Contract law - Consideration
What are the elements of consideration?
- Sufficiency test - Past consideration - Existing contractual and legal obligations - Part payment of debt
What is the exception rule for part payment of debt?
1. Accord and Satisfaction and/or 2. Promissory estoppel (will not deal with)
What is existing contractual and legal obligations?
Doing what you are already required to do in contract or by law is not consideration unless you provide something extra and beyond what is required
What is the sufficiency test?
Parties to a contract must provide something of commercial value, but the things promised need not be of equal value. Consideration must be sufficient but need not be equal
What is consideration?
Paying a price or cost or paying in or providing something commercially valuable to be part of, benefit from, and enforce a contract
What is past consideration?
Unless there is a request for services and a reasonable expectation of payment/compensation, things done or provided before contract is not consideration Past consideration can be services or promises in the past not related to a present contract EXCEPT WHERE one of the parties requests the performance of service or act and there is usually an expectation for act or service
What is part payment of debt?
Unless there is agreement to accept part payment as A) something other than debt or B) at an earlier date than due date Part payment of debt on the due date is not consideration except where -APPLIES TO: Employees accepting part payment of wages, creditors accepting part payment of debt -EXCEPT WHERE: Debtor is offered to pay partial payment earlier than required. Debtor is offered to pay partial payment in another form of equivalent value
What are cases for existing contractual and legal obligations?
[Collins v Godefroy 1831] A police officer performing his duties [Stilk v Myrick 1809] Sailors dealign with the normal contingencies and emergencies of sea voyage BASIC RULE: TO PERFORM WHAT ONE IS ALREADY BOUND TO DO IS NOT SUFFICIENT CONSIDERATION
What are the cases for the exceptions to existing contractual and legal obligations?
[Glassbrook v Bros v Glamorgan County Council 1925] The provision of extra and social police protection for a business against strikers [Williams v Roffey Bros & Nicholls Contractors Ltd 1990] Hiring more staff and dedicating more resources to complete a contract on time to avoid huge default payment for promisor [Shadwell v Shadwell 1860] May apply to social arrangements Exceptions to the rule: doing and providing something that goes beyond existing, legal and contractual obligations
What is case law for past consideration?
[Lampleigh v Braithwaite 1615] The price of pardon. B was accused of killing a man and asked L to get him a king's pardon. L achieved this, with considerable expense to himself. B promised to pay him 100 pounds in return, which he never did. L claims there was a contract established between to the parties because it was clear that both would have comprimised a payment. A PROMISE TO PAY COMING AFTER THE SERVICE IS PERFORMED WILL BE ENFORCED BY THE COURTS
What are cases for part payment of debt?
[Pinnels Case 1602] An acceptance of part payment of debt on the date does not discharge or cancel the outstanding balance. [D.C Builders v Rees 1965] Workers accept part payment of wages/debt owed from employer [Foakes v Beer 1884] A creditor accepts payment in instalments, but later requests interest for an on late payments.
What are cases for consideration?
[Thomas v Thomas 1842] Anything that is of some commercial value in the eye of the law [Currie v Misa 1875] A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to the one party or some forebearance, detriment loss of responsibility, given, suffered, or undertaken by the other
What are cases for the sufficiency test?
[White v Bluett 1853] A promise by son to a dying father not to cause trouble over his will after death (NOT SUFFICIENT) [Ward v Byham 1956] Promise by mother to a father to keep child 'happy' for payment. (SUFFICIENT) [Chappell v Nestle Co 1960] Anything of monetary value or commercial benefit in a commercial context, exchange, relationship
