- based on exchange of promises "an act of forbearance of one party, or the promise thereof, is the price for which the promise is bought"
Dunlop v Selfridge:
- an earlier definition based on benefit/detriment came from the case of currie v misa, but this definition was found to be inadequate
Two Types of Consideration:
- executory consideration where exchange of promises to carry out acts at a later stage
- executed consideration where it applies in unilateral contracts where one side of contract performs the contract or in bilateral contract where promises done at the same time
Rules of Consideration
Consideration must be sufficient but need not be adequate
- Adequacy means are the parties promising things of equal value? the courts are not interested in whether there has been a good or bad bargain: Thomas v Thomas: a man before his death expressed the wish that his wife be allowed to remain in the house, although this was not in hil will. The executors carried out this wish and charged the widow a nominal ground rent of £1 per year. when they later tried to dispossess, they failed. the moral obligation to carry out the mans wishes was not consideration but the payment of the ground rent, however small and apparently inadequate.
- Even things of no apparent worth have been classed as amounting to valuable consideration: Chappel v Nestle: nestle had offered a record, normally retailing at 6/8D, for 1/6D plus three chocolate bar wrappers, to promote their chocolate. on receipt, the wrappers were thrown away. they were still held to be good consideration when the holders of the copyright of the rocrd sued to prevent the promotion because they would receive substantially fewer loyalties from it.
- Bainbridge v Firmstone: the need arose to know the weight of some boilers. it was agreed that if the boilers were taken away for weighing, they would be returned in good condition. on return they were damaged, and it was held that payment should be made for this. in the contract, then, the consideration on one side was the benefit of weighing boilers, and on the other, the entitlement to having returned them in good condition.
Rules of Consideration Cont.
Consideration must not be in the past
- Consideration must be given in return for the promise/act of other party: Roscorla v Thomas
- If it is given before then will not support the contract: Re McArdle: a son and his wife lived in his mothers house that on her death would be inherited by her son and three other children. the sons wife paid for substantial repairs and improvements to the property. the mother then made her four children sign an agreement to reimburse the d-i-l out of her estate. when she died and the children refused to pay, the d-i-l sued unsuccessfully. her consideration was past.
- Note the exception when payment is expected in commercial/professional contract: Re Caseys Patents: joint owners of a patent wrote to the claimant, agreeing to give him a one-third share of the patents in return for his services as manager of their patents. when the claimant wished to enforce this agreement they then claimed that the agreement was actually in respect of his past services and unenforcable for past consideration. he had in fact supplied no consideration following the agreement. bowen lj held that there was inevitably an implied promise that in managing the patents the claimant would be paid for his work.
- or when a service is requested and payment is implied later: Lampleigh v Braithwaite: b was accused of killing a man and asked l to get him a kings pardon. this l acheived, at considerable expense to himself and b promised to pay him £100 which he never did. l's claim that there was a contract suceeded. because the service was requested, even though no price was mentioned, it was clear that both parties would have contemplated payment later.
Rules of Consideration Cont.
It must move from the promisee
- A person cannot enforce a promise if they did not provide consideration for it: Tweedle v Atkinson: fathers of a young couple who intended to marry agreed in writing each to settle a sum of money on the couple. the young womand's father died before giving over the money and the young man sued the executors to the estate when they refused to hand over the money. even though he was name in the agreement, he failed because he had given no consideration for the agreement himself.
Rules of Consideration Cont.
Existing duties are generally not sufficient consideration
- Merely doing something that you are already bound to do can never be sufficient consideration for a fresh promise
- Existing public duty; Collins v Godefroy: a police officer was under a court order to attend and give evidence at a trial. it was important to the defendant that the officer attended so he promised to pay him a sum of money. the promise to pay was unenforcable, there was no consideration for it.
- However, where more is given than normally expected, consideration occurs: Glasbrook Bro's v Glamorgan C.C: during a strike a pit owner asked for extra protection from the police and promised a payment. when the strike was over the pit owner refused to pay, claiming that the police were in any case bound to protect his pit. his arguement failed, the police had provided more men then they would normally have done, so there was consideration for the promise.
- Existing contractual duty; Stilk v Myrick: two members of a ships crew deserted. the captain promised the remaining crew that they could share the two men's wages if they got the ship safely home. the promise was held not to be binding on the ship owner, sailors were bound by their contract to cope with the normal contingencies of the voyage, which could include these desertations, so there was no consideration for the captains promise.
- However, if party has gone beyond there contractual duty, consideration exists: Hartley v Ponsonby: here only 19 members of a 36 crew remained. promise to pay more was enforceable because high reduction in numbers made voyage more difficult
Rules of Consderation Cont.
- A very recent exception to the basic rule occurs where the party making the promise to pay extra receives an extra benefit from the other party: Williams v Roffey: roffey bro's builders sub-contracted the carpentry on a number of flats they were building to williams for £20,000. williams had under-quoted for the work and ran into financial difficulties. because there was a delay clause in roffeys, they promised to pay williams another £10,300 if he would complete the carpentry on time. when williams completed the work roffey's failed to pay extra. his claim to the money succeeded, even though williams was only doing what he was bound to do, roffey's were gaining the extra benefit of not having to pay extra for the delay clause.
- Existing contractual duty to 3rd party; note that this is good consideration: Shadwell v Shadwell: nephew proposes and is obliged to marry. uncle agrees to pay £150p.a until he earns £600p.a. nephew gets married but uncles estate refuses to pay as nephew obliged to marry after engagement. nephew succeeded because there was no consideration to fiance but was to uncle.
- Scotson v Pegg: claimants contracted with one party to deliver coal to them or to their order. the contracting party then sold the coal to the defendants and instructed the claimants to deliver the coal to a third party, the defendants. the defendants then agreed with the claimants that in consideration of the claimants delivering coal to them the defendants would unload the coal at a fixed rate per day. the defendants failed arguing that there was no consideration for the agreement with the claimants. the court rejected argument and held that the performance of a duty owed to a third party could provide consideration for a promise made by a third party.
Rules of Consideration Cont.
Consideration must be sufficient but need not be adequate cont.
- Sufficiency is used here as a legal term and means that what is promised mut be real, tangible and have some actual value. it can't be too vague: White V Bluett: a son owed his father money on a promissory note. when the father died and his executors were trying to recover the money, the son tried to claim that he was not bound to pay. he claimed an agreement with his father that the debt would be forgotten in return for the son's promise not to complain about the distribution of the fathers will. the son failed, the promise was too intangible to be consideration for the fathers promise to forgo the debt.
Part Payment of a Debt
The Rule in Pinnel's Case
- part payment of a debt doesn't discharge the full amount even if other party agree's not to sue for the full amount later, unless at the creditor's request part payment is;
- paid ealier than due date
- paid with a chattel
- paid in a different place
- paid by third party
- or promissory estoppel
- promissory estoppel is an equitable doctrine developed by Denning J in High Trees: defendants leased from claimants a block of flats in wimbledon which they sub-let to tenants. when war started, it was impossible to find tenants so the defendants were unable to pay the rent. the claimants agreed to accept half rent, which the defendants continued to pay. by the end of the war flats were all let and claimants wanted the rent returned to its former level and sued for the higher rent for the last two quarters. they succeeded but Lord Denning stated, obiter, that had they tried to sue for extra rent for the whole period of the war, they would have failed. estoppel would prevent them from going back on a promise.
- the effect of the doctrine is to prevent the claimant from going back on a promise because it would be unfair to do so
- the doctrine has been considered in other cases; Combe v Combe: a wife separated from her husband and sued him for a promise that he had quite gratuitously made to her that he would pay £2 per week. the judge at first instance noted the lack o consideration but held that following High Tree's this was irrelevant and found in the wifes favour. in the ca, lord denning apologised for any confusion he had caused in High Trees and explained that it can only be used in defence to a cause of action. Lord Birkett described estoppel as a "shield and not a sword."
- D+C Builders v Rees: builders were owed £482 for the balance of work they had completed. after several months waiting for payment, and at a point where they were in danger of going out of business, they reluctantly accepted an offer by rees to pay £300 in full satisfaction of the debt. when the builders then sued for the balance, they were successful. they were not prevented by the agreement to accept less, which in any case was extracted from them under pressure.
When Will Promissory Estoppel Apply?
- there must be an existing contractual relationship
- defendent must have acted in reliance of the promise to forego some of the debt
- pe. can be used only as a shield and not a sword; Combe v Combe
- he who comes to equity must come with clean hands; D+C Builders v Rees