6 - consideration

• • consideration is an element about identifying an enforceable promise in the contract and the way it provides a form of validation in terms of legally binding obligations
  • a contract cannot be in place without consideration
• consideration is about the purpose and motivation behind someone entering a contract
• the bargain theory

  • a contract can be deemed mutually advantageous for both parties
  • consideration can be found in the course of identifying the bargain inherent in the formation of a contract
  • Bargain as a form of an exchange that is motivated by self interest or something that both parties may feel is of interest to them to get an advantage of
• defining consideration

  • Currie v Misa - "some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other'
  • EG one party gain something other party looses something
• sufficiency or adequacy

  • Chappel v Nestle - CD by chappel could be bought in exchange for 3 nestle crunch bar wrappers and 6 shillings, Chappel making no money on royalties as being paid in wrappers, nestle argued they provided sufficient consideration. Held, good enough in the courts eyes
  • consideration needs to be sufficient, not adequate
• forbearance

  • Hamer v Sidway - promised money by uncle to give up smoking, alcohol and gambling, nephew did it, uncle died and executor of his estate refused to give nephew money as there was no consideration. Held, since the nephew was free to smoke, drink and gamble, that was good enough to be consideration
  • a promise to do a certain thing is good consideration
• forbearance

  • White v Bluett - father gave £100 to son on the condition the son would stop nagging the father on how he would deal with his estate, which was registered in his will as a loan, father died, son refused to pay back the loan as there was good consideration (he stayed quiet). Held, there was no good consideration because the estate belonged to the father so the son had no right to complain about the estate of another
  • Forbearance has to be some sort of action, something related to the contract to be good consideration
• forbearance

  • Pitt v PHH Asset management - P wanted to buy a house from the Estate agent (EA), EA accepted then rescinded days later as someone else made a higher offer, which also got rescinded for an even higher offer, P found shady deals within EA and so made a deal with P, EA wouldn't sell the house to P or anyone, EA then went on to sell the house, breaking the locking agreement. Held, there was an agreement as the good consideration was P having a right to bring action to the EA shady deals in exchange for the promise of not selling the house
• Eastwood v Kenyon

  • E had a friend who died, E raised friend's daughter with friends estate, daughter said when she comes of age, she would repay him, E used the entire estate and used some of his own money to raise the daughter. Daughter married K, who repeated the promise made by daughter, when E asked for compensation K refused. Held, whatever money was provided, the daughter never asked for so it was past consideration
  • past consideration is not good consideration
• • Past consideration is not good consideration
  • Past consideration is the provision of a promise in exchange for an action that happened in the past and no one asked the party who conducted the action to do so in the first place
• past consideration bad

  • Re McArdle - McArdle died, 5 sons with a poor house and no money, the wife of a son renovated the house, who also got the sons together to sign an agreement that suggested upon the mothers death, there will be a repayment in equal shares for the amount of money spent on redecoration, sons agreed, mum died and house going to be sold to repay wife, questioned whether the promise to repay was good consideration. Held, not good consideration as no one asked her to renovate in the first place
• past consideration good if there is an indication that any action done in the past was made in an assumption that there would be something in return

  • Lampleig v Braithwaite - B killed a man and asked L to get the king to pardon him, he was successful, when b got out of jail he promised to pay L money, he didn't pay. Question as to whether the promise was actionable. Held, it was past consideration but it made extreme sense that L wouldn't do that if there was no monetary reward
• Past consideration only good when

  • the act was done at the promisors request
  • the parties must have understood that act was being paid for
  • payment or benefit must have been legally enforceable had it been promised in advance
• existing contractual duty owed to third party

  • Pao on v Lau Yiu Long - authority for the proposition that when you promise to carry out an existing contractual obligation to somebody else, that can be good consideration for a third party to pass to you
• going beyond duty

  • having a legal duty to do something is not good consideration
  • Ward v Byham - arrangement about care of a child post breakup, promise to pay certain amount every month for the child, he didnt pay, he said no consideration as he is legally obliged to look after the child anyway, wording used was 'give you the money to care for the child and make him happy'. Held, extra obligation to make the child happy means promising more than legally obliged to do so good consideration
• consideration must move from the promisee

  • Tweddle v Atkinson - couple gets married and the dads agree to put some money into the wedding, they marry but both dads die, one provides the money, other dies before that. executor of the estate said contract not valid and refuses to pay, son sues him. Held, the contract was made between the two dads, there was never a promise made to the couple so there was no consideration between them
• collateral damage

  • Shanklin pier v Detel products - pier needed repairing, owner gets a contractor to provide paint, approached by detel who convince them to use their paint saying its the best paint ever, the paint sucks and they sue. Held, there was never a contract between S and D as D is a third party to the transaction