Consideration

promisor (the party who makes the promise) , Promisee (the party who receives the promise)

What is consideration?

When 1 party makes a promise to another party as part of an agreement, then the other party must give something back (act/gift)

Exception of legally binding contract (no consideration) which is known as ‘under seal’

e.g. If a person gifts property to someone without expecting anything in return, they can sign a deed of gift under seal. Even though there’s no exchange of value, the seal makes it legally binding

Principles of Consideration

-legal

-real

-adequate

-*present or future, cannot be from past

-must move on from promisee*

-performance of an existing duty

consideration must be legal

cannot be against the law/immortal

consideration must be real

love/affection is not considered

consideration need not be adequate

value of promise does not be equal to consideration (parties can choose their own terms of the contract)

Chappel & Co.Ltd v Nestle Co.Ltd [1960] -pg 37

3 choco wrappers in return for a music record

Thomas v Thomas [1842] -pg 37

small amt of money for staying in a house

consideration must be present or future, but it must not be past

past consideration: promisee gives consideration bfr the promise was made by the promisor- (e.g. improvements made bfr the promise of payment)

past consideration McArdle [1951]

consideration is not given in response to the promise of the promisor (viewed as a gift)

Tweddle v Atkinson [1861]

consideration must move on from promisee. If consideration was not given by promisee but by another person, then the promisee cannot enforce the promise.

performance of an existing duty is NOT consideration

act is already owed to the promisor under an existing duty

Collins v Godefroy [1831]

-plantiff attended a court case as a witness under subpoena (an order from the court to appear in court)

-existing duty imposed by general law
-no proper consideration for defendant’s promise

Glasbrook Brothers v Glamorgan County Council [1925]

Exceed public duty

-performance given exceeds that expected under public duty

-mining company insisted that policemen shld be stationed at its premises

-police told the mining company that to provide to the premises was not within the scope of their duty to the public (protection is more than reasonably expected under public duty)

Rule

The general legal principle is that a promise to perform an existing public duty does not constitute valid consideration. However, if a party exceeds their existing legal duty, it can amount to fresh consideration, making the agreement enforceable.

Application

The police were obligated to provide general protection during the miners' strike. However, Glasbrook Brothers requested additional stationed officers at the colliery, which went beyond standard patrols. Since the police provided extra services beyond their legal duty, the agreement was supported by fresh consideration.

Still v Myrick [1809]

Existing contractual duty

-captain does not have to pay the extra money because the 8 sailors already owed a duty to sail the ship back because of existing contract

-Extra work that 8 sailors had to carry out, becus of 2 sailors, was AN INSIGNIFICANT AMT HENCE DOES NOT AMT TO NEW CONSIDERATION FOR THE CAPTAIN’S PROMISE OF THE EXTRA WAGES

Hartley v Possonby [1857]

-significant amt of extra work to be done due to the 17 deserting sailors, as well it being dangerous to sail the ship with so few remaining crews

-The danger and large amt of extra work cld not be reasonably expected und3r the original contract and, therefore, amounted to consideration in return

part payment of debt(PAYMENT OF DEBT ONLY)- Pinnel case [1602]

*Payment of a lesser sum on the day [it is due] in satisfaction of a greater sum cannot be any satisfaction for a whole

No consideration made from Jeremy to Chee (pg 42)- part payment of debt

Nothing given in return for the promise. No consideration given in return for Chee’s promise. The agreement does not amount to the contract hence Chee will be able to successfully sue Jeremy

Pinnel’s case

Foakes v Beer [1884]

Exception to Pinnel’s case

Accord and satisfaction (debt can be discharged by a partial payment)

Accord means

*the person who lends the money (creditor) willingly agreed without being forced to accept part payment). For e.g. creditor requests for partial payment instead of debtor

satisfaction means

creditor received some form of benefit in addition to receiving the part payment

examples of satisfaction (consideration need not be adequate)

-payment made at an earlier date than originally agreed

-consideration need not be adequate

-payment of the smaller sum was made at a diff place