Contract Law

Question 1

What is a Unilateral offer?

Answer 1

an offer which prescribes an act which when performed constitutes acceptance. (Carlill v Carbolic Smoke Ball)

Question 2

An advertisement amounted to an offer to the world which could be accepted by anyone who performed the conditions set out in it. The claimant did not have to notify the advertiser of her intention to accept the offer prior to her performance of the conditions. Which case does this concern?

Answer 2

Carlill v Smoke ball Co

Question 3

Did the words, ‘ may be prepared to sell’ in the case of Gibson v MCC constitute a clear and certain offer?

Answer 3

No. It was an Invitation to treat. It is important to consider the language and context when considering whether an offer was clear or certain. (Lord Diplock)

Question 4

In Storer v MCC, the council said “ if you will sign the agreement and return it to me I will send you the agreement signed on behalf of the corporation in exchange.” The price was also stated. Did this constitute a clear and certain valid offer?

Answer 4

Yes. The council had made an offer to mr storer and terms of that offer were clear and certain. Language and context were clear and certain.

Question 5

What was the ratio of the Taylor v Laird case?

Answer 5

It was an uncommunicated intention to offer to sell a car. This did not constitute a valid offer because a valid offer must be communicated to the offeree!

Question 6

What is the general rule that was established by the Fisher v Bell case?

Answer 6

A display of goods is an invitation to treat. Lord Parker CJ stated that “ it is perfectly clear that according to the ordinary law of contract the display of an article with a price on it in a shop window is merely an ITT.”

Question 7

In Pharmaceutical Society of GB v Boots Cash chemists what was the ratio?

Answer 7

A display of goods Is simple an ITT, not an offer to sell. the picking of a medicine bottle from a shelf is an offer from a customer but the acceptance and sale take place at the till under the supervision of a pharmacist.

Question 8

What is e general rule of advertisements, elicited by the Partridge v Crittenden case?

Answer 8

Advertisements are ITT. The advertisement “offer for sale” of birds was an ITT and not a valid offer.

Question 9

What did Lord Parker CJ in Partridge v Crittenden consider as an exception to the rule regarding advertisements.

Answer 9

If the seller is the manufacturer, arguably an ad may constitute an offer as they can satisfy all orders. If the seller is not a manufacturer then the seller would be bound to satisfy all orders even when stock is limited, therefore being in breach of contract for orders that he could not fulfil.

Question 10

Which case established that an ad may constitute an offer where it prescribes an act which when performed would constitute an acceptance, in other words a unilateral offer?

Answer 10

Carlill v Carbolic Smoke Ball. Remember that for ads to constitute a unilateral offer there must also be a sufficient intention to be bound. In carlill, such an intention was evidenced by the deposit of £1000 into a bank account.

Question 11

Which case established that an invitation to tender is an invitation to treat as a general rule?

Answer 11

Spencer and others v Harding and the others. In this case the defendants were not obliged to sell to the plaintiffs since the defendants invitation to submit tenders was simply an invitation to treat. The plaintiffs made an offer when they submitted to the highest tender but since this was not accepted there could be no binding contract.

Question 12

What exception was introduced regarding the general rule of invitations to tender and which case confirmed the rule?

Answer 12

If the inviter had stated that they wold accept the highest bid, then the inviter would be bound to sell to the highest bidder. The case was Harvela Investments Ltd v Royal Trust Company of Canada Ltd. In this case it was adjudged that there was an obligation of the vendors to sell the shares to the buyer whose offer was the higher.

Question 13

What were the material facts of Blackpool & fylde Aero Club v Blackpool Borough Council and the subsequent ratio decidendi?

Answer 13

It was held that the council had made an offer to consider all conforming tenders because (I) the invitation was made to a specified no. Of parties and (ii) there Are specific and absolute conditions governing the manner of and timing for the submission of tenders. There were 7 parties invited to tender and the local authority’s invitation prescribes clear, orderly and familiar procedure ( draft contract conditions available for inspection, a prescribed common form of tender, the supply of envelopes designed to preserve the absolute anonymity of tenderers and clearly to identify the tender in question and an absolute deadline.) in this circumstance there will be a contractual obligation on the person inviting tenders to consider such tenders that are submitted in accordance with prescribed method.

Question 14

What was the a ratio in Payne v Cave?

Answer 14

The defendant made a bid of 40£ for y but when the auctioneer delayed in accepting his bid, he declared that he would not buy y and refused to pay. The defendant was entitled to withdraw his bid for y because his bid is simply an offer which he entitled to withdraw any time before acceptance. ( fall of hammer). The general rule is that auctioneer requesting bids, these requests are mere invitations to treat. In other words the offeror can revoke his offer any time prior to it being accepted.

Question 15

Which case established the exception to the auctions general rule and what was the ratio?

Answer 15

Barry v Davies and Warlow v Harrison. This case adjudged that an auction that is held ‘without reserve’ (without a reserve price) meaning that the auctioneer is in effect undertaking to sell the lot in question to the highest bidder. Therefore in auctions without reserve, the auctioneer is obliged contractually to sell to the highest bidder even if it falls short of the desired price.

Question 16

How can an offer be terminated?

Answer 16

1 of 3 ways. By rejection, so the offeree rejects the offer, by revocation, meaning the offeror withdraws the offer and by lapse. Once an offer has been terminated in one of these ways, it can no longer be accepted.

Question 17

Which legal rule would you apply to demonstrate that a counter offer operates as a rejection of the original offer?

Answer 17

Hyde v Wrench. The effect of a CO is that is rejects the original offer and extinguishes it (not capable of resurrection) so an offer of £10 and CO of £8 kills and extinguishes the offer of £10. £8 is the new offer that is rejected. If the original offeree proposes to accept the original offer of £10 it is not binding on the original of offeror, because it is a new offer that requires acceptance from original offeror.

Question 18

What was the ratio of Stevenson, Jacques & Co v McLean?

Answer 18

The request for further information “please wire whether you would accept forty for delivery over two months, or if not the longest limit you wold give,” did not kill off the original offer of 40s for the item in question. The original offer did not affect original offer and therefore only required acceptance on the part of offeree. The offeror is contractually bound by the acceptance of the offeree.

Question 19

What is an option?

Answer 19

When a party makes an offer, he may agree to keep it open for a specified period of time. That promise by the offeror to keep the offer open can be a separate contract that is itself enforceable by the offeree, this is referred to as an option contract or option.

Question 20

Which case established the legal rule that if no consideration had been provided to keep an offer open, then no contract had been created and the offeror could withdraw his contract as he wished without any consequences?

Answer 20

Dickinson v Dodds. A promise unsupported by consideration is not enforceable. There was no consideration by Mr Dickinson of Mr.Dodds notice to leave the offer open up until a specified date, there no option contract would have been created.

Question 21

Which legal rule established that revocation of an offer is only effective on communication?

Answer 21

Byrne & Co v Leon Van Tienhoven & Co. The revocation was communicated after the acceptance of the offer, therefore there was still a binding contract of the respective parties.

Question 22

Which legal rule is the authority for the principle that an offer can be revoked by a 3rd party communicating that information to the offeree?

Answer 22

Dickinson v Dodds

Question 23

What was the orbiter dictum from the Dickinson v Dodds?

Answer 23

Treitel criticised the rule that communication of revocation need not come from the offeror. There can be a regrettable source of uncertainty . It puts on the offeree the possibly difficult task of deciding whether his source of information is reliable. (3rd party unreliability).

Question 24

Which legal authority established that revocation of unilateral offers could only suffice at any time before performance of the prescribed act has commenced?

Answer 24

Warrington v Errington and Woods. In this case there was a unilateral offer ‘ the house’ and the prescribed act ‘continuance of mortgages payments,’ the daughter in law continued to make mortgage payments even after death of offeror so it was decided that the widow could not revoke the unilateral offer. However completion of the specific performance is needed for acceptance!

Question 25

What precedent did the Boulton v Jones case establish?

Answer 25

An offer can only be accepted by the offeree being the person to whom the offer is made. The offer from Jones was made to Brocklehurst and it was not open to Boulton to accept it.

Question 26

Which authority established that an acceptance cannot be made in ignorance of an offer and outline the case.

Answer 26

Williams v Carwardine. The motive for acceptance is not important, in this case the motive was not the reward of £20. This can hav undesirable consequences. A person who is a good citizen by providing information but is not aware of the offer of a reward, will not be able to claim it. But someone solely motivated by financial gain will be able to claim it.

Question 27

What is the ratio for the case Paul Felthouse v Bindley?

Answer 27

The offeror cannot make an offer 'if I hear no more about him, I consider the horse is mine at 30l.15s' and within that offer impose a positive obligation on the offeree to reject that offer (to communicate rejection).

Question 28

Which authority established the principle that 3rd parties can accept an offer on behalf of the offeree, provided that they are authorised by the offeree to do so?

Answer 28

Powell v Lee. In this case the 3rd party did not have the offeree's authority to accept. The committee member who communicated acceptance of plaintiffs offer to be headmaster of the school was not authorised by the offeree (committee of managers) and consequently his communication could not constitute acceptance by a 3rd party.

Question 29

Which authority states that acceptance of a unilateral offer does not have to be communicate that he is going to perform the act?

Answer 29

Carlill v Carbonic Smoke Ball. It was held that the offeree does bot need to communicate his intention to act, simply using the smoke ball as prescribed and catching influenza was sufficient to accept the offer. Remember a unilateral offer is an offer which prescribes an act which, when performed will constitute acceptance.

Question 30

Which authority established the postal rule?

Answer 30

Adams and others v Lindsell and Another. The postal rule provides that where post is deemed to be the proper method of acceptance, acceptance is deemed to take effect from the moment of proper posting.

Question 31

Which authority ensures that the postal rule only applies to acceptance only and not to the revocation of an offer?

Answer 31

Byrne & Co v Leon Van Tienhoven & Co. In this case it was established that a revocation is only effective when it is actually communicated.

Question 32

Which authority established that the postal rule still operates when letters are delayed or indeed never arrive at their destination (lost or destroyed)?

Answer 32

Household Fire and Carriage Accident Insurance Company v Grant. In this case the letter of acceptance was never received by the offeror as it was lost. It was held that the acceptance of the defendants offer to purchase shares was valid from the time of proper posting, despite never reaching the defendant. The offeror does not know that the offeree has accepted but is nevertheless bound by that acceptance even though it is lost or destroyed.

Question 33

Rule: 'Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.' Which case established this rule?

Answer 33

Henthorn v Fraser. In this case it was deemed that the acceptance of such offer by letter through the post is expressly or impliedly authorised. An authority to accept by post must be implied. Since the plaintiff resided in another town from the defendants, it would have been in the contemplation of the parties that the post would have been used. Consequently the postal rule applied and the plaintiffs acceptance was valid from the moment of posting.

Question 34

Which authority established that if a counter offer was sent by telegraph, it implied a condition that prompt acceptance was required and accordingly the postal rule did not apply?

Answer 34

Quenerduaine v Cole. The acceptance of an offer by post is 'not expressly or impliedly authorised.'(Dunlop v Higgins). Prompt acceptance was impliedly authorised by the offeror.

Question 35

Which case established that 'The postal rule does not apply if, having regard to all circumstances, including the nature of subject matter under consideration, the negotiating parties cannot have intended that there should be a binding agreement until the party accepting an offer or exercising an option had in fact communicated the acceptance or exercise to the other.'

Answer 35

Holwell Securities Ltd v Hughes. In this case there was an option to buy a property. The plaintiff wrote to the defendant exercising the option but the letter never reached the defendant. It was held that the postal rule will not operate where it will result in 'manifest inconvenience and absurdity.' Sending a letter of acceptance for buying of a property was deemed to be an inconvenience and an absurdity.

Question 36

Would 'by notice in writing' oust the postal rule?

Answer 36

Yes. The language impliedly requires that acceptance is actually communicated to the offeror, thereby ousting the postal rule. Holywell Securities v Hughes is the legal authority. It was deemed in this case that the postal rule does not apply when the express terms of the offer specify that the acceptance must reach the offeror. The language used in each case must be considered to establish whether it expressly or impliedly requires that acceptance is actually communicated to the offeror, thereby ousting the postal rule.

Question 37

Does the language "your answer by post is only to bind me if it reaches me," expressly or impliedly require that acceptance must be communicated to the offeror?

Answer 37

No. There is no ousting of the postal rule. The legal authority for this example is Household Fire and Carriage Accident Insurance v Grant.

Question 38

Which authority was the precedent of where the postal rule would lead to a manifest inconvenience and absurdity established?

Answer 38

British & American Telegragh C v Colson.

Question 39

Which legal authority established the general rule that acceptance by instantaneous methods of communication must require actual communication?

Answer 39

Felthouse v Bindley.

Question 40

Which case established four principles; 1)acceptance must be communicated in order to be effective 2) if the acceptance is not communicated through the fault of the offeree, there will be no contract, 3) if the acceptance is not communicated through the fault of the offeror, he will be estopped from denying that the acceptance was received and there will be a contract and 4) if the acceptance is not communicated and there is no fault on the part of either there will be no contract?

Answer 40

Entores v Miles Far East Corporation. This case also established that the contract is made at the place where the acceptance is received. So if there is a telegram of acceptance sent from Amsterdam to Liverpool, the acceptance is made in Liverpool, so any issues of legality are to be dealt by the English jurisdiction.

Question 41

What is the Entores rule?

Answer 41

Telexes can be treated as Instantaneous communications and that acceptance accordingly takes place at the time and in the place of receipt of the telex. This rule was applied to the case of Brinkibon Ltd v Stahag Stahl. In this case a telex was received in Vienna, therefore applying the Entores rule, acceptance was sealed in Vienna. However importantly, there is no universal rule to cover all cases, there must be reference to the intentions of the parties, by sound business practise and in some cases by a judgement where the risks should lie.

Question 42

Which authority established that instantaneous communication methods of acceptance sent within 'office hours' were effective when they arrived at the office?

Answer 42

Tenax Steamship v Brimnes. In this case a telex arrived at a Charterers office at 5.45pm. This was within the normal office hours, (staffed until 6.30pm) therefore even withdrawal notices cannot nullify the rule that any IMC received during office hours is effective at time of arrival in the office, irrespective of whether there was anyone there to see the message. The recipients were estopped during working house from denying the receipt and the acceptance was effective at 5.30pm.

Question 43

Which authority established that IMC sent outside office hours was deemed received the first thing the next working day and therefore effective at that time?

Answer 43

Mondial Shipping and Chartering v Astarte Shipping Ltd. 23.41 was deemed to be outside office hours so it was not an effective receipt at this time. It was deemed to be received first thing the next working day, a Monday morning.

Question 44

Which authority established the legal rule that in order for a prescribed mode of acceptance to suffice, the offeror must expressly exclude the use of other modes of acceptance?

Answer 44

Manchester Diocesan Council for Education v Commercial and General Investments. In this case it was established that it is possible for an offeror to prescribe a mode of acceptance, but Buckley J makes it clear that if he wants the mode to be mandatory, he must explicitly rule out other methods.

Question 45

Is request for acceptance 'by return of post' a valid prescribed mode of acceptance?

Answer 45

No. The legal authority is Tinn v Hoffman & Co. 'by return of post' does not mean exclusively a reply by letter by return of post, but you may reply by telegram or by verbal message, or by means not later than a letter written and sent by post. If the offeror does not expressly exclude the use of other modes of acceptance, any method of acceptance which is no less advantageous to the offeror will be a permitted mode of acceptance. Important to remember that less advantageous does not mean a less quick mode of communication. For example acceptance of a commercial contract by telegraph is not more advantageous than a letter setting out the terms in writing. Depending on the context, particular modes of communication will be more or less advantageous.

Question 46

How would you define consideration of a contract?

Answer 46

An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable. In other words the price for which the promise is bought. (Dunlop v Selfridge).

Question 47

Which case establishes/confirms the rule that consideration must not be in the past?

Answer 47

Eastwood v Kenyon. In this case there is past consideration the acts have been carried out before the promise. The act of bringing up Sarah was in the past, and the subsequent promise to discharge debt was not acceptable consideration because consideration must not be in the past. In other words a promise is not enforceable for past acts. Eg a promise to pay someone for contract notes you gave me last month, this promise is not enforceable, the promise must be before the act.

Question 48

Which rule did the case of Roscorla v Thomas confirm?

Answer 48

Consideration must not be in the past. In this case Roscorla bought Thomas's horse for £30. Subsequently, Thomas promised Roscorla that the horse was sound and free from vice. The horse proved to be vicious. HELD: there was no consideration to support Thomas's promise and he was not bound. The sale itself could not be valuable consideration, for it was completed prior to the promise being given. The act proceeded the promise.

Question 49

Which case establish an exception to the past consideration rule?

Answer 49

Lampleigh v Brathwait established that when past consideration was provided at the promisors request and it was understood that payment would be made, then there is an enforceable consideration. So past consideration was provided by Brathwait, asking Lampleigh to intercede with the king to obtain a pardon. In doing this act, there was an implied understanding that payment would be made to Lampleigh. So the later promise was just an express confirmation to fix amount of reward.

Question 50

Which case confirms the Lampleigh case that a payment was understood to be due in past consideration?

Answer 50

Re Casey Patents case. Here there is an understanding that payment would be made(implied).The owners of patent rights promised their manager a share in those rights in consideration for his previous services for them. Lord Justice Bowen said, ‘The fact of a past service raises an implication that at the time it was rendered it was to be paid for, and, if it was a service which was to be paid for, when you get in a subsequent document a promise to pay, that promise may be treated as an admission which evidences or as a positive bargain which fixes the amount of that reasonable remuneration on the faith of which the service was originally rendered.’

Question 51

What did Pao On v Lau Yiu Long confirm?

Answer 51

That an act done before the promise can sometimes be consideration when 3 conditions are satisfied. 1) the act must have been done at the promisors request. So Lampleigh interceded with the king to obtain a pardon (act) at the request of the promisor (Brathwait). 2) The parties must have understood that the act was to be rewarded either by a payment or the conferment of some other benefit. So payment must be understood to be due. In Lampleigh, there was an implied understanding that the act of obtaining a pardon would confer a payment to the promisee. 3) The payment, or conferment of other benefits, must have been legally enforceable had it been promised in advance. So contracts with children, friends and family are not enforceable generally.

Question 52

What rule did Tweddle v Atkinson establish?

Answer 52

Consideration must more from the promisee. So a party that has not provided consideration may not bring an action to enforce a contract. In this case, the promisors, the fathers of the bride and groom promised the promisee (William twiddle) both 100 pounds. One of the promisors didn't pay up so the promisee, the groom sought to enforce his father in law (Mr Atkinsons) promise, but it was held that he could not as he had provided no consideration of the promise. Mr Twiddle Junior, the groom was not the party that provided consideration. Only Mr Twiddle Sr and Mr Atkinson had consideration of the promise that both would pay 100 pounds.

Question 53

Which authority should be used to confirm the rule that consideration need not be adequate, only sufficient?

Answer 53

Chappell v Nestlé.(p51) So there is no reason why a party should be not bound by a promise to sell a Ferrari for 1 penny. If agreement is freely reached, the inadequacy of the price is immaterial to existence of binding contract.

Question 54

Which cases established that consideration must be something of value?

Answer 54

Chappell v Nestlé. So the chocolate wrappers were stipulated as something of value to Chappell because they were evidence of sales of chocolate bars. In White v Bluett, a father promised to discharge his son from the obligation to repay money he had borrowed if the son refrained from complaining about the father's distribution of his property among his children. His father's executors sued the son for the money. HELD:there was no consideration from the son for his father’s promise. The father had every legal right to distribute his property as he chose and his son had no legal right to complain about the distribution. The son was therefore giving nothing up by forbearing to complain. In Hamer v Sidway an uncle promised his nephew $5,000 if the nephew would refrain from ‘drinking liquor, using tobacco, swearing and playing cards or billiards for money until he should become 21 years of age’. The nephew complied but the defendant, the uncle's executor, refused to make the payment. HELD: the promise was enforceable because the nephew had provided consideration by restricting his lawful freedom of action.

Question 55

What did the case Stilk v Myrick establish as a general rule?

Answer 55

Performance of an existing obligation is not a good consideration. In the Stilk case, the captain of a ship promised his crew that, if they shared between them the work of two seamen who had deserted, the wages of the deserters would be shared out between them. The court held that the promise was not binding because the seamen gave no consideration: they were already contractually bound to do any extra work to complete the voyage.

Question 56

Why was the ruling in Hartley v Ponsonby different to Stilk v Myrick when the material facts are ostensibly the same?

Answer 56

because in Hartley case, the ship crew were accepting an additional obligation, going beyond what they were obliged to do, there is a consideration of an additional obligation, the completion of the voyage undermanned is dangerous and onerous, therefore the promise to pay 40£ extra is binding on the promisor.

Question 57

Which case confirmed the authorities of Stilk and Hartley?

Answer 57

North Ocean Shipping v Hyundai.

Question 58

Why did the Williams v Roffey case not apply the Stilk v Myrick rule that existing obligations will not be considerations?

Answer 58

Practical benefits resulted from a promise to pay extra money. Roffey avoided losing money under the penalty clause in the contract with main contractor and the cost and inconvenience of finding an alternative contractor. Consequently there was a consideration for Roffeys promise to pay additional money and therefore promise to do so was binding.

Question 59

When should you apply the Williams v Roffey authority?

Answer 59

When the following conditions are satisfied, 1) promisee has a contract with promisor to supply goods and services. 2) promisor has reason to doubt that promisee will be able to complete. 3) promisor promises to pay promisee extra to complete in time. 4) promisor obtains practical benefit or obviates (avoids) a disbenefit. 5) promisors promise is not given as a result of fraud/duress.

Question 60

Which authority established that Williams v Roffey doctrine does not apply to claims of debt owed?

Answer 60

Re Selectmove Ltd.

Question 61

Which case established that for a legal duty, such as attending court, one cannot be bound by promises to pay compensation for loss of time in the courtroom, because a duty to attend was a duty imposed by law, so there is no consideration for a promise even if there was a promise to give money to the promisee to attend court?

Answer 61

Collins v Godefroy.

Question 62

Which case confirms that if there is a promise accepted that goes beyond the scope of ones responsibilities, then it is not an existing obligation but a new obligation that binds the promisor to enforce the promise?

Answer 62

Harris v Sheffield United. In this case, to maintain law and order, a substantial police presence was required inside the defendant's ground and this involved a significant amount of police overtime. According to the police, their attendance at the request of the club amounted to ‘special police services’ for which, by statute, the defendants were obliged to pay. The club refused to pay for these services claiming that the police were merely carrying out their normal public duty in ensuring the maintenance of law and order and, therefore, they had provided no consideration for the promise of the defendants to pay for those services. HELD: the responsibility of the club was to take all reasonable steps to ensure that the game took place in conditions which did not occasion danger to any person or property. The attendance of the police was necessary to assist the club in the fulfilment of this duty which went beyond the maintenance of law and order and for which the club should pay.

Question 63

Which case established that if a parental responsibility (to keep child happy and well) exceeded the duty imposed by law (to care for child) then there was a consideration for the mother that maintained the happiness and wellness of the child?

Answer 63

Ward v Byham. By law there is a duty of care for mother to look after child, so any promise to pay a mother for simply looking after their own child, would never amount to a consideration, because it is just a legal duty. However the promise of the father in is case was to pay the mother if the child was happy and well. It happened to be that the child was happy and well. Therefore there was a good consideration for father to pay up! There is no duty to make the child happy, therefore there is a consideration.

Question 64

Which case established that the performance of a pre-existing duty owed to a third party will be regarded as sufficient consideration for a promise given by the promisor?

Answer 64

Scotson v Peggy. In this case X owned some coal which was being shipped to a port. X contracted with Scotson for Scotson to deliver the cargo of coal to X or to anyone X nominated once it had arrived. While it was still being shipped, X sold the coal to Pegg and, exercising his right under the contract, X ordered Scotson to deliver it to Pegg. In the usual manner, Pegg was to unload the coal for a charge upon arrival. Pegg contacted Scotson and promised Scotson that he would unload the coal at discount rate in return for Scotson delivering the coal to him, Pegg. Pegg then discovered that Scotson was already contractually obliged to deliver the coal to Pegg (under his contract with X) and so refused to give Scotson the benefit of the unloading discount. Pegg contended that the promise of a discount was not binding for lack of consideration since Scotson was already bound under the previous contract with X to deliver the coal. Scotson sued for breach of the promise to unload at a discount, claiming that his promise to deliver the coal to Pegg was consideration for Pegg’s promise to unload it at a discount. HELD: The delivery of the coal to Pegg was good consideration for Pegg’s promise of a discount. It was immaterial that Scotson had previously contracted with X to deliver the coal to Pegg, Pegg still got a benefit by having the coal delivered to him. Baron Wilde said ‘there is no authority for the proposition that where there has been a promise to one person to do a certain thing, it is not possible to make a valid promise to another to do the same thing’.

Question 65

In sum what are the various rules regarding consideration?

Answer 65

1. The consideration must not be past. 2. The consideration must be sufficient but need not be adequate. 3. The consideration must move from the promisee. 4. An existing public duty will not amount to valid consideration. 5. An existing contractual duty will not amount to valid consideration. 6. Part payment of a debt is not valid consideration for a promise to forego the balance.

Question 66

How would you define consideration of a contract?

Answer 66

An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable. In other words the price for which the promise is bought. (Dunlop v Selfridge).

Question 67

Which case establishes/confirms the rule that consideration must not be in the past?

Answer 67

Eastwood v Kenyon. In this case there is past consideration the acts have been carried out before the promise. The act of bringing up Sarah was in the past, and the subsequent promise to discharge debt was not acceptable consideration because consideration must not be in the past. In other words a promise is not enforceable for past acts. Eg a promise to pay someone for contract notes you gave me last month, this promise is not enforceable, the promise must be before the act.

Question 68

Which rule did the case of Roscorla v Thomas confirm?

Answer 68

Consideration must not be in the past. In this case Roscorla bought Thomas's horse for £30. Subsequently, Thomas promised Roscorla that the horse was sound and free from vice. The horse proved to be vicious. HELD: there was no consideration to support Thomas's promise and he was not bound. The sale itself could not be valuable consideration, for it was completed prior to the promise being given. The act proceeded the promise.

Question 69

Which case establish an exception to the past consideration rule?

Answer 69

Lampleigh v Brathwait established that when past consideration was provided at the promisors request and it was understood that payment would be made, then there is an enforceable consideration. So past consideration was provided by Brathwait, asking Lampleigh to intercede with the king to obtain a pardon. In doing this act, there was an implied understanding that payment would be made to Lampleigh. So the later promise was just an express confirmation to fix amount of reward.

Question 70

Which case confirms the Lampleigh case that a payment was understood to be due in past consideration?

Answer 70

Re Casey Patents case. Here there is an understanding that payment would be made(implied).The owners of patent rights promised their manager a share in those rights in consideration for his previous services for them. Lord Justice Bowen said, ‘The fact of a past service raises an implication that at the time it was rendered it was to be paid for, and, if it was a service which was to be paid for, when you get in a subsequent document a promise to pay, that promise may be treated as an admission which evidences or as a positive bargain which fixes the amount of that reasonable remuneration on the faith of which the service was originally rendered.’

Question 71

What did Pao On v Lau Yiu Long confirm?

Answer 71

That an act done before the promise can sometimes be consideration when 3 conditions are satisfied. 1) the act must have been done at the promisors request. So Lampleigh interceded with the king to obtain a pardon (act) at the request of the promisor (Brathwait). 2) The parties must have understood that the act was to be rewarded either by a payment or the conferment of some other benefit. So payment must be understood to be due. In Lampleigh, there was an implied understanding that the act of obtaining a pardon would confer a payment to the promisee. 3) The payment, or conferment of other benefits, must have been legally enforceable had it been promised in advance. So contracts with children, friends and family are not enforceable generally.

Question 72

What rule did Tweddle v Atkinson establish?

Answer 72

Consideration must more from the promisee. So a party that has not provided consideration may not bring an action to enforce a contract. In this case, the promisors, the fathers of the bride and groom promised the promisee (William twiddle) both 100 pounds. One of the promisors didn't pay up so the promisee, the groom sought to enforce his father in law (Mr Atkinsons) promise, but it was held that he could not as he had provided no consideration of the promise. Mr Twiddle Junior, the groom was not the party that provided consideration. Only Mr Twiddle Sr and Mr Atkinson had consideration of the promise that both would pay 100 pounds.

Question 73

Which authority should be used to confirm the rule that consideration need not be adequate, only sufficient?

Answer 73

Chappell v Nestlé.(p51) So there is no reason why a party should be not bound by a promise to sell a Ferrari for 1 penny. If agreement is freely reached, the inadequacy of the price is immaterial to existence of binding contract.

Question 74

Which cases established that consideration must be something of value?

Answer 74

Chappell v Nestlé. So the chocolate wrappers were stipulated as something of value to Chappell because they were evidence of sales of chocolate bars. In White v Bluett, a father promised to discharge his son from the obligation to repay money he had borrowed if the son refrained from complaining about the father's distribution of his property among his children. His father's executors sued the son for the money. HELD:there was no consideration from the son for his father’s promise. The father had every legal right to distribute his property as he chose and his son had no legal right to complain about the distribution. The son was therefore giving nothing up by forbearing to complain. In Hamer v Sidway an uncle promised his nephew $5,000 if the nephew would refrain from ‘drinking liquor, using tobacco, swearing and playing cards or billiards for money until he should become 21 years of age’. The nephew complied but the defendant, the uncle's executor, refused to make the payment. HELD: the promise was enforceable because the nephew had provided consideration by restricting his lawful freedom of action.

Question 75

What did the case Stilk v Myrick establish as a general rule?

Answer 75

Performance of an existing obligation is not a good consideration. In the Stilk case, the captain of a ship promised his crew that, if they shared between them the work of two seamen who had deserted, the wages of the deserters would be shared out between them. The court held that the promise was not binding because the seamen gave no consideration: they were already contractually bound to do any extra work to complete the voyage.

Question 76

Why was the ruling in Hartley v Ponsonby different to Stilk v Myrick when the material facts are ostensibly the same?

Answer 76

because in Hartley case, the ship crew were accepting an additional obligation, going beyond what they were obliged to do, there is a consideration of an additional obligation, the completion of the voyage undermanned is dangerous and onerous, therefore the promise to pay 40£ extra is binding on the promisor.

Question 77

Which case confirmed the authorities of Stilk and Hartley?

Answer 77

North Ocean Shipping v Hyundai.

Question 78

Why did the Williams v Roffey case not apply the Stilk v Myrick rule that existing obligations will not be considerations?

Answer 78

Practical benefits resulted from a promise to pay extra money. Roffey avoided losing money under the penalty clause in the contract with main contractor and the cost and inconvenience of finding an alternative contractor. Consequently there was a consideration for Roffeys promise to pay additional money and therefore promise to do so was binding.

Question 79

When should you apply the Williams v Roffey authority?

Answer 79

When the following conditions are satisfied, 1) promisee has a contract with promisor to supply goods and services. 2) promisor has reason to doubt that promisee will be able to complete. 3) promisor promises to pay promisee extra to complete in time. 4) promisor obtains practical benefit or obviates (avoids) a disbenefit. 5) promisors promise is not given as a result of fraud/duress.

Question 80

Which authority established that Williams v Roffey doctrine does not apply to claims of debt owed?

Answer 80

Re Selectmove Ltd.

Question 81

Which case established that for a legal duty, such as attending court, one cannot be bound by promises to pay compensation for loss of time in the courtroom, because a duty to attend was a duty imposed by law, so there is no consideration for a promise even if there was a promise to give money to the promisee to attend court?

Answer 81

Collins v Godefroy.

Question 82

Which case confirms that if there is a promise accepted that goes beyond the scope of ones responsibilities, then it is not an existing obligation but a new obligation that binds the promisor to enforce the promise?

Answer 82

Harris v Sheffield United. In this case, to maintain law and order, a substantial police presence was required inside the defendant's ground and this involved a significant amount of police overtime. According to the police, their attendance at the request of the club amounted to ‘special police services’ for which, by statute, the defendants were obliged to pay. The club refused to pay for these services claiming that the police were merely carrying out their normal public duty in ensuring the maintenance of law and order and, therefore, they had provided no consideration for the promise of the defendants to pay for those services. HELD: the responsibility of the club was to take all reasonable steps to ensure that the game took place in conditions which did not occasion danger to any person or property. The attendance of the police was necessary to assist the club in the fulfilment of this duty which went beyond the maintenance of law and order and for which the club should pay.

Question 83

Which case established that if a parental responsibility (to keep child happy and well) exceeded the duty imposed by law (to care for child) then there was a consideration for the mother that maintained the happiness and wellness of the child?

Answer 83

Ward v Byham. By law there is a duty of care for mother to look after child, so any promise to pay a mother for simply looking after their own child, would never amount to a consideration, because it is just a legal duty. However the promise of the father in is case was to pay the mother if the child was happy and well. It happened to be that the child was happy and well. Therefore there was a good consideration for father to pay up! There is no duty to make the child happy, therefore there is a consideration.

Question 84

Which case established that the performance of a pre-existing duty owed to a third party will be regarded as sufficient consideration for a promise given by the promisor?

Answer 84

Scotson v Peggy. In this case X owned some coal which was being shipped to a port. X contracted with Scotson for Scotson to deliver the cargo of coal to X or to anyone X nominated once it had arrived. While it was still being shipped, X sold the coal to Pegg and, exercising his right under the contract, X ordered Scotson to deliver it to Pegg. In the usual manner, Pegg was to unload the coal for a charge upon arrival. Pegg contacted Scotson and promised Scotson that he would unload the coal at discount rate in return for Scotson delivering the coal to him, Pegg. Pegg then discovered that Scotson was already contractually obliged to deliver the coal to Pegg (under his contract with X) and so refused to give Scotson the benefit of the unloading discount. Pegg contended that the promise of a discount was not binding for lack of consideration since Scotson was already bound under the previous contract with X to deliver the coal. Scotson sued for breach of the promise to unload at a discount, claiming that his promise to deliver the coal to Pegg was consideration for Pegg’s promise to unload it at a discount. HELD: The delivery of the coal to Pegg was good consideration for Pegg’s promise of a discount. It was immaterial that Scotson had previously contracted with X to deliver the coal to Pegg, Pegg still got a benefit by having the coal delivered to him. Baron Wilde said ‘there is no authority for the proposition that where there has been a promise to one person to do a certain thing, it is not possible to make a valid promise to another to do the same thing’.

Question 85

In sum what are the various rules regarding consideration?

Answer 85

1. The consideration must not be past. 2. The consideration must be sufficient but need not be adequate. 3. The consideration must move from the promisee. 4. An existing public duty will not amount to valid consideration. 5. An existing contractual duty will not amount to valid consideration. 6. Part payment of a debt is not valid consideration for a promise to forego the balance.