Consideration

• Maxim 1:

  • Rule: Consideration need not to be adequate but sufficient
  • Cases: (Thomas v Thomas)
  • Explanation: Enforceable contracts require a transfer of something real and valuable between parties
• Maxim 2:

  • Rule: Past consideration is not good consideration
  • Cases: (Re McArdle) and (Lampleigh v Braithwait)
  • Explanation: Courts do not recognise a deed already done or a good provided at the time of the agreement is made as consideration because something that has already passed cannot form part of a new agreement
  • (Lampleigh v Braithwait) = Exception. Implied promise to pay exists for of a new agreement.
• Maxim 3:

  Rule: Consideration must move from the promisee

  Cases: (Tweddle v Atkinson)

  Explanation: A person cannot sue or be sued under a contract unless they have provided consideration for it.
• Maxim 4:

  Rule: Performing an existing duty cannot be the consideration for a new contract

  Consideration cannot take the form of something a person is already obligated to do. Extra element like additional benefit required for new payment.
• Maxim 4: Other three ways

  1. Public duty = Duty imposed under a public duty to act. EG police officer doing public duty
  2. Duty imposed under an existing contract = EG Contract of employment and doing one's job
  3. Promise to make payment on an existing debt = Repaying a loan (Collins v Godefroy) and (Glasbrook bros)
• Consideration:

  • Definition = Something of value exchanged within a contract
  • Requirement = Both parties must provide consideration for a legally binding contract
  • Case: (Currie v Misa)
• Evaluation for consideration - Intro

  The law on consideration is outdated and an had had little reform. Exception of third party rights. No significant review of consideration law since 1937. Law commission proposed abandoning consideration for gifts in court.

  Minimal changes except for third party rights (contracts/Rights of Third parties) Act 1999
• Point 1: Sufficiency

  Focus on bargains, not gifts. Courts don't like to enforce gifts to avoid claims. Questionable decisions regarding the value of consideration (Chappell v Nestle) Difficulty in distinguishing between value, gifts and transactions.

  Could align with Freedom of Contract. However risks increasing fraud and coercion. Sufficiency in consideration raises questions about the differentiation between transactions and gifts. Potential implications for fraud and coercion
• Point 2: Past consideration

  Past consideration is generally not accepted to prevent dubious claims, but exceptions exist blurring lines between favours and contractual obligations.

  Past conduct generally not valid for consideration (Re McArdle) justification. Avoiding dubious claims, reflecting freedom of contract.
• Point 3: Performing an existing duty

  The law establishes that no new consideration is offered for actions already under contractual duty.

  However, renegotiations are allowed if there is additional benefit, aligning with freedom of contract

  (Williams v Roffrey) Renegotiation for additional payment was allowed. (Stilk v Myrick) established the existing duty rule
• Performing an existing duty cannot be the consideration for a new contract

  • Public duty - (Collins v Godefroy)
  • A duty imposed under an existing contract - (Stilk v Myrick)
  • A promise to make payment on an existing debt - (Glasbrook bros)