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Contract Law - Consideration 1 (2) - Coggle Diagram
Contract Law - Consideration 1 (2)
I. Introduction
1. When is consideration required
-> to form a contract/vary/discharge
2. Requirements of form
(a) Formalities instead of consideration
Gratuitous promises are enforceable without consideration if they are contained in a deed. ((Miscellaneous Provisions) Act 1989)
(b) Formalities in addition to consideration
in any form and evidenced by any means
Exceptions: eg Act 1989, s 2 requires a contract for the sale of an interest in land to be made in writing.
II. What is consideration?
1. Definition
A Burrows:
Consideration means that, in exchange for a promise by one party, a counter-promise or performance is given by the other party
Each party must receive or be promised something in return for giving or promising something (no binding gratuitous promises)
2. Consideration in bilateral and unilateral contracts
Bilat not yet performed, each party's promise is consideration for the other
Unilat, promisee’s perf of the requested act is the csion for the promise, and the promise is the csion for the perf of the requested act.
III. Requirement of nexus
1. Consideration must be requested by the promisor
/in return for the promise. :red_cross: in reliance on the promise but not in return (bike)
Combe v Combe 1951: :red_flag:
2. Consideration must move from the promisee
provided consideration for that promise
(a) General rule
a third party cannot enforce the promise (privity).
(b) Consideration does not need to move to the promisor
While consideration must move from the promisee, there is no requirement that it must move to the promisor. The promisee can provide consideration by conferring a benefit on a third party at the request of the promisor.
Bolton v Madden :warning: (just ex)
3. Past consideration is not good consideration
(a) General rule
Consideration must be given in return for the promise: consideration cannot logically be given before the other’s promise was made.
Eastwood v Kenyon (1840) :red_flag:
Roscorla v Thomas (1842) (horse, price/vice) :warning:
(b) Rationale
O Sulivan
‘The fear is moral blackmail: that one party might confer a benefit gratuitously and then later put pressure on the recipient to make a promise to pay for it or enter into some other contractual obligation.’
(c) Exceptions
Doctrine of implied assumpsit
Where the act of the promisee was performed at the request of the promisor and subsequent to that performance, the promisor promises to pay for it, such a promise might be enforceable.
Lampleigh v Brathwait (1615) :warning: (death)
Pao On v Lau Yiu Long [1980] :red_flag:
IV. Requirement of ‘value’
1. Consideration must be sufficient
something of value is given in return for a promise
(a) Intangible benefits
= :red_cross: consideration (love/affection etc)
White v Bluett 1853 :warning: (stop complaining not enough)
No right to complain, abstaining from that no csion
Critics: he had a right to complain, giving it up = consideration, and practical benefit from the promisor for not hearing it
Pitt v PHH Asset Management Ltd [1991] sits uneasily with refusal from White :red_flag:
2. Consideration need not be adequate
/not harsh. Something valuable in the ayes of the law enough, no equivalent
Chappell & Co v Nestle Co Ltd [1960], trivial value enough :warning: -> parties to determine what they value, not concern of the law whether it is a good deal
3. Compromise and forbearance to sue
(1) A promise not to enforce a valid claim is good consideration for a promise given in return
(2) A promise not to enforce a claim which is doubtful in law is :check:
(3) A promise not to enforce a claim which is known to be invalid is :red_cross:
(4) A promise not to enforce a claim which is clearly bad in law but is believed to be good seems to be :check:
Cook v Wright (1861) (4)
V. Pre-existing duties
= consideration for a promise given in return?
1. Pre-existing duties imposed by public law
Gen rule: The performance of, or the promise to perform, an existing public duty is :red_cross: consideration for a reciprocal promise.
Prevents opportunistic exploitation by public officials, extorting money for performing legal duties
But if do more that what legally obliged, :check:
Collins v Godefroy (1831): :warning: (subpeonaed -> :red_cross:)
Glasbrook Bros Ltd v Glamorgan County Council [1925] (beyond police public duty so :check:) :warning:
Ward v Byham [1956] (looking after the child :check: for the father's promise -> more than legal duty of caring). Gen rule attacked by Denning LJ (just public duty, consideration bc father derived a factual benefit) :warning:
Williams v Williams [1957], wife provided consideration (maintain herself) -> controversial (just existing duty here) :warning:
2. Pre-existing contractual duties owed to a third party
Performance of, or a promise to perform, an existing contractual duty owed to a third party is good consideration
A undertakes a new obligation which is independent from that owed to X (third party).
Shadwell v Shadwell (1860) -> The performance of his contractual obligation to marry his fiancée was good consideration for the uncle’s promise. :warning:
Scotson v Pegg (1861) :warning:
New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd, ‘The Eurymedon’ :warning:
3. Pre-existing contractual duties owed to the other party (the promisor)
See contract modifications