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Consideration of a contract - Coggle Diagram
Consideration of a contract
Definition
Both parties provide consideration along with the agreement for there to be a contract.
Each side must promise to give or do something for the other.
Executed and executory consideration
Executed consideration
When one of the parties has sone all that is required of them.
Leaves the outstanding liability on the other party.
E.g. I have offered a reward to find my missing watch. You find it and return it, my payment is still outstanding.
Consideration has been completed
Executory consideration
A promise for a promise.
E.g. I will give you the watch, you will give me £200.
Consideration is waiting to be completed
Sufficiency and adequacy
Adequacy
There has to be economic value
Sufficiency
What is being supplied as consideration, such as money, a service or an object.
Must be of the type that is regarded in law as capable of supporting the contract.
Must be real, tangible and have some actual value.
The consideration must be sufficient but need not be adequate.
Chappell v Nestle Co.
Past consideration
The consideration must not be past
For there to be a contract the consideration cannot come before the agreement, it must follow it.
Re McArdle (1951).
Courts can enforce consideration, but there must be an earlier request to carry out the act.
Lampleigh v Braithwait (1615)
Consideration must move from the promisee
Someone cannot sue on a contract which they are not a party.
Tweddle v Atkinson (1861)
Exception is a collateral contract and the Contracts (Rights of Third Parties) Act 1999.
Performance of existing duties
Existing Public duties
Existing public duties will not amount to valid consideration.
Collins v Godefroy (1831)
This can be changed if it can be shown they have gone beyond their duty.
Glasbrook Bros v Glamorgan County Council (1925)
Existing contractual duty
The performance of existing contractual duties will not amount to valid consideration.
Stilk v Myrick (1809)
This is different if the claimant does something in excess of existing duties.
Hartley v Ponsonby (1857)
Promise of existing duty to a third party
A promise to perform an existing duty that is made to a third party can be valid consideration for a new contract.
Pao On v Lau You Long (1980)
Williams v Roffey Bros and Nicholls Contractors Ltd (1990)
Part payment of a debt
Part payment of a debt is not valid consideration for a promise to forego the balance.
Pinnel’s Case (1602)
Foakes v Beer (1884)
D and C Builders Ltd v Rees (1965)
Accord and satisfaction
Where a contract is discharged in return for a different consideration from the original obligation.
British Russian Gazette v Associated Newspapers (1933)
Promissory estoppel
Stops the claimant from going back on their promise to agree to a part payment.
Central London Property Trust Ltd v High Trees House Ltd (1947)