consideration - w2 Flashcards
(16 cards)
what is consideration in general terms?
consideration: the contractuial price or something that has value in the eye of contract law
- similar to a bargain
- courts will see consideration as one fundamental element before they would agree to a proper enforceable agreement, a contract was established
contract law (civil law)
what is the burden of proof called and who does it lie on in contract law?
burden of proof (onus of proof): on the balance of probabilities
lies on: applicant, plaintiff (they party who lodged the case)
law of evidence (yr3 indept)
consideration
what is consideration?
consideration = price stipulated by the promisor for a promise -> 3.30
something that has value in the eye of contrcat law, given in exchange for the promise received
- e.g. promise to do or not to do something: performing an act or forbearing to perform an act -> chappell v nestle case -> 3.30
consideration must move from the promisee (3.20), although it does not have to move to the promisor
but must be a benefit to promisor, and detriment to the promisee; carlill v carbolic smoke ball -> 2.70
reliance is one party relying on the other, consideration is referring to the price iteself
must be a bargain, quid pro quo this for that) - given in return for something:
- australian woollen mills v commonwealth -> 3.100
- beaton v mcdivitt -> 3.130: detrimental reliance does not automatically amount to valid consideration
without consideration (nudum pactum = a naked agreement) an agreement can’t be enforces, unless it is in the form of a deed (formal contractual deed)
common law system = judgement law
additional information
estoppel
NOT PART OF CONTRACT LAW - PART OF EQUITY
3.420 - 3.490
promissory estoppel:
- detrimental reliance is the key fundamental element to establish an estopel
- it’s a legal principle that prevents a person from going back on a promise if another person has reasonably relied on that promise to their detriment
- can be used to enforce a promise even if there’s no formal contract or legal agreement (although requires lots of evidence)
to ‘estop’ = to stop or raise a legal bar
preventing from resiling on words/representation which has caused detrimental reliance to person who relied/acted on representation (3.430 -> central london property trust ltd v high threes house ltd)
-> preventing them from going against their own words
created as a shield to defend parties with a pre-existing contract
aka proprietary estoppel
estoppel
development in australia
walton stones v maher 3.440 & elements of estoppel 3.450
1. assumption
2. inducement
3. detrimental reliance
4. reasonableness
5. unconscionability
6. departure or threatened departure
not in pre-existing relationship:
- plaintiff can commence action, without forming a contract
- crown melbourne v cosmopolitan hotel 3.490
- clear representation required
consideration
illegal or illusory considerations
chapter 20
- consideration can’t be illegal
- illusory: too vague, ambigous, or uncertain, usually come with unfettered discretion to choose whether or not to perform
- e.g. in this context: is a prive that has value in the eye of contract law, really given?
illusory consideration is not good consideration
placer development ltd v commonwealth 3.160
consideration
legally sufficient vs commercial adequate
3.180
consideration must be legally sufficient
consideration doesn’t need to be commercially adequate (although grossly inadequate consideration, say a nominal consideration, may trigger questions related to avoidance
- legally sufficient is the minimum value that courts need to find in order to make the contract body
- adequate refers to market commercial value (which is always increasing or deceasing depending on the time)
legally sufficient is a way means there is some benefit to both sides, while commercial adequate means that there will be some force of loss to one side of the contract
wollsowrths ltd v kelly
consideration
past consideration
not good consideration
3.210
a person performed a conduct when there was no binding contract. later a promise is given to that person e.g. to pay for the conduct
exception: 3 requirements given: pao on v lau yiu long case -> 3.240
- the act was done at promise source request
- the parties understood that the acts would be remunerated in some way
- the promise that was eventually given would have been enforceable had it been given at the time of the acts
distinction between executed consideration and past consideration -> 3.250
refer back to contractual obligations
consideration
existing duty rule
3.420 - 3.490
there is an existing contract, and maybe a new agreement now
what performance of an existing legal duty is no new consideration (3.230 -> stilk and myrick), but as usual, there are exceptions:
- new consideration apparantly given: 3.370 -> the pinnel v cole case
- practical benefits: 3.280&3.290 -> williams v roffey brother &nicholls (contracts) ltd case & musumeci v winadell pty ltd case
- new promises made to third parties: 3.320 -> the pao on v lau yiu long case
- bona fide compromise: 3.340 -> wigan v edwards (if one party genuinely believes that they can litigate the matter, have a case to claim in the courts)
bona fide compromise
demonstartes that both parties have acted honestly and in good faith to reach a settlement, which is a valid basis for a new contract
-> it is valid consideration in contrac law, meaning its a sufficient reason for a promise to be legally enforceable
extra duty can amount to a valid consideration, new consideration to support additional payments (if theres a significant change e.g. 25 ppl doing 100 ppl’s work)
- new consideration just needs to be legally sufficient
existing public law duties: collins v godeffroy 1040 or glasbrook brothers ltd v glamorgan county council 1925
general questions
which on the following statements about illegal consideration are coorect?
consideration
- consideration cannot be used to enfroce a contract involving unlawful acts
- courts will enforce all contrcats regardless of legality
- a contract based on illegal consideration is unenforceable
- if both parties agree, illegal consideration can still form a valid contract
general questions
which of the following statements about illusory consideration are correct?
consideration
- illusory consideration is vague or ambigous
- courts always enforce contracts with illusory consideration
- consideration is illusory only when it involves a future promise
- if a party has unfettered discretion over whether to provide something, it may be considered illusory
general questions
which of the following are key principles of consideration?
consideration
- courts require consideration to always reflect fair market value
- courts will enforce contracts even if the consideration is as small as $1
- a contract is only valid is both parties receive equal financial benefits
- consideration must be legally sufficient but does not have to be commercially adequate
general questions
which of the following are examples of past consideration that would not form a valid contract?
consideration
- paying for a taxi ride after the driver has completed the trip
- entering a contract after the service has been completed but promising payment later
- someone finds and returns a lost dog before knowing a reward was offered
- a landlord fixes a heater for a tenant after the lease was already signed
general questions
the following is defined as…
consideration
illegal consideration: consideration based on an unlawful act, making the contract unenforceable
illusory consideration: a vague or discretionary promise that does not create a binding obligation
legally sufficient: a minimum level of value that courts require to enforce a contract
past consideration: a past act that was not bargained for and cannot be used to enforce a new promise
nudum pactum: a contract with no consideration, meaking it unenforceable unless in the form of a deed
general questions
which of the following best describes the doctorine of promissory estoppel in australian law?
consideration
- a promise enforceable without consideration in limited circumstances when there is no binding contract
- a rule allowing parties to terminate a contract unilaterally
- a principle requiring written contracts to be igned by both parties
- a legal mechanism to recover money owed under a contract
estoppel
quick recap of estoppel
consideration
- issue: does promissory estoppel prevent a party from reneging on their promise to fulfil whatever they ‘promise’ to do
- rules: the doctrine of promissory estoppel in australia law (following high trees) requires:
- a clear and unequivocal prommise
- the promisee must have relied on that promise
- the reliance must have caused detriment to the promisee
- it would be inequitable for the promisor to go back on their promise
