Unit 1.2- Consideration Flashcards
(26 cards)
Define consideration
The price you pay for another’s promise (The 3 Ps, Pollock)
Chappell & Co Ltd v Nestle Co Ltd
Consideration need not be adequate, but must be sufficient
Thomas v Thomas
Consideration must have some economic value
Consideration need not be adequate, but must be sufficient
Chappell & Co Ltd v Nestle Co Ltd
Consideration must have some economic value
Thomas v Thomas
What is the rule in White v Bluett
Due to public policy issues, forbearance (not doing something) is not good consideration
What does Roscorla v Thomas tell us?
Past consideration is not good consideration
Exception to the rule in Roscorla v Thomas
Following 3 must be satisfied:
Lampleigh v Brathwait- the act was carried out at the promisor’s request
Re Caesy’s Patents, Stewart v Casey- the parties understood from the beginning that the act was to be rewarded in some way
All other requirements for a valid, binding contract exist
Is A’s Performance of his existing contractual duties good consideration in exchange for a promise from B to pay more?
GENERALLY no
Stilk v Myrick
Exceptions to the rule that performance of an existing contractual duty is not good consideration in exchange for a promise to be paid more?
EXCEPTION 1- If A exceeds his duties in some way, or confers extra benefit on B (Hartley v Ponsonby). Question of:
- Fact and degree
- Public policy
EXCEPTION 2- provided that all following criteria are satisfied (Williams v Roffey Bros & Nicholls (Contractors) Ltd)
a) There is a contract for goods/ services in return for payment
b) B doubts whether A will compete his obligations
c) B promises additional payment if A completes his obligations on time
d) As a result of giving this promise, B obtains a practical benefit or obviates a dis benefit; and
e) B’s promise to pay extra is not given as a result of economic duress or fraud on the part of A
Is A’s performance of his existing contractual duties to a third party good consideration?
Yes
Scotson v Pegg- Even if the promisor is already bound to perform obligation for another party
Is the performance of one’s public/ legal duties good consideration?
Generally No
Collins v Godefroy
Exceptions to the fact that performance of one’s public/ legal duties is not considered good consideration?
If
- Contrary to public policy (Williams v Williams)
- Public duty is exceeded (Glasbrook Bros Ltd v Glamorgan County Council)
Is the party payment of undisputed debts good consideration for a promise by the creditor to forgo the balance?
GENERAL RULE- no
EXCEPTION 1 (Pinnel’s case)- part payment is good consideration if the debtor
- gives something different; or
- pays early
EXCEPTION 2- promissory estoppel (Central London Property Trust Ltd v High Trees House Ltd)
Define promissory estoppel
High Trees
Where promisor has made promise to other party to forgo a legal right. Once promisee has acted on promise he has good defence to any claim brought by promisor which is inconsistent with promise
When will promissory estoppel apply?
If following conditions are met (PRIDE)
Promise- must be a promise to waive legal right which must be intended to be acted upon by the other party (Hughes v Metropolitan Railway Company)
Reliance- promisee must act upon promise, but he need not have acted to his detriment only altered his behaviour (Emanual Ajayi v TR Briscoe (Nigeria) Ltd and Alan v El Nasr)
Inequitable- it must be inequitable/ unjust for promisor to go back on his promise and insist on his full legal rights (D&C Builders v Rees)
Defence- promissory estoppel will not give rise to a cause of action- shield not sword (Combe v Combe)
Effect- the effect is to extinguish or suspend legal rights
What is the effect of promissory estoppel?
Suspend promisor’s legal rights
May resume these rights by giving promisee reasonable notice (Tool Metal Manufacturing Co case)
Where cannot be resumed, permanently extinguishes them (Emanual Ajayi)
Effect on one off debts is uncertain, may possibly operate to waive payment (D&C builders v Rees)
What is the case law concerning promissory estoppel?
High Trees
Hughes v Metropolitan Railway Company
Emanual Ajayi
Alan v El Nasr
D&C Builders v Rees
Combe v Combe
Tool Metal Manufacturing Co
Steps for determining when promissory estoppel will apply?
PRIDE P- promise R- reliance I- inequitable D- defence E- effect
Define Agency
Relationship that arises where one person acts on behalf of another (principal) and has the power to effect the principal’s legal position with regard to a third party
Case that determines how agency is made
Freeman and Lockyer v Buckhurst Park Properties
What are the two ways that agency can be created via?
Freeman and Lockyer v Buckhurst Park Properties
- actual authority: legal relationship created by express appointment
- apparent authority
- Representation (words or conduct) made by the principal to the third party that agent had authority
- Representation is relied upon by the third party, believing that the agent had authority
- In reliance of the representation, the third party altered their position e.g. by entering the contract
The effects of agency?
Agent has authority (actual or apparent)- valid contract between the principal and third party
Agent does not have authority- principal cannot sue or be sued by third party. Third party can sue agent in
- Tort of deceit if the agent knew he had no authority
- Breach of an implied warranty of authority
‘It is a shield, not a sword’
Promissory estoppel
Combe v Combe- it will not give rise to a cause of action
