Consideration

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  • Consideration
    • Common law test of enforceability for simple contracts.
    • Past consideration.
      • When a promisor offers a reward after the promise has embarked upon their performance.
        • Not good consideration.
    • Mutual exchange under which one party must suffer a detriment or a benefit as a result of what is promised or given under the contract.
      • Can be good consideration
    • Only a party that has provided consideration can enforce the promise.
    • Must have some economic value in order to be legally sufficient.
      • Promise to perform act which carries no economic value will not be sufficient, therefore not good consideration
        • White v Bluett
    • Must be sufficient but not adequate.
      • Courts role isn't to protect a party from a bad bargain.
        • Thomas v Thomas - widow promised she could live in matrimonial home if she paid £1 ground rent and maintained property.
    • Consideration must move from the promise.
      • As it is the promise who wants to enforce the promise, it makes sense for them to provide justification for allowing them to do this.
        • The Contracts (Rights of Third Parties) Act 1999
    • Performance of existing duties - bad consideration.
      • Performance of an existing public duty - performance of duty required by law is not valid consideration.
        • Collins v Godfroy - promise was made to pay witness for giving evidence at trial. Not enforceable as party was required to give such evidence by law.
    • Performance of existing contractual duty owed to the same promisor.
      • If parties wish to change agreements of existing contract, fresh consideration will need to be created in order for changes to be enforceable.
        • Stilk v Myrick - captain promised crewmembers a split of the wages of deserters. Crewmembers provided no consideration therefore promise was not enforceable.
      • Exceeding an existing contractual duty - good consideration.
        • Hartley v Ponsonby - similar facts to Stilk v Myrick, but in this case the captain offered crew money to sail home. The crew sailing home counted as consideration.
    • Glidewell criteria.
      • if A has entered into a contract with B to do work for/supply goods/services to B, in return for payment by B.
      • at some stage before A has completely performed his obligations under the contract B has reason to doubt whether A will/will be able to complete his side of the bargain.
      • B thereupon promises A an additional payment in return for A's promise to perform his contractual agreement on time; and
      • as a result of giving his promise, B obtains in practice a benefit, or obviates a disbenefit; and
      • B's promise is not given as a result of economic duress or fraud on the part of A; then
      • the benefit to B is capable of being considered for B's promise, so that the promise will be legally binding.
    • Performance of duty owed to a third party.
      • party promises payment in return for the other party to perform a duty they are already under an obligation to perform to a third party.
        • Shadwell v Shadwell - uncle promises nephew £150 per year to marry his fiance, no contract between uncle and fiance. fiance = 3rd party.

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