Consideration

• Consideration is concerned with the bargain of the contract. A contract is based on the exchange of promises, each party must be a promisee or promiser. They much each recieve a benefit and suffer a detriment. This benefit or detriment is referred to as consideration.
• Rules of consideration

  1. consideration need not be adequate but must be sufficient
  2. past consideration is not good consideration
  3. Consideration must move from the promise
  4. Performing an existing duty cannot be the consideration for a new contract
  5. A promise to accept part payment of pre existing debt in place of whole debt is not consideration
• RULE 1 - CONSIDERATION NEED NOT BE ADEQUATE JUST SUFFICIENT

  Adequacy is that the parties themselves agree the value of things exchanged is acceptable. Supports the concept of freedom of contract

  Thomas v Thomas - LEGAL PRINCIPLE - consideration doesn't have to be of equal value

  Chappell v Nestle Co Ltd - LEGAL PRINCIPLE - There is consideration even if the exchanged item is of nominal value
• RULE 1 - CONSIDERATION NEED NOT BE ADEQUATE JUST SUFFICIENT

  sufficiency means the consideration must be real and have some economic value not emotional or sentimental. Real means the consideration must exist. Consideration must be definite.

  These two cases show conflicting decisions

  White v Bluett - LEGAL PRINCIPLE - Normal love and affection is not consideration as it carries not real value

  Ward v Byham - LEGAL PRINCIPLE - There can be consideration in social situations if the promise carries value
• RULE 2 - PAST CONSIDERATION IS NO CONSIDERATION

  • This means consideration has no value where it has already been done at the time the agreement is made.
  • Thing of value being offered cannot be completed prior to contract negotiations or already taken place.
  • Re McArdle - Claimant made repairs to a bungalow and when her father in laws children inherited it they promised to pay her for the repairs but there was no consideration as the repairs took place in the past
• RULE 2 - PAST CONSIDERATION IS NO CONSIDERATION

  Exception - An act done before can sometimes be consideration for promise

  • the parties must've understood the act was to be remunerated
  • must've understood act was to be rewarded expressly or impliedly.
  • Lampleigh v Braithwait - B to be sentenced for murder and hanged. L asked lawyer to get him royal pardon, which he did and praised to give him 100. He never did. LEGAL PRINCIPLE- as lawyer expected payment as it was requested by the d.
  • Re Casey's Patents - can be past consideration where action requested and both patios expected benefit
• RULE 3 - CONSIDERATION MUST MOVE FROM PROMISE

  Person cannot sue or be sued under a contract unless they provided consideration for it

  Tweddle V Atkinson - LEGAL PRINCIPLE - third parties to a contract cannot provide consideration and therefore cannot sue for breach of contract
• RULE 4 - PERFORMING PRE EXISTING DUTY CANT BE CONSIDERATION

  1. A duty imposed under a public duty to act, such as the police doing what they are required to

  Collins v Godefroy - police offer promise payment to give evidence in court. LEGAL PRINCIPLE - Police officer was under a pre - existing duty to provide evidence in court there was no consideration and therefore coudn't claim additional payment
• RULE 4 - PERFORMING A PRE EXISTING DUTY CANNOT BE CONSIDERATION

  2. A duty imposed under an existing contract with the promisor

  Stilk v Myrick - 3 sailors refused to work the journey home so the others tried to claim additional payment. LEGAL PRINCIPLE - Making boat safe and seaworthy part of pre existing contract

  Glasbrook Bros V Glamorgan County - police provided protection at minors strike per request of mine owner. They had to pay extra as the police force provided extra protection.

  Hartley v Ponsonby - 1/2 crew deserted - there was consideration, entitled to extra pay.
• RULE 5 - PROMISE TO ACCEPT PART PAYMENT IS NOT CONSIDERATION

  Rule in Pinnel's case:

  It is not valid consideration unless

  1. before the due date (avoids interest )
  2. with a chattel
  3. to a different destination

  Foakes v Beer - Even though they agreed to not do interest F was still liable to pay it. It was not good consideration.
• PRIVITY OF CONTRACT

  it means only those who are parties to a contract are bound by it and can benefit from it.

  Dunlop Pneumatic Tyre Co Ltd v Selfridge - Tyre manufacturer (D) agreed with dealer to not sell below RRP, told them to do the same with their retailers. If they're sold below RRP they're required to give Dunlop £5. Selfridges sometimes sold below RRP. Dunlop couldn't claim as they became 3rd party.
• PRIVITY AND CONSIDERATION

  Rule of privity is based on the rule that consideration must move from the promisee - Tweedle v Atkinson

  This rule can cause injustice so courts avoid using it - Jackson v Horizon Holidays. - Jackson booked holiday for him and family which was disappointing, he sued but courts decided its unfair to limit damages to only Mr Jackson.
• Exceptions when rule of privity doesn't apply

  AGENCY - An agency arise when the agent is authorised to make a contract on behalf of another person, the principal. The principal is bound by the terms of the contract even though they didn't make it.

  Collateral contracts - court may be able to avoid rule by finding 2nd contract. Shanklin Pier Ltd v Detel Products Ltd - C's are owners of a pier, entered contract with contractors to have pier painte, after several months paint flaked off. C brought claim against Detel - manufacturers
• Contracts (rights of third parties) Act 1999

  The act allows 3rd parties to enforce a contract if they are

  1. Identified by name
  2. Member of a class
  3. Match the description