OCR Law Synoptic paper on contract law

Consideration is the thing of value that each side gives to the contract.

It may be money or good, but it could be another obligation such as an undertaking not to do something.

this is shown in Currie V Misa (1875) The judge in this case said that consideration can either be a positive (a promise to do or give something) ir a negative (a promise to give up a right or notto do something)

But consideration is not paying for something. when a party pays for goods or services they are just performing their side of the contract. the consideration is the promise that they would pay.

Consideration Must be sufficient, but it need not be adequate!

therefore there is no requirement that the consideration is of equal value on each side, it must be of some nominal value however.

this is shown in the case of White V Bluett (1854)

In that case, Bluett, when sued by his father’s executors for an outstanding debt to his father, claimed that his father had promised to discharge him from it in return for him stopping complaining about property distribution. The Court held that thestopping of complaints was of no economic value; thus, Bluett’s father had received no real consideration for the promise, and the debt was unenforceable at law

However a similar case of Hamer V Sidway (1891) found that a sons promise of giving up drinking, gambling and spitting was considered good consideration for the fathers promise of money. This is because the sons promise was of economic value to the father and was considered sufficient consideration to the fathers promise. but this case is from USA so is only Persuasive

Another case which highlights further the fact that consideration need not be equal value but sufficient, is Chappel V Nestle. Nestle offered a record to customers who sent a certain number of chocolate bar wrappers. Although the wrappers were simply thrown away, it was sufficient consideration to support the agreement. The wrappers were worth next to nothing but were found to be good consideration to the contractual agreement. this is because consideration needs to be sufficient not adequate.

this is further shown in Midland Bank V Green (1981) this case involved a husband who conveyed his house to his wife for £500 even though it was worth £40000 to avoid an option he had given his son to buy the farm for £1 because the father and son had since fallen out. held the £500 was not adequate but was sufficient which amounted to good consideration.

this is doing what you already have to do.

it was shown in Williams V Williams (1956)

this case involved the divorce of a husband and wife. the husband promised to pay her an allowance if she supported and maintained herself, did not run up any debts against his name and she did not sue him. after a yr, he stopped paying and she sued. Held the first point of maintaining herself was good consideration, the second point was also good consideration becauase she had no right to get credit under his name. but the third point was not good consideration as she had a statutory right to sue and could not make a contract to lose that right

Ward V byham showed similar. in this case, the plaintiff lived with the defendant and in 1950 had his child. in 1954 the defendant chucked the plaintiff out and paid a neighbour £1 per week to look after the child. a yr later the plaintiff had found work and asked for her child back and £1 per week to look after it. the defendant agreed as the plaintiff promised it would be well looked after and happy. the plaintiff married and the defendant stopped paying. plaintiff sued and won, her consideration was doing what she was already doing but it still benefited the defendant to know the child was being looked after.

Stilk, a seaman, agreed with Myrick to sail his boat to the Baltic seaand back for £5 per month. During the voyage, two men deserted. Myrick promised he would increase Stilk's wages if Stilk agreed to honour his contract in light of the desertions. Stilk agreed and on return to port, Myrick refused to pay him the extra wages. It was held that Myrick's fresh promise was not enforceable as the consideration Stilk had provided for it, the performance of a duty he already owed to Myrick under contract, was not good consideration for Myrick's promise to increase his wages.

Initially, there were only two exceptions to this rule:

1. The promisee has done, or has promised to do, more than he was obliged to do under his contract (see Hanson v Royden);
2. Before the fresh promise was made, circumstances had arisen which would have entitled the promisee to refuse to carry out his obligations under his contract (see Hartley v Ponsonby).

Hartley VPonsoby shows this also. a crew of sailors refused to complete a voyage because their conditions had been worsened by desertions; in both cases the captains offered extra money if the crew carried on working; in both cases the captains refused to pay at the end of the voyage; in both cases the sailors sued for the additional wages. The difference is that in this case there were substantial desertions: only five were left of the orgininal complement of 36. In Stilk two deserted out of eleven.

The sailors won their case in Hartley, where they had failed in Stilk. Why? In both cases the sailors had a contractual obligation to work the ship back to port, so in neither case was there any fresh consideration. The difference can be accounted for like this. In Stilk the change in the sailors' conditions was not dire: the crew should have been able to cope with two desertions. There being no fresh consideration, the captain's agreement to increase wages was not binding. In Hartley, there were so many desertions that the contracted parties were no longer working in the same circumstances as when the contract was formed. Hence there were entitled to consider it discharged. This makes the captain's offer of increased wages, and acceptance by the sailors, an entirely new contract.

its also shown in Williams V Roffey.

Roffey Brothers entered into a contract to refurbish a block of flats for a fixed price of £20,000. They sub-contracted carpentry work to Williams. It became apparent that Williams was threatened by financial difficulties and would not be able to complete his work on time. This would have breached a term in the main contract, incurring a penalty. Roffey Brothers offered to pay Williams an additional £575 for each flat completed. Williams continued to work on this basis, but soon it became apparent that Roffey Brothers were not going to pay the additional money. He ceased work and sued Roffey Brothers for the extra money, for the eight flats he had completed after the promise of additional payment.

The Court of Appeal held that Roffey Brothers must pay Williams the extra money, as they had enjoyed practical benefits from the promise they had made to Williams. The benefits they received from it include: Having the work completed on time, not having to spend money and time seeking another carpenter and not having to pay the penalty.

In the circumstances, these benefits were sufficient to provide consideration for the promise made to Williams of additional payment.

It now seems that the performance of an existing duty may constitute consideration for a new promise, in the circumstances where no duress or fraud are found and where the practical benefits are to the promisor.

This was shown in Shadwell V Shadwell. The Plaintiff was engaged to be married, this was a legally enforceable contract. the defendant promised to pay him £150 a yr if he got married. he sought to enforce this promise and was able to do so even though he was obliged to marry anyway.

this is further shown in the case of Pau on V Lau Yiu Long. Held the sellers of the buildings obligation was past consideration to the buyers of the building. but the exceptions of past consideration apply in this case. one obligation can be god consideration to 2 other people. also economic duress does not apply where there is an alternative course of action. the buyers could have sued for specific performance of the original contract.

this is also shown in n.z shipping v satterthwaite. where an exclusion clause that ifunloaders damaged the goods an action had to be taken within a year. the stevedores damaged the goods but 3 yrs later the shippers sued and the stevedores relied on the exclusion clause but the shipper argued that the stevedores gave no consideration to the clause. HELD the stevedores gave good consideration to the contract by agreeing to unload the goods at the port. even though they were already bound to do this, it didnt stop it being good consideration.

this is also shown in the case of Scotson V pegg.plaintiff had an obligation to a third party to deliver coal to the defendant