Consideration

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Consideration

Terminology- 'a valuable consideration in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other.'- Lush in Currie v Misa.  Shadwell v Shadwell 1860, Dickinson v Abel 1969 and Pitts v Jones 2007.

General principles- a) consideration must be causally related to the promise- Wigan v English and Scottish Law Life Assurance Association.

b) consideration must not be past- Roscorla v Thomas 1842, Re McArdle 1951, Lampleigh v Braithwaite 1615, Re Caseys Patents 1892 and Pao On v Lau Yiu Long 1980- 'the act must have been done at the promisors request' Scarman. 

c) consideration must move from the promisee- Tweddle v Atkinson 1861, Dunlop v Selfridge 1915 and Contracts (Rights of Third Parties) Act 1999- created statutory exception to the law of privity, 3rd party beneficiary can sue on a contract without being  a party. 

d) consideration need not be adequate- Thomas v Thomas 1842, Chappel v Nestle 1960 and Esso Petroleum v Commissioners of Customs and Excise.

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Consideration sufficiency

4) the consideration must be sufficient- it is insufficient in the following circumstances- 

a) where the consideration consists of a promise by the promisee to do what he is already obliged to do under a duty imposed by the general law or the performance of such duty- Collins v Godefroy 1831, Glasbrook Bros v Glamorgan CC 1923, and Ward v Byham 1956.

b) where the consideration consists of a promise by the promisee to perform a duty which he already owes under a contract with a third party, or the performance of such a duty- Shadwell v Shadwell 1860, Blackpool and Flyde Aeroclub v Blackpool BC 1990, Scotson v Pegg 1861 and The Eurymedon 1975. 

c) where the consideration consists of a promise by the promisee to perform a duty which he already owes under a contract with the promisor or the performance of such a duty- Stilk v Myrick 1809, Hartley v Ponsonby 1857, Pinnels Case 1602, Foakes v Beer 1884, Williams and Roffey v Nicholls 1991.- this case gives an example of when it will still be binding. It does not affect Pinnels rule. 

Re Selectmove 1995 and Collier v P and MJ Wright Holding Ltd 2007

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Waiver, variation and estoppel

The parties to a contract may at any time vary its terms, but such variation must in general have the characteristics of a contract, that is to say there must be an agreement supported by consideration. To this general rule there are exceptions with contraversial scope. First a party may effectively waive a right which he has under a contract even if there is no consideration for the waiver. Secondly a party who has indicated that he will not enforce his rights under a contract may in some circumstances be estopped from doing so. 

This area of law has been effected by Collier v P and MJ Wright 2007 and all earlier accounts in the books should be read subject to the decision of the CoA in that case. 

a) estoppel at common law- Jordan v Money 1854.

b) estoppel at equity- i) statement of the doctrine- Central London Property Trust v High Trees House 1947, Hughes v Metropolitan Railway 1877 and Combe v Combe 1951. (quotes from these cases are on the sheet) 

ii) Equitable estoppel does not create a right of action or does it? - the orthodox opinion is that estoppel can only be used as a defence to a claim upon breach of contract and cannot be used to create a cause in its own right.

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Estoppel

It is 'shield not a sword' - Combe v Combe. There is support in the US and Canada that it can create a cause of action in some circumstances. In the Baird Textile case the CoA regarded itself as precluded by binding English authorities from following the American and Austrailian cases, but the matter is open to be considered by the SC. Combe v Combe 1951, Waltons Stores v Maher 1988 and Baird Textile Holdings v Marks and Spencer 2001. 

iii) equitable estoppel may be merely suspensory- Tool Metal Manufacturing Co v Tungsten Electric Co 1955.

iv) the party claiming the benefit of equitable estopple must have behaved equitably- D and C Builders v Rees 1966. 

v) does there have to be detrimental reliance by the promisee? WJ Alan v El Nasr Export and Import Co 1972, The Post Chaser 1981 and Collier v P and MJ Wright 2007. Collier Arden LJ good judgement,

vi) representation will be unambiguous- Woodhouse AC Isreal Cocoa v Nigerian Produce Marketing 1972. 

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Intention to create legal relations

1) express terms- Rose and Frank Co v JR Crompton 1925 and Helibut, Symons and Co v Buckleton 1913.

2) ex gratia payments- Edwards v Skyways ltd 1964

3) domestic arrangements- Balfour v Balfour 1919, Merritt v Merritt 1970, Spellman v Spellman 1961, Jones v Padavatton 1969 and Simpkins v Pays 1955 and Zuckerman 1980.

4) letters of intent and letters of comfort- Kleinwort Benson Ltd v Malaysian Mining Corp 1989

5) agreements to agree, agreements to negotiate and similar devices- Walford v Miles 1992, and Pitt v PHH Asset Management 1993. 

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Privity

Statement and critique of the doctrine- Tweddle v Atkinson 1861, Dunlop v Selfridge 1915, Trident General Insurance v McNeice Bros 1988 and the Mahkutai 1996.

The Contracts (Rights of Third Parties) Act 1999- 1999 act does not abolish the doctrine of privity of contract, but creates very wide general exeception to it by providing that a third party can sue upon a contract if the contract purports to confer a benefit on him. Cases such as Tweddle v Atkinson would now be decided differently, and other cases eg Beswick v Beswick would be decided the same but for different reasons. There are few reported cases on the interpretation of the act. This is partly a consequence to the fact that s1(2) provides the parties can contract to say that it is not intended to benefit a third party. Clauses like these are often in commercial contracts. Nisshin Shipping Co v Cleaves and Co 2003. 

Action by the promisee- Beswick v Beswick 1966, Lloyds v Harper 1880, Jackson v Horizon Holidays 1975, Linden Gardens Trust v Lenesta Sludge Disposals, St Martins Property Corp v Sir Robert McAlpine and Sons 1993 and Darlington BC v Wiltshier Northern 1995. 

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