Consideration

What is the definition of consideration? (a contract is a?, not a?)

Something must be exchanged- both parties must give/ promise something

“ a contract is a bargain not a gift”

What is meant by executory and executed consideration?

executory- promises given at the moment the contract is made

executed- something given at the moment the contract is made e.g. money

What is the definition of consideration from the case of Currie V Misa?

Some right, interest, profit or benefit according to one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other

Consideration must move from the promisee (the person can only enforce a promise made to them if they gave something in exchange for that promise).

Which case shows this?

Tweedle V Atkinson

• Both fathers of a young couple, who intended to marry, agreed in writing to each give a sum of money to the couple

• The woman’s father died before giving over the money and the husband then sued the executioners when they refused to pay the money

• Even though the husband was named in the agreement, his claim failed because he had not given no consideration and was not a party to the agreement himself

Consideration must be sufficient but does not need to be adequate.

What does this mean?

Consideration does not need to be an equal exchange in value (adequate)

Which case shows consideration must be sufficient but does not need to be adequate?

Thomas V Thomas

• Before he died, a man expressed the wish that his wife should be allowed to remain in the house after he died

• The wish was not stated in his will, the executors carried out this wish and charged the widow a rent of £1 a year, when they later tried to evict her

• The eviction failed because the consideration was provided- £1 a year (sufficient)

Which case shows that emotional promises are not sufficent?

White V Bluett

• A son owed his father money and had given a written note promise to pay a sum of money to cover the debt

• The father died with the note unpaid, The father’s executors sued for the money

• The son claimed that his father had promised to write off the debt if he stopped complaining about the way his father was handling his assets, which he had done

• There was no consideration, as he had no legal right to complain and natural love and affection were not consideration so he still had to pay the debt

Which case shows that emotional promises are sufficent?

Ward V Bytham

• The parties were the parents of an illegitimate daughter. The child lived with the father at first, but the mother asked the child to live with her

• The father agreed and said he would pay £1 a week, provided the mother could look after the child and keep her happy

• The father eventually stopped making the payments, as there was no legal obligation for him to keep the child happy

• However, even though the mother is looking after the child as it is a legal obligation, the court considered this as sufficient consideration

What is meant by past consideration not being sufficient?

Consideration has no value where it has already been done at the time the agreement is made

How does the case of Re McArdle show past consideration not being sufficient?

Re McArdle

• Mrs McArdle had carried out work on the bungalow, in which she lived with her husband and his mother

• The bungalow was part of the estate of her husband’s father.

• After the work had been carried out, those inheriting the bungalow signed a document stating “in consideration of you carrying out repairs, we agree the executors pay you a sum of money”

• As the promise to make the payment came after the work had been done, it was past consideration, there was, therefore, no contract to pay her the money

What is the exception to the rule that past consideration not being sufficient?

there may still be sufficient consideration if there was an implied promise to pay at the time the other party carried out their part.

In terms of past consideration being sufficient if there was an implied promise to pay at the time the other party carried out their part.

Which case shows this?

Lampleigh V Braithwait

• Braithwait had been convicted of murder and was to be hanged. Lampleigh agreed to do what he could to obtain a royal pardon

• Lampleigh negotiated the pardon and Braithwait then promised him to pay £100, but he did not do so

• Braithwait argued that gaining the pardon was past consideration, so there was no obligation to pay £100

• The Court decided that although the consideration had preceded the promise, the actions taken were at D’s request and were so important that a fee had been implied,

Performing an existing duty (under a previous contract) is also not sufficient consideration in a new contract.

What case shows this?

Stilk V Myrick

• Stilk agreed to sail as a crew with Myrick for £5 per month. Half-way through the voyage, 2 of the crew deserted and the captain asked the remaining crew to do the extra work, sharing the wages saved.

• The claim for the additional wages failed because there was no consideration

• There was no consideration- the crew agreed to do everything possible in the event of emergencies

What are the 3 exceptions to Performing an existing duty (under a previous contract) is NOT sufficient consideration in a new contract?

• Will be sufficient if something extra is done (extra benefit)

• Nothing extra was done, but the party gained a factual benefit from the performance of the existing contract

• existing duty was owed to a 3rd party (someone who was not party to the contract)

In terms of performing an existing duty (under a previous contract) not being a sufficient consideration in a new contract.

What is the exception to this?

Performing an existing duty will be sufficient consideration if something extra is done in return for the new payment (an extra benefit).

Which case shows performing an existing duty will be sufficient consideration if something extra is done in return for the new payment (an extra benefit)?

(contrast with Stilk V Myrick)

Hartley V Ponsonby

• After some of the crew deserted during a voyage, just over half of the crew remained.

• There was a promise to pay more money to the remaining crew → this was enforceable as the reduction in numbers made the voyage much more dangerous, so there was an extra element amounting to good consideration

More recently, the courts have been more generous in their approach to what counts as an extra benefit. (Factual benefit)

How does the case of Williams V Roffey show this?

Williams V Roffey

• Roffey Bros (the builders) contracted with Williams (the subcontractor) to refurbish flats. Williams faced financial difficulties and was falling behind schedule, potentially leading to penalties for Roffey Bros

• To avoid these penalties and ensure timely completion, Roffey Bros promised to pay Williams an additional sum

• The Court of Appeal held that Roffey Bros' promise was enforceable because they obtained a practical benefit by avoiding the penalties and ensuring the work was completed on time

• a promise to perform an existing contractual obligation can be good consideration if the promisor gains a practical benefit

There is an exception that there can be sufficient consideration if the existing contractual duty was owed to a 3rd party (not a party to the new contract).

A promises B that he will do something for C (something which B had to do anyway for a different reason)

Which case shows this?

Shadwell V Shadwell

• D was CLMT’s uncle. The uncle promised to pay his nephew a sum every year until the nephew’s income reached 600 guineas, provided the nephew marries his fiance

• The uncle paid 12 instalments but then died, the payments then stopped

• The nephew sued the uncle’s estate for the remaining payments

• The court held the marriage contract being performed was consideration, even though the contract was made with a 3rd party to the agreement