Scribd
Upload
7 views

Contract Law Lecture 3 Consideration

Uploaded by

nicoenzo82
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
7 views

Contract Law Lecture 3 Consideration

Uploaded by

nicoenzo82
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 17

The Doctrine of Consideration

Contract Law Lecture 3


The nature of a promise

“And don’t cross your fingers either.”


Connotations
• Trustworthiness
– “To keep a promise”; “break a promise”
• Fairness
– Reliance
• Compliance
– Authorised Economic Operator (AEO);
• Legal certainty
– Promises traditionally made under seal
Limitations on enforceability
• Not all promises are enforceable
– Historically, promises had to be made under
seal
– Increase in commerce led to actions for
assumpsit
– Today, consideration is the element which
distinguishes binding from non-binding
promises.
Three explanations of consideration
• Benefit/detriment approach
– Currie vs. Misa [1875]
• Bargain approach
– Combe vs. Combe [1951]
• Enforceable element approach
– A mechanism to determine which contracts
should be binding (public policy).
Currie vs. Misa [1875]
• Court held that consideration was something of
some value in legal terms
• May be a detriment to the plaintiff or some
benefit to the defendant
• Must move from the plaintiff
– Only views consideration from the plaintiff‘s point
of view
– Does not define what benefit or detriment means
– Does not explain why a detriment occurs.
The Exchange/Bargain Approach
• One party abandons a legal right in the
present or limits legal freedom of action in
the future
• as an inducement
• for the promise of the other party
– Did the action/inaction/promise of one party
“buy” the action/inaction/promise of the other?
– Consideration = price of the promise.
American Restatement of Contracts
[1932]
• 1981 restatement
– S. 71 (1): to constitute consideration, a
performance or a return promise must be
bargained for.
– A performance or return promise is bargained
for if it is sought by the promisor in exchange
for his promise and is given by the promisee in
exchange for that promise.
Combe vs. Combe [1951]
• Def. promised to pay his ex-wife an annuity
of £100.
• In reliance on this promise she did not apply
for maintenance (detriment). Def. broke his
promise.
– Court held she had not provided consideration
for the payment
– Reason: her decision was unrelated to her ex-
husband’s promise to pay her the annuity.
Conditions for consideration
• Meaning of value in legal terms:
– There must be sufficient consideration, even if it is
not economically adequate.
• General rules:
– Past consideration is not sufficient
• Cannot pre-date the promise (must be given in return for
the promise and then acted upon)
– Consideration must move from the promisee
– Existing obligations are not sufficient consideration
• Contractual duties (e.g. payment of an outstanding debt)
• Public duties (e.g. jury service)
Consideration must be sufficient
• Thomas vs. Thomas [1842]
– Deceased had promised his wife she could reside in
his house.
– Wife had to pay £1 a year
– Executor challenged the will, claiming the promise
was gratuitous (i.e. made without consideration)
– Court held that:
• Fulfilling testator‘s wishes = no consideration
• £1 rent and maintaining house = sufficient consideration
Consideration must move from the
promissee
• Tweddle vs. Atkinson [1861]
– Two fathers agreed that the husband was to be
paid a certain amount.
– Amounts not paid and husband sued.
– Court held that husband could not sue because
he had provided no consideration
Third Party Claims
• Dunlop Pneumatic Tyre Co. Ltd. vs. Selfridge
[1915]
• Dunlop sold tyres to B = B was not to sell them
below a certain price.
• B sold tyres to S under same condition. S broke
the condition. D sued S.
• Court rejected the claim:
– Contract made between B and S: consideration had
not moved from D
– (Case also reflects privity of contract doctrine).
Performance of existing obligations
do not constitute consideration
• Stilk vs. Myrick [1809]
– Crew demanded extra wages because some
sailors had deserted.
– Captain promised to distribute their wages
amongst the remaining crew. Failed to do so and
sailors sued
– Court held that there was no consideration
provided for the promise of additional wages.
Extra work fell under terms of original contract.
– Reflects needs of public policy
Existing obligations as consideration
in relation to third parties
• Scotson vs. Pegg [1861]
– Where there has been a promise to one person
to do a certain thing, it is possible to make a
valid promise to anohter to do the same thing.
• Shadwell vs. Shadwell [1860]*
– Man under a duty to marry. His uncle promised
him an annuity. Existing duty held to be good
consideration for the promise of the third party.

*The father died before he could pay the annuity and the executors refused to carry out the promise because they did not
believe there was sufficient consideration. So the nephew (husband) sued his uncle’s estate.
Part payment of a debt
• The rule in Pinnel’s case [1602]
– A lesser sum cannot be paid to the plaintiff in
satisfaction of a larger sum.
– If creditor promises not to claim full payment,
the promise is unenforceable because the
promisee has not provided any new
consideration in return.
Exceptions to Stilk vs. Myrick rule
• Activities exceed existing obligations:
– Hartley vs Ponsonby [1857]
• Facts similar to Stilk vs Myrick. However, court held that extra
work was not covered by contract. Therefore, good
consideration.
– Williams vs. Roffey Bros. & Nicholls (Contractors)
[1991]
• Contractor agreed to pay builder extra to avoid penalty for late
completion of work.
– Court held that contract had been varied. Def. was going to receive a
benefit.
– No consideration moved from Pl. (because he was obliged to finish the
building) but court held that the contract was intended to be binding.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy