Friday, June 17, 2016

Contract Law - Consideration

PrincipleCase Name / Definition
Definition of ConsiderationReciprocal benefit and detriment
something of value in the eyes of the law moving from the promiseeThomas v Thomas
the price for which the promise of the other is bought (adopting a definition from Pollock's Principles of Contract)Dunlop v Selfridge
Consideration must be given in return for the promise (Detriment alone is not enough)Combe v Combe
Consideration must be sufficient (of some value) but need not be adequate (of equal value)Chappell v Nestle
Past consideration is not good considerationRoscorla v Thomas

Re McArdle
Exception to Past ConsiderationLampleigh v Braithwait

Re Casey's Patents

Pao On v Lau Yiu Long PC
Consideration must move from promiseeTweddle v Atkinson
Sufficiency of consideration
a. A public duty imposed by the general law
Collins v Godefroy
Sufficiency of consideration
a. A public duty imposed by the general law (exception)

if the promisee undertakes to do more than that which he is legally bound to do
England v Davidson

Glasbrook Bros v Glamorgan CC
Sufficiency of consideration
b. Performance of a Contractual Duty owed to the Promisor
Stilk v Myrick HL - no

Hartley v Ponsonby HL - yes

Willaims v Roffey CA [1991] - yes if practical benefit
Glidewell LJ criteria in W v R- if a person, who is already entitled to the benefit of the contract (provide goods / services)
- promises a further sum
- in order that the contract be performed as originally agreed
- and they (the promisor) obtain a practical benefit as a result of giving the promise
- then the performance of the existing contractual duties on the promisee’s part might amount to sufficient consideration
- as long as the promise was not given as a result of economic duress or fraud
Economic duressarises where one party uses a superior economic power in an illegitimate way, so as to coerce the other contracting party to agree to a particular set of terms
modern test for economic duressDSND Subsea v Petroleum Geo Services

1. Pressure
2. the effect of which is compulsion or lack of practical choice
3. which is illegitimate; and
4. which is a significant cause including the claimant to enter the contract
Economic duress may render a contract voidable if it amounts to a coercion of the will which vitiates consentPer Lord Scarman in Pao On v Lau Yiu Long
Examples of Economic duressAtlas v Kafco (absence of practical choice)

The Atlantic Baron (not protest for 8 months - meant the contract had been affirmed)

The Universe Sentinel (purpose of the threat (blackmail) was illegitimate)

CTN Cash & Carry v Gallagher (acting in good faith)
The innocent party, promisor, is entitled to rescind the contract. This right can be lost if they delay.The Atlantic Baron
Sufficiency of consideration
c. Performance of a Contractual Duty owed to a 3rd party
Shadwell v Shadwell
Part Payment of DebtPinnel v Cole (exception - giving something else, pay earlier, pay different location, etc)

Foakes v Beer HL

D & C Builders v Rees CA - use if cheque for lower amount not good consideration for the whole debt
Lord Blackburn - prompt payment of a part of their demand may be more beneficial to them than it would be to insist on their rights and enforce payment of the wholeFoakes v Beer HL
Refused to extend W v R to apply to part-payment of a debt cases (bound by Foakes v Beer HL)Re Selectmove (CA)
Promissory Estoppel

Lord Denning - although a promise to accept less than was due was not supported by consideration, the promise could be used to found a defence and the creditor could be estopped from insist on his strict legal rights
Central London Property Trust Ltd v High Trees House Ltd
Lord Cairns - starting point - Lord Denning uses itHughes v Metropolitan Railway
Promissory Estoppel

1. Clear promise that existing rights will not be enforced
Woodhouse v Nigerian Produce
2. The promisee must have 'altered his position' in reliance on the promise made to himHughes v Metropolitan Railway
3. It must be inequitable for the promisor to go back on his promise and insist on his strict legal rightsD & C Builders v Rees
PE can only be usedas a shield and not a sword
Usually suspensoryHughes v Metropolitan Railway
sometimes partially extinguishHigh Trees, Tool Metal v Tungsten, Collier v Wright

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