2: formation and variation

what is consideration

something of legal value exchanged between parties - each party must give, promise or undertake something in exchange for the other party’s promise

case defining consideration

currie v misa - Lush J

“A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to the one party or some, detriment loss or responsibility, given, suffered or undertaken by the other”

5 rules of consideration

1. past consideration is not good consideration

2. consideration must move from the promisee

3. consideration must be sufficient, but need not be adequate

4. consideration must have legal value

5. performance of an exisitng duty is generally insufficient

past consideration is not good consideration explanation

something done before the promise is made will generally not count as consideration for that later promise

key case

roscala v thomas 1842

R buys horse of T for money - R then asks whether the hose was sound and free from vice - horse was not - R sued for breach of contract - HELD: promise was unenforceable because R had provided consideration for the original sale but nothing for the later assurance

supporting case

Re McArdle 1951

improvements carried out on a house before a promise was made to pay - after completion D promised to pay for the improvements but never did - improvements had already been completed so was not valid consideration for the payment - no breach

2 exceptions to past consideration rule

1. requested performance

2. both parties must have understood that payment was to follow the performane of requested act

requested performance

where an act was requested by the promisor and the circumstances imply payment

requested performance key case

Lampleigh v Braithwait 1615

B was convicted of murder + asked L to obtain a royal pardon - L undertook considerable effort to obtain the pardo - B then promised to pay £100 - promise was enforcable because the act wsa reuqested by B and the circumstances indivcated that the service was intended to be paid

both parties must have understood that payment was to follow the performane of requested act - key case

re caseys patents 1892

C managed patents for owners and helped commercialise them - owners later promised a share in the patents - services were performed at someones request in a commercial context meaning it is reasonable to infer both parties understood that serives would be paid for

conditions for the exceptions to apply - Pao On v Lau Yiu Long 1980

1. has the act been done at the promisors request

2. would both parties have understood that the act was to be renumerated

3. would the poayment of benefit have been enfornocable if promised in advance

consideration must move from the promisee

promisee can not enforce A’s promise if they provide no consideration

key case

tweddle v atkinson 1861

fathers of couple agreed to each pay husband following wedding - father of bride didn’t pay - huaband couldn’t enforce the promise because he had provided no consideration

consideration must be sufficient but not adequate

sufficient = law recognises it as having value capable fo supporting a promise

adequate = proportionate or reaosnably equivilent to what is recieved

• the law doesn’t protect a bad deal

key cases

thomas v thomas 1842

• before death husband expressed wish that his wife should be able to live in his house - executors allowed in return for £1 a year rent and obligation to maintain the property = sufficient consideration

Chappell & co v nestle 1960

• nestle ran a promotion offering records in return for money and three chocolate wrappers -wrappers discarded after receipt - issue was whether the wrappers formed part of the consideration given they had no value to nestle - held that they were valid consideration

consideratoin must have some economic value

consideration must be something that the law can recognise has having value

key case

white v Bluett 1853

• son owed father money - father promised to release the debt if the son stopped complaining - held that the sons promise to not complain was no valid consideraton —>son had no legal right to complain and giving up something he had no legal entitlement to do was not sufficient in exhcnage for the circumstances

performance of an existing duty

perfomance of an existing duty is generally insufficinet consideration

3 situations the law distinguishes

performing an existing public duty

performing an existing contractual duty (inc duty owed to a third party)

part payment of debt

performance of an existing public duty rule + exception

generally performance of an existing public duty is insufficient consideration —> collins v godefroy - promise of payment for gigivng evidence failed as already elgally obliged to attend court

• glasbrook v glamorgan cc - proise of payment for additional police protection

• ward v byham - promise o payment to ensure child was ‘well looked after and happy’

performance of a existing contractual duty

performing an existing contractual duty owed to the promisor is generally insufficient consideration for a promise of extra payment

stilk v myrick

ship crew agreed to sail for a specified wage - 2 crew members deserted - captain promised remaining crew the wages divided in order to complete to voyage - refused to pay - promise of extra wages was unenforceable as hadn’t gone beyond the original contract = no fresh consideration

exception case

hartley v ponsby - large proportion of crew deserted leaving rest of sailors in much more dangerous conditions = promise of additional wages was enforceable because circumstances had changed tha sailors were no longer performing their original contractual obligations = provision of new consideration

williams v roffey principle

if ther performance of the existing contractual duty confers a practical benefit this can consitute valid consideration

performance of an exisiting contractual duty owed to a third party - general rule

performing a contractual duty owed to a third part can consitute valid consideration for a new promise —> the promisee is providing something of value to the promisor even though the promisee was already obliged to perform that act for another person

shadwell v shadwell

uncle promised nephew annual payment if newphew married his fiancee - newphew was already engaged to the wife = obgligation —> newphews marriage was treated as sufficient consideration for the uncle promise

scotson v pegg 1861

X pays pegg to unload coal delivered by S - S also paid P for the same thing - S argued that P already owed a duty to X so S shouldn’t have to pay - held that P’s existing duty was owed to the purchaser it could count as consideration for his separate agreement with S

new zealand shipping v satterthwaite

part payment of debt - when does this apply?

when a creditor promises to accept less money than owed but then later demands the remaining debt

pinnel’s case

payment of a smaller sum on the agreed due date does not by itself discharge a larger debt as there is no fresh consideration for the creditor’s promise to accept less

exceptions to pinnel’s case

where fresh consideration is provided as ‘horse, hawk or robe’ - ie. something else being given

when the part payment is made early

Foakes v Beer

F owed B debt with interest - B promised to not take to court if F paid original debt without the interest - F paid - B sued for the interest arguing there was no consideration - F argued that there was a practical benefit as B didn’t have to go to court to claim the debt originally - confirmed Pinnel’s case

promissory estoppel