Enforceability of a contract Flashcards
what is consideration?
outlined in currie v misa is some right , interest profit or benefit accuring to one party or some forbearance loss or responsibility given, suffered or undertaken by the other.
promise in exchange for something
if consideration is yet to be performed
executory
if consideration has been performed
executed
rules relating to consideration
1 consideration need not be adequate but must be sufficient
2 past consideration is not good consideration remcardle
3 consideration must move from promisee tweddle v atkinson
4 performing an existing duty cannot be the considertion for a new contract
5 a promise to accept part payment of a pre existing debt in place of the whole debt is not consideration
thomas v thomas 1842
before he died a man expressed the wish that his wife should be allowed to remain in the house after he died. this wish was not stated in the will. the executors carried out this wish and charged the widow a nominal rent of £1 a year. when they later tried to evict her they failed because consideration was provided by the £1 per year rent meaning there was a legally binding contract.
chappell & co v nestle co Ltd
Nestle stated that whoever sent in 3 nestle chocolate bar wrappers would get a record of a song for a fraction of the price that it usually is.
The courts held that the chocolate bar wrappers alone would have been valid consideration, as something sufficient had been exchanged.
eventhough they were only chocolate bar wrappers it is stillof nominal value because customers may have broufh more chocolate bars than they would hsve intened to beforehand therefore being a benefit of nestle.
Ward v byham
a maintenenace agreement was amde between a mother ans a father of achild. in exchange for payment from the father, the mother promised to keep the child well looked after and happy and also to allow the child to decide whether it wanted to live with the mother or the father.
It was held that there was consideration in this agreement. The first of these is an existing legal duty not consideration but the requirement to keep the child happy and allowing it to choose where to live were enough to be valid consideration. There was a benefit to the father in these parts ie having a happy child and allowing it to live with him if he wishes .
White v Bluett
A son owed his father money but the father said he did not have to pay it if he stopped complaining about the way his estate was to be distributed. After his father passed his estate tried to make him pay back the loan.
It was held that he did have to pay it back because the service was not sufficient consideration because he had no right to complain in the first place.
Past consideration
Occurs when the consideration has been provided before the agreement has been made whereas executed consideration happens at the time of the agreement being made .
Past consideration is not legally binding.
Re McArdle 1951
A house was inherited by several children when the mother died. One of the children’s wives had undertaken repairs on the bungalow whilst the mother was still alive. Only after she had done the repairs did the mother say she would reimburse her from her estate once she had died. It was held that this was past consideration as the repairs took place before the agreement had come into existence.
Lampleigh v braithwait 1615
Braithwait had been convicted of murder and was to be hanged. Lampleigh agreed to do wha the could to obtain a royal pardon the only way to avoid being executed. Lampleigh negotiated the pardon and braithwait then promised to pay him £100 but did not do so. Braithwait arguement was that gaining the pardon was past consideration so there was no obligation to pay the £100.
Held the court decided that although the consideration had preceded the promise, the actions taken were at the defendants request and were so important that a fee must been implied.
Exception to implied contracts
If one party asks the other for a service to be provided and this is a service that one would usually pay for and the service is is then provided
The court will draw the conclusion that both parties knew in advance that the device was menant to be paid for and will enforce a promise to pay, if it was made after the service had been performed ie haircuts
What need apply in order for their to be a implied contract
Am express or implied request by the promisor to the promised to perform a task
An implied promise inherent in the request that the promisor will pay the promise a reasonable sum for performing the task
The performance of the task and
The payment of money by the promisor to promisor to the promised for that performed
consideration must move from the promise
this means that a person cannot sue or be sued under a contract unless he/she has provided considerastion for it.
in a bilalteral contract each person is a promisor and a and a promise.
in a unilateral contract however one perosn makes the promise promisor and the other does the act rather than make a promise.
Tweddle v Atkinson 1861
both fathers of young couple who intended to marry agreed in writing to each give a sum of money to the couple. the womans father died before giving over the money and the husband then sued the executors of the estate when they refused to pay the money. even though the husband was named in the agreement, his claim failed because he had given no consideration and was not a party to the agreement himself.
thomas v thomas
in thomas v thomas the courts state that consideration is something that is of value in the eye of the law.- therefore , in this case a widower was allowed to stay in her husbands house despite it not being in his will, because she was paying £1 rent per year.
collins v godefroy
services can be seen as something of value. in the above case, the expert witness wanted to enforce payment for his services. this would have been sufficient consideration but he was already subpoenaed to appear in court therefore not upheld. because he was already meant to appear in court, he was already legally obliged to do it under another existing contract therefore he could not use that as consideration in this contract.
stilk v myrick
existing legal duty
a number of crew member were engaged to sail on s voyage. stilk was one of them and the wage was £5 per month. as part of their contract, all crew members had agreed as part of their contract to carry out all necessary duties including dealing with emergencies. two crew deserted during the voyage. the captain agreed to share their two wages between the rest of the crew if they agreed to continue to sail with two men short.
when they got back the captain refused to pay the extra money , saying they only did what they were contractually obliged to do.
held the courts agreed with the captain. the crew had agreed to do everything possible in the case of emergencies therefore this was already existing legal duty.
pinnel’s case 1602
the payment of a lessser sum on the day a debt is due cannot be in satisfaction of the greater debt.
therefore a creditor can claim the remainder of the debt even if he or she has agreed with the debtor that a part payment will clear the debt.
this is unless there is early repayment or something additioonal given.
this rule us cofirmed in the case of foakes v Beer 1884.
foakes v beer 1884
dr foakes owed Mrs beer £2090 after a court gave judgement in favour of Mrs Beer. the two reached an agreement that foakes could pay in instalments, with Mrs beer agreeing that no further action would be taken if the debt was paid off by an agreed date.
later, Mrs beer demanded the interest to which she was entitled under a judgement debt and sued when foakes refused to pay. she was successful following the rule in pinnels case.
what are the exceptions to part payment of a debt is not consideration to the whole debt
1 principle of accord and satisfaction
where there is agreement accord to end a contract and satisfaction consideration that has been acted upon voluntarily. thus accepting something other than money for the whole debt is good consideration, even if it is not of equal value to the debt. this must be done at the request of the creditor , not the debtor.
2 the doctrine of promissory estopple
if one part to an existing contract agrees to vary the contract and the other part relies on that promise, the promisor annot go back on the agreement as he or she is estopped preented from breaking the promise.
central london property trust ltd v high tree house ltd 1947
authority for promissory estoppel
the owner of a block n of flats agreed with the company to which he released the block than only half rent was to be paid during ww2. the agreement was made because finding individual tenants was easy so the landlord claimed full rent for the period after the war had ended.
even though there was no consideration from the tenant for the reduction in rent, he had relied on and acted on the owners promise. the owner had accepted the reduced rent without question, so both parties had acted voluntarily on the agreement so the agreement was valid . however the owner would not have been entitled to the forfeited half rent accrued during the war.
courts are reluctant to use promissory estoppel.
re selectmove 1995
selectmove Ltd owed tax to the inland revenue. An agreement was reached that the tax owed would be paid by instalments and the company started to pay the instalments. the revenue then claimed the whole debt and wanted to put the company into a liquidation . the company argued thatit had relied on the revenues promise not to claim the whole debt while payments were being made and that promissory estoppel applied. this arguement failed.
limitations of promissory estoppel
1 it can only be used to defend an existing claim- not to found a new contract
2 for it to be valid the promise must have relied on it to their detriment
3 it may only suspend rights but not extinguish the rights of the promisor high trees case
4 since it is an equitable principle anyone seeking to rely on the principle must show that they behaved equitably
