Study Notes on Contract Law - Consideration

Contract Law

Consideration

  • Definition: Mutual exchange of something of value; makes a contract enforceable.
  • Referred to as "The badge of enforceability."
  • Exchange of promises may qualify as consideration.

Rules of Consideration

  1. Must move from the promisee.
  2. Sufficient but need not be adequate.
  3. Existing public, legal, or contractual duty does not constitute valid consideration.
  4. Going beyond an existing duty can amount to valid consideration.
  5. Consideration must not be past.

Principle 1: Movement from the Promisee

  • Promisee/offeree is the party to whom the promise is made; must provide consideration to enforce the agreement (e.g., Tweddle v Atkinson).

Principle 2: Sufficient but Not Adequate

  • Sufficient: Recognized by courts as capable of constituting consideration (e.g., money).
  • Adequate: Courts do not require equal value in exchanges; only sufficient value needed.
  • Relevant cases: Thomas v Thomas, Chapell v Nestle.

Principle 3: No Consideration for Existing Obligations

  • No consideration for tasks under existing duties, whether public, legal, or contractual.
  • Exceptions exist for going beyond existing duties or when obligations involve third parties.
Existing Public Duty
  • Collins v Godefroy: No consideration where public duty exists.
  • Glasbrook Bros v Glamorgan CC: Additional efforts beyond duty can constitute consideration.
Existing Legal Duty
  • Shadwell v Shadwell: Going beyond legal duties can provide consideration.
  • Examples of relevant cases illustrating existing obligations.
Existing Contractual Duty
  • Cases depict limitations and exceptions concerning additional promises on existing contractual duties (e.g., Roffey v Williams).

Past Consideration

  • Definition: Acts done before contract formation are unenforceable as consideration.
  • Valid if exceptions apply: request by promisor, understood payment, enforceability if prior.
  • Relevant cases: Re McArdle, Pao On v Lau Yiu Long; explore implications of past acts in contracts.