4. Consideration

• Currie v Misa (the definition of consideration)

  A valuable consideration, in the sense of law, may consist either in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other.
• What are the 2 types of consideration?

  1. Executed consideration: When one of the parties has completed all that is required while liability is outstanding on the other party.
  2. Executory consideration: When a promise is made for a promise.
• The rules of consideration

  1. Consideration must be sufficient but need not be adequate.
  2. Consideration must not be passed.
  3. Consideration must move from the promise.
  4. An existing public duty will not amount to valid consideration.
  5. And existing contractual duty will not amount to valid consideration.
  6. Hard payment of debt is not valid consideration for a promise to forgoe the balance.
• Chapple v Nestle co (the consideration must be sufficient, but need not be adequate.)

  The chocolate wrappers was a method of promotion and were held to be good sufficient consideration.
• Lampleigh v Braithwaite (The consideration must not be passed)

  Although the price was not mentioned at the time of the request, it was clear that both parties contemplate a apayment. Therefore such a contemplation of payment can amount to be valid consideration.
• The consideration must not be passed:

  In order for there to be valid consideration a promise of consideration must be after the consideration. This is because consideration given before the gareement will be past consideration and only be regarded as an expression of gratitude and not a binding contract.
• Tweedle v Ankitson (the consideration must move from the promisee)

  2 Fathers of an engaged couple about to be married each agreed to pay the couple a sum of money. Woman's father died before making the paymment and her husband sued the estate. As he was not party to the contract he was not succesful.
• Contracts (rights of third parties) Act 1999

  The main aim of the act is to benefit a person who is not a party to the contract unless the contract states that it was not intended to be enforceable to the third party.
• Collins v Godefroy (an existing public duty will not amount to valid consideration)

  A policeman was summoned to attend court. The court held that the police was excercizing his existing public duty. There was no consideration and the agreement was not contractual.
• Glasbrook bros v Glamorgan county council (an existing public duty will not amount to valid consideration)

  A pit owner asked for extra police protection and promised an extra payment in return. After the strike he claimed that there were only carrying out their degal duty and thereby there was no consideration for the promise.
• An existing contractual duty will not amount to valid consideration

  1. Stilk v Myrick: 2 sailors of a 11 man crew deserted the ship. Captain promised salary would be paid in extra if they sailed safely home. Court held that they were anyways under existing duty, no extra consideration.
  2. Hartley v Ponsonby: 19 men of a 36 man crew remained. Captain promised more money will be paid if they sailed safely home. Court held that crew had given consideration as the reduction in the number of members had made the voyage dangerous.
• William v Roffer brothers and nicholls contractors ltd

  The defendants were building flats where they had subcontracted the carpenters. Claimants underquoted and ran into financial difficulty. If the work was not done they had to pay a penalty. The defendants promised an extra payment. Work was completed on the day but the defendants refused to pay. Court held that the defendants gained a practical benefit by not having to pay the penalty. Therefore defendants were liable to pay the extra payment to the claimant.
• Part payment of debt

  1. Pinnel: Stated that payment of smaller sum than debt itself on the date due can never relive the liability of the debtor to pay the whole debt.
  2. Foakes v Beer: dr foakes owed mrs beer 2090 pounds which was agreed o be paid in instalments. Mrs beer demanded interest on the payment. Dr foakes required to pay the full payment which includes interest and part payments that is allowed.
  3. D and C builders v Rees: Builders were owed 482. Were paid 300 in final and was held that part is not valid as the balance of 182 needs to be paid.
• Exceptions for part payments of debt

  1. Accord and satisfaction: Can be valid consideration provided once both parties agreed to release each other from the obligations under the original contract.
• Doctrine of promissory estoppel

  Part payment is valid if these 4 elements:

  1. presence of an existing contractual relationship
  2. Claimant must have waved some rights under contract
  3. Defendant need to rely on the rights that are waived
  4. Defendant relied on the promise to forgoe some debts.