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Consideration - Coggle Diagram

- - - - Parties can stipulate what consideration they want and courts should not interfere (Bad Bargains)
        
        Anything can amount to Consideration
        
        Relates to freedom to contract
        
        Chappel v Nestle (1960) Per Lord Somervell:
        
        Promisee provided chocolate wrappers as Consideration at the request of the promisor.
        
        Held: Promisee had provided sufficient Consideration
      - Consideration must have some economic value
        
        White v Bluett:
        
        Facts: Son made promise to the father not to bore him with complaints of how the father distributed his property in his will. In return for the father's promise not to sue the son for the debts that owed
        
        Held: Son did not provide Consideration to enforce the father's promise. The son had no right to complain to the father. The father has all rights to distribute his property to anyone
      - Hamer v Sideway
      - Thomas v Thomas
  - - - Currie v Misa (Benefit & Detriment principle):
        
        Benefit to the person making the promise (the promisor)
        
        Detriment to the person to whom the promise is made (the promisee)
      - Tweddle v Atkinson:
        
        To enforce a promise, must be proven that the Promisee has shown consideration for that promise. Consideration must move from Promisee but need not move to Promisor
        
        As long as the Promisee has shown consideration (suffered detriment), promise of payment will be enforceable even though the Promisor received no benefits
  - - - Re McArdle (1951):
        
        Facts: Claimant carried out work refurbishing is house where his siblings had a beneficial interest. He asked them to contribute towards the cost where they agreed
        
        Held: Agreement not enforceable as promise to pay did not come with Consideration. The only consideration the claimant had was that he completed the house before the promise is made. Hence this is 'past consideration" and NOT Consideration at all
      - Roscorla v Thomas:
        
        Facts: A guarantee/promise is made about the soundness of a horse after the sale.
        
        Held: This guarantee is not enforceable as its past Consideration. There's no Consideration given for the guarantee/promise
    - - The act of applying the Consideration must have been done at the promisor's request
        
        Lampleigh v Braithwaite (1615):
        
        Facts: Defendant wanted claimant to travel to Nowark to get a pardon for him. He then promised to pay him $1000. He later refused to pay.
        
        Held: Claimant can claim the amount promised as the defendant had requested him to do the act.
      - Must reasonably contemplated/understood by BOTH parties that payment is expected. Parties is understood that the work is paid in some way, either by money/some form of benefit
        
        Re Casey's Patents:
        
        The act was one where payment was reasonably contemplated by both the parties
        
        Pao On v Liu Yong:
        
        Lord Scarman laid down the conditions which must be satisfied if they exception is to operate
  - - - Stilk v Myrick (1809):
        
        Facts: Stilk (seaman) agreed to sail to Baltic and back. Defendant agreed to pay $5 per month. Originally there were 11 men. 2 men deserted the ship during the voyage. The master could not find a replacement and the rest he will share the 2 men's wages with the rest if they sailed back to London. Crew agreed. Upon return the Master refused to pay the additional amount and Stilk sued.
        
        Held: Claim failed. The performance of an existing contractual duty to a party is not good Consideration for a promise from that party to pay extra
        
        The Espinasse Report:
        
        It is contrary to policy to allow these promises to be enforced. This can lead to economic duress/pressure. Promisee can make unreasonable demands
        
        Hartley v Ponsonby:
        
        Facts: 17 men out of a crew of 36 abandoned ship. Out of the remaining crewman only 4 or 5 of them were able seamen. The voyage became very dangerous/unsafe to continue. The master of the ship promised additional wages to continue to voyage.
        
        Held: The master had to pay additional wages promised as they had gone above and beyond their scope of existing duty. They had provided consideration
        
        Per Lord Campbell CJ: It worked in Hartley v Ponsonby because the voyage became dangerous and the men where at liberty to enter into a fresh bargain and thus provided consideration for extra wages
    - - Wiliam v Roffey Brothers (1991):
        
        Defendant are main contractors where they had to refurbish a block of flats. Defendant hired carpentry work from claimant for $20,000. Claimant made a bad bargain and the defendant acknowledged that the price is unreasonably low. Claimant ran into financial difficulty after doing part of the works due to 1) failure to manage workforce and 2) undercoating the price for the work. As defendant were under time constraints, defendant called for a meeting with claimants to discuss the situation. Defendant agreed to pay more $575 per flat. Claimant finished 8 more flats and the defendant did not pay as promised where claimant sued for extra payment.
        
        Held Per Glidewell LJ, Russel and Purchass LJJ: Claimant can claim for additional payment. Defendant argued that claimant did not provide consideration for the promise of additional amount (they were just performing an existing duty they were already contractually bound to do
  - - - Payment of the lesser sum is NOT consideration for the Promise not to sue as he is merely performing his existing duty to pay off the debt
        
        Pinnel's Case (1602):
        
        Facts: Pinnel sued Cole in an action of debt upon a bond $8.10p. Cole (defendant) argued that at Pinnel's request, tendered $5.2p 6 days a month before the debt was due. And the claimant accepted in full satisfaction for the debt
        
        Held per Lord Coke: "Payment of a lesser sums on the day in satisfaction of a greater sum cannot be satisfaction as a whole. But the gift of a horse etc. is good. For it is intended that the horse might be more beneficial to the claimant than the money"
        
        But since the lesser sum was paid at an earlier date at the request of the Promissor, thus there is good consideration
        
        Foakes v Beer (1884):
        
        Facts: Claimant (Foakes) owed defendant (Beer) a sum of $2,090 19 days after a court judgement. Defendant agreed that she won't take any action against claimant for the amount owed if he will sign an agreement promising to pay the initial sum of $500 and pay $150 twice yearly until the whole amount is paid back. Claimant was in financial duty and with help of his solicitor drew up an agreement with defendant to waive any interests on amount owed and she signed it. Claimant paid back the principal amount but not the interest. Defendant sued claimant for the interest. Issue was whether she is entitled to it despite their agreement that he would not need to pay it
        
        Held: Defendant is allowed to sue for the interest owing. The defendant's promise not to enforce the judgement was not binding because claimant did not provide consideration
    - - Payment at an earlier date - Pinnel's Case
      - Payment at a different place as requested by the creditor
      - Payment by a 3rd party - Hirachand Punamchand v Temple (1911)
        
        Facts: Father paid the son's debt. Creditor accepted the Fathers terms and it had the effect of extinguishing the son's debt
  - - - A promise not to enforce a valid claim is also good consideration - Cook v Wright (1861)
        
        Facts: Claimant threatened to take legal action against defendant if he did not pay. Defendant then agreed to pay in 3 installments and give 3 promissory notes (legal, financial tool declared by party and promising the other party to pay debt on a specific date). He failed to pay and claimant sued him on the notes. Issue is whether there is consideration for the notes. Claimant argued there is consideration because they forbeared suing him on a reasonable claim that they intended on good faith
        
        Held: There is sufficient consideration for the promissory notes in the compromise of the claim. Court said as long you don't need to have an actual benefit/detriment. As long as you have a reasonable claim on one side where you intend to pursue, in which is modified/given up by the agreement
  - - - High Trees House Case:
        
        Facts: Claimant (Central London Property) let a block of flats to defendant (High Trees) at an annual rent of $2500. In 1940 defendants discovered that due to war and evacuation of people from London they are unable to let most of the flats. Claimant agreed to reduce the rent. The promise to accept the reduced rent was not supported by consideration. At the end of the war, the property market returned to normal and the flats were fully let. Claimant demanded the defendants to resume payment amount before the war but defendant refused
        
        Held: Agreement for the reduced amount was meant to be temporary and ceased to operate after the war. Thus claimants are entitled to the full amount after the war
        
        Tool Metal v Tungsten Electric (1955):
        
        Facts: A supposed to pay rental for $2500 to B under a contract. B promises A that he will accept the reduced amount of $1250 (agree not to exercise legal rights)
        
        If B wants the full rental, A wants to hold B to his promise:
        
        Under Common law, A must provide full consideration to enforce promise
        
        Under Equity, A can use PE as a defense and B will be estopped from using legal rights
    - - There must be a clear and unequivocal promise/representation that existing legal rights will not be fully enforced
        
        Kim v Chasewood Park Residents (2013) - The rationale for the rule is that promise must be clear and unambiguous to ensure that one party will not easily 'lose' his contractual entitlement
      - Must have reliance on the part of the promisee on the promise of the promisor. Promise must have in some way influence the conduct of the party to whom it is made to (you don't owe anyone, so you can use the extra money for other things, no longer allocate the money to pay current debts)
        
        Brikom Investments v Carr (1979)
      - Must be inequitable for the promissor to go back on his word/promise. Judge cannot simply apply PE whenever there is a promise which changes the existing contract which was relied on (courts have discretion to decide whether it is fair to allow promise to be enforced) (it is fair to ask for the money back)
      - PE does not need to only be used in context of contractual relationships
        
        Evenden v Guildford (1975) Lord Denning - PE can apply in situations with no existing contractual relationships at all between parties
      - Used as a shield and not a sword. Only used as a defense and never a course of action when non existed. Only used to prevent enforcement of existing rights and not create new rights.
        
        Combe v Combe (1951)
      - Promisee must act equitably to rely on doctrine. He who comes to equity must come with clean hands
        
        D & C Builders v Rees (1966) - Mrs. Rees cannot use PE as she extorted on the promise from the builders and did not act in a conscionable manner when she obtained the promise from the builders to accept lesser payment
    - - Suspensory (promise does not last forever/temporary promise):
        
        Upon reasonable notice, promisor can insist upon his strict legal rights because it will only allow the promisee longer time to perform their obligation with very little effect on the result. Seen in Foakes v Beer (1884)
        
        Confirmed in Tool Metal Manufacturing Co. Ltd v Tungsten Electric Co. Ltd (1955) where effects of PE is only suspensory and promisor can enforce legal rights with reasonable notice/intention to do so
        
        Once notice is given, rights that are put in storage/suspended can be activated and is known as future obligations (High Trees)
        
        Extinctive (is it gone for good):
        
        Per Lord Denning, he held obiter that PE to have an extinctive effect: "Where there has been a true accord, under which the creditor voluntary agrees to accept a lesser sum in satisfaction and the debtor acts upon it, then it is inequitable for the creditor afterwards to insist on the balance". (it is possible for single payments)
        
        In Collier v P & MJ Wright (Holdings) Ltd (2007) enforces this obiter dictum by Lord Denning stating that PE has the effect of extinguishing the creditor's right to the balance of debt when he has accepted a part payment of the debt
  - - - Reason being the Promisee is already under obligation by law to the job:
        
        E.g. Policeman, Firemen, Coast guards, Lifeguards
      - Collins v Godefroy (1831):
        
        Facts: A subpoenaed witness was promised some money if he attended the court hearing. He did attend and asked for the payment
        
        Held: Cannot claim for the amount promised as he was under a duty to appear in court
        
        But if the person goes beyond their scope of duty then promise of payment is enforceable
      - Glasbrook Bros v Glamorgan County Council (1925):
        
        Facts: During a strike defendant owners of a coal mine asked the police to provide protection in the form of a officers around the premise. Police only had resources to make visiting patrols and offered to give protection requested in exchange for financial contribution. After the strike police presented the coal mind with a bill for their services. Defendant refused to pay arguing that police are under existing private duty to give protection. Police sued. Issue was whether police had authority to give free consideration for Glassbrook Bros Ltd's promise to pay.
        
        Held: Although police is bound to give protection against violence, the form should take is at the police's discretion. If they gave additional protection/go beyond scope of duty then there is sufficient consideration and could claim additional amount promised. Hence, police went beyond scope of duty where they are entitled to payment
      - Leeds United FC v Chief Constable of Yorkshire (2013): CA held that the police are under duty to prevent crime, maintain law and protect property