the expectation, but this position could be altered. a. Therefore, the remedy sometimes would be fulfilment of the expectation, sometimes the reversal of the detrimental reliance and sometimes it would be something else. 3) The process of the Court divided the case in two parts: the obligation and remedy. The remedy would be determined, in part, on the obligation breached. If in Walton Stores it had been the Mahers who had been promised an interest in Walton’s land (and not Waltons who were promised an interest in their land) they may have had a cause of action (because it would have been proprietary estoppel) – why does English law continue to differentiate? - Treitel: one possible explanation is that proprietary estoppel cases originally involved an element of unjust enrichment while promissory estoppel could arise from mere action in reliance (less strong ground?)

Answer 87

- Estoppels have all along been binding promises with general effect, so that there is no point in continuing to call them estoppels – promises are contracts when made by deed, supported by consideration, or relied on to the detriment of the promisee. If this is true, then the remedies in estoppel are normal contractual remedies (protection of expectation interest).

Answer 88

- Not a contract because more than a breach of promise is required – there must be unconscionable conduct or detrimental reliance. But it is still concerned with the enforcement of promises where not enforcing them would be inequitable. It is a different doctrine which enforces promises in different situations.

Answer 89

It is defendant-sided and attaches primary significance to the conduct of the promisor. But what is the wrong, except breach of promise? If we accept this view, then the remedy should be to compensate promisee for loss.

Answer 90

But this will only explain cases where the promisor has gained from his promise but will not explain where there is loss on the promisee but no gain on the promisor.

Answer 91

Would support that the remedy be the “minimum equity” on the facts (Verweyen v Commonwealth of Australia), that “appropriateness” should govern the remedy. Thus under this approach courts have remedial discretion and this discretion is to be exercised with the aim of detriment avoiding. However, protection of expectation interest appears closer to cases like Giumelli v Giumelli.

Answer 92

- The duty places obligations on a party who induces an assumption and reliance on that assumption. The primary obligation is to prevent harm to the relying party (in so far as reasonably able) and secondary obligation is to compensate the relying party for harm suffered that the inducer could reasonably have prevented. But problem with the moral basis of the duty – absent a promise, can you really impose an obligation on an inducing party? Should your expectations of me limit my freedom of choice? (Fried). Therefore, in conclusion, the theoretical basis of estoppel is unclear → difficulty in working out the appropriate remedy.

Answer 93

- The fundamental restriction on promissory estoppel has been that it only applies to promises to forgo existing rights (defence not cause of action), but: o Certain cases do show promissory estoppel (“PE”) being used as a sword at least in part (ex. Re Wyvern Developments), especially in “proprietary estoppel” cases which differ from PE “only because the promise relates to rights over land”. o The law does give effect in some circumstances to gratuitous promises, counting as “consideration” detrimental reliance on gratuitous promises. - In the US, PE can be used as both a shield and a sword since 1932 (s90, Restatement of Contracts, 1932) – indeed there was a debate between two views, and eventually the view that liability for detrimentally relied on promises was essential if the Restatement was to reflect legal decisions won out, so s90 was included. o In the UK too there are too many cases where detrimentally relied on promises have given rise to liability, for them to be ignored. We should follow the lead in the US and recognize it as both a shield and a sword.

Answer 94

- Example – A promises B that A wouldn’t enforce a debt of £2000 that B owes A. B, relying on the promise, incurs a further debt of £800. Can A claim the remaining £1200? o If PE only protects the status quo interest, then YES o If PE protects expectation interest, then NO - This goes to the heart of other debates: o whether PE is extinctive or suspensive: those who think that PE is (or should be) extinctive think in reality that it protects (or should protect) the expectation interest! o whether PE requires detrimental reliance or mere reliance: those who think PE only requires reliance would protect expectation interest (though those who think PE requires detrimental reliance aren’t necessarily committed to protecting only status quo interest, once detrimental reliance is proved) - It has been hotly debated in the US o s90 doesn’t say, and the Second Restatement merely added “the remedy granted for breach may be limited as justice requires” o caselaw has gone both ways, though primarily status quo interest? - Might be argued that it should remain vague and be decided on the facts of each case, but IAO disagrees and thinks that there has to be an answer, and personally he would favour that expectation interest should be protected. In any case, whichever answer adopted has wider implications: o If status quo interest → PE is seen as an example of wrongful harm for which the law should give compensation (alongside harm caused by torts, or breach of bargain promises…) o If expectation interest → PE joins bargain promises and promises under seal as “binding” promises for which the expectation interest can be protected.

Answer 95

Argues that Williams can be best explained as a case where the original bilateral contract was supplemented by a “collateral unilateral contract to pay more … if actual performance is rendered”. Thus, D was not purchasing the right for performance, but was bargaining for actual performance (which will often be more valuable than simply having the right to sue for non-performance).

Answer 96

Argues that courts’ preference is to protect C’s expectation interest through estoppel, and that they should continue to do so. - Mason J (Commonwealth v Verwayen, Australian High Court) labelled reliance loss as “narrow” detriment and expectation loss as “broad” detriment. Dicta from the court support the reliance loss theory. - Lord Scarman (Crabb v Arun DC) said “the minimum equity to do justice”, but then proceeded to say that C should get an “enforceable legal right” without any payment. It is clear that this was because he had already suffered loss in the sterilization o the land – but what he got was the meeting of his expectations (indeed it would have been impossible to give effect to reliance loss only) → reliance on this sentence for the reliance loss theory is to take it out of context. - IAO courts should not adopt the reliance loss theory because: o estoppel has mostly been used in family property contexts where reliance loss < expectation loss, but the courts have felt that injustice would be done unless expectations were met. There should still be discretion, but the status quo (preference for expectation loss) should not be reversed. o it would be inconsistent with restitution (which is based on ‘objective’ injustice determined by a list of ‘unjust factors’ in the interest of predictability) – though sometimes estoppel (which is more flexible) claims will lead to awards of restitution, this should be kept to a minimum with the court’s preference for expectation loss → the position should be maintained that restitution = reliance; estoppel = expectation. - IAO there should be exceptional circumstances where reliance loss should be preferred, ex. where there is no unjust enrichment.

Answer 97

Argues that the basis of contractual liability in common law is a voluntary exchange as the mark of mutually respectful dealing that tracks the reciprocity instinct, keeps the law out of the domain of gratuitous promises, and preserves scope for change of mind as constitutive of valuable autonomy. The ‘problems’ identified by the LRC (not enforcing all seriously intended promises, not protecting all foreseeable reliance) are either (i) not problems or (ii) adequately dealt with elsewhere (deed, promissory estoppel), or (iii) can be resolved within the orthodox framework by adjusting the scope of valuable consideration. The Law Revision Committee (LRC) thinks that consideration is too entrenched to abolish entirely, but we should enforce six types of promises without consideration: 1. Promises made in writing (≠deed) 2. Promises that induce foreseeable reliance 3. Promises to do what one is already bound to do 4. Promises to accept part payment in discharge of the whole debt 5. Promises for past consideration 6. Promises to keep offers open for a definite period IAO these are based on (i) belief that all seriously intended promises should be enforced, (ii) belief that induced reliance should be protected or (iii) flawed implementation of and not basis for consideration.

Answer 98

- Consideration is more than evidence of serious intention consideration is obviously not evidentiary of intention because o (i) it can contradict intention as much as support it, o (ii) gratuitous transactions aren’t necessarily more difficult to prove than bargains, o (iii) bargains can be made just as rashly as gratuitous promises, and o (iv) the contrary claim misunderstands the historical evolution of the consideration doctrine (enforcement of sealed promises predates the writ of assumpsit and is based on different theoretical foundations). - In the same way that vitiating factors are not just evidence of serious intention they are not generally aimed at negating consent, but express the force of other important values that trump the presence of consent (non-exploitation, protection of vulnerable parties, threatening C’s future freedom). - Civil law also doesn’t enforce all seriously intended promises indeed formalities are stringent unless the transaction is synallagmatic. They do enforce some informal gratuitous non-gifts that would not be enforced in common law (modify existing contracts, firm offers, lend goods, provide services) but “practical benefit” consideration and promissory estoppel do the same thing. - The law should not enforce all seriously intended promises promises do not enforce themselves but need the help of the law, and why should the state “subsidize” private arrangements in this way, by allowing individuals to “coerce” others to perform for their benefit? o A positive conception of autonomy (freedom to pursue acceptable and valuable projects and relationships – Raz) means that the state need not facilitate worthless options that one is better off without. Valuable options include the freedom to change one’s mind, and even if in some circumstances restricting one’s ability to change one’s mind “increases one’s options in the long run” (Fried), the room to change one’s mind is “necessary for free intercourse between those who lack omniscience” (Cohen). The common law of contract draws the line by allowing the promisor to change their mind unless they have received consideration (triggering the promisee’s legitimate interest). o The law should not intrude on the trust-building function of the private domain (of friends and family) by the enforceability of gratuitous promises by an outside force. We need to preserve the expressive functions of gratuitous undertakings, and the law of contract doesn’t take adequate account of the fact that, if the gratuitous promisor has a moral obligation to perform, so does the promisee have a moral obligation to release, forgive or accommodate the repenting promisor. Thus, civilian systems recognize additional excuses for non-performance in informal gratuitous promises. - Even if gratuitous promises should be enforced, it should only be to the extent of the promisee’s reliance + translating the promise into their cash equivalent in damages will impoverish the social domain y translating promises out of love, friendship and affection into their money’s worth.

Answer 99

(2) should be rejected because it doesn’t give as much weight to the promisor’s interest as promissory estoppel. - Induced reliance should be remedied by reimbursing C for losses suffered, not specific performance or expectation damages - If induced reliance is the basis of the remedy, then why limit it to promises? - Contract fails to take into account the promisor’s position – relative to which the promisee’s reliance is a weaker justification for binding the promisor than where the promisor requested the promisee to rely.

Answer 100

3-6) are objections to the scope of consideration not arguments against its basis. - Criticisms of consideration are unfounded: o Consideration need not be adequate but consideration only yields a presumptively enforceable agreement which can be defeated by vitiating factors (which are at least in part dependent on the degree of imbalance) and corrected through interpretation/implied terms/statutes. o Courts invent consideration to enforce promises for policy reasons (ex. Ward v Byham, Shadwell v Shadwell) (i) stretching an existing rule to fit new situations is ubiquitous in law, and (ii) these old cases can now be accommodated in other doctrines so is unnecessary. o Failures in the scope of consideration ♣ “More for the same” Williams solves this, but IAO preferable to use a collateral unilateral contract to pay more if the stipulated performance is rendered. ♣ “Less for the same” promissory estoppel in Collier v Wright solves this but IAO distorts promissory estoppel unacceptably, so preferable to use the same collateral unilateral contract device as in MWB ♣ “Past consideration” LRC recommends that agreements be enforceable with valuable consideration ‘past or present’. No – past consideration is a contradiction in terms for it is not consideration at all. ♣ “Firm offers” can be binding if a court finds that • (i) the promisee has relied on the promise and (ii) reliance was impliedly requested by the promisor (to increase its chances of concluding the main contract by encouraging the promisee to invest in resources in assessing the offer). • Or use the model of a preliminary unilateral contract aimed at protecting reliance or the integrity of the negotiating process (like in Blackpool Aero).

Answer 101

Common and Civil law countries both have concerns about enforcing informal promises: - Shouldn’t enforce suspect transactions and transactions of marginal value - Need to safeguard individuals from their own rashness and importuning of others - Need to ensure that the individual is aware of their actions having legal significance - Need for evidentiary security to safeguard against manufacture of evidence Thus, civilian and common law alike require formalities for entirely gratuitous promises (deed in English law; writing evidenced by a notary in civilian law), but civilian law has a much narrower understanding of purely gratuitous promises than in English law (so many more seemingly gratuitous promises will be enforced without formalities): 19C French Courts recognized that subscribers of money to a public cause were contractual promises and not gifts because they sought to gain an advantage in the increase in their social standing.

Answer 102

At the time of the action of assumpsit, the promise was the assumpsit and the trespass was the breach of the promise. A promise could be enforced even if no debt was involved. - The meaning of consideration can be understood in the way in which actions were pleaded: it appears in the part of the pleading that contained “the matter of inducement”, preceding the proof of the promise – it constituted the factual background to (and explanation of) the promise. - Thus, the idea at this time was that the legal effect of a promise should depend on the factors which motivated the making of the promise, and consideration meant any good reason for making the promise. The promise, however, was enforceable because it was itself regarded as intrinsically valid to create an obligation and breach was morally reprehensible. - At the time, the influence of commerce was not apparent, as commercial matters were mainly dealt with through actions on the bond, and not action on an informal promise. - At the time, consideration was not originally conceived of as a single principle but a list of generalized factual circumstances which prompted the promisor to make the promise – some were sufficient (marriage, money paid…) and others were not (past consideration). Some of the examples had their origin in attempts to avoid the objection that a different action was the appropriate remedy and not assumpsit. EXAM POINT The vital importance of consideration lies in the remedy and the form of action. Historically, the understanding of consideration was shaped by the action – for example, the role of consideration in an action of assumpsit meant that the range of circumstances that could be taken as consideration was influenced by the fact that (i) commercial matters weren’t usually dealt with under it and (ii) it had to deal with objections that an older action (ex. debt, covenant) was the appropriate remedy rather than assumpsit. In 19C attempts were made to encapsulate all forms of consideration with one formula (Dunlop v Selfridge) – an “act or forbearance of one party, or the promise thereof”.

Answer 103

the civilian concept of cause is similar to consideration: an agreement must be based on a lawful cause, i.e. the purpose for which a promise was made. Whether or not causa is the origin of consideration, common lawyers developed a doctrine very similar in the action of assumpsit in 16C. - Causa in German law = evidence of serious intention because German doctrine was influenced by the theory of the intrinsic moral forces of promises, the question was whether there was an intention to enter into a legal transaction, and cause shifted to evidence/procedure. - Cause in French law = in the Civil Code, but meaning is debated and often said that it is dispensable and contributes nothing. Intention is also the basis of enforceability.

Answer 104

- Common law requirement of exchange or counter-performance through consideration o Many non-reciprocal gratuitous contracts are recognized in civilian codes (ex. mandate, gratuitous loan) o Options and offers are binding in civilian law o Release from performance can be agreed without more (and additional payment) Zweigert and Kötz ask why, without duress, would the promise not be held valid in Stilk v Myrick, since there was obviously good reason from which a serious intention could be discerned. ♣ Common law too distinguished in Williams v Roffey, where the approach invites comparison with civilian law in that it implies that there was a perfectly understandable reason for the extra payment (similarly to how assumpsit would have approached the problem). o There is no reason why contracts made for the benefit of third parties would not be enforced in civil law countries.

Consideration Flashcards

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