Flashcards
Consideration
Cards in this deck (14)
- 1Intention to create legal relations- commercial agreements - there is intention once a promise has been made, only rebutted when clear words to the opposite are used or extreme uncertainty of terms (Edward v Skyways Ltd);
- domestic - no intention (Balfour v Balfour) unless reliance on the promise and certainty of terms (Parker v Clark). - 2Economic duressPao On v Lau Yiu Long - For a contract to be voidable for economic duress:
- there must be a threat or pressure which is illegitimate and;
- that pressure or threat must amount to a 'coercion of will that vitiates consent'.
Duress renders a promise voidable and rescission possible if the victim protests imminently and avoids affirmation, i.e. does not wait too long to claim extra money paid. - 3DeedIf the promise was contained in a deed, then it is enforceable and there will be no need to show consideration.
- 4Consideration (definition and types)An act or a promise given in exchange for the promise. Consideration must mover from the promisee.
- formation (whatever is asked for and given in exchange) or;
- alteration (promises to pay or do more or accept less) one. - 5Formation promises (bilateral or unilateral)- Bilateral - each party's promise is the consideration to support the promise given by the other. They are bound on the exchange of promises.
- Unilateral - consideration is the performance of the requested act for earning the reward or promise. Enforced only after the act is completed. - 6Adequacy and sufficiency- need not be adequate (Chappell & Co v Nestle - chocolate wrappers as part payment for a record)
- must be sufficient = some economic value (White v Bluett - refraining from doing something that have no right to do anyway)
or Thomas v Thomas for both - 7Past considerationGP - Past C is not god C (Re McArdle - improvements carried out before promise for payment).
- UNLESS A, without a prior, express promise to pay, requests that B performs services for him and, on completion, promises to reward B (Lampleigh v Brathwait; Pao On v Lau Yiu Long - D requested P not to sell 60% shares and offered protection to P after agreement D promised to indemnify P for losses) - 8Duty imposed by lawGP - duty imposed by law no good C (Collins v Godefroy - testifying in court)
- UNLESS going beyond that duty giving practical benefit to the promisor (Ward v Byham - not only maintained, but also a 'well looked after and happy child'). - 9Existing contractual dutyGP - already owed to the same promisor not sufficient C (Stilk v Myrick - sailors did not do more than contracted + extortion)
Exceptions:
- performance of existing contractual duty owed to a TP - (New Zealand Shipping Co. Ltd);
- new/additional consideration (Hartley v Possobny - legal - shipping crew beyond contract duties); (Williams v Roffey Bros - practical benefit + economic duress - no penalties for late submission to TP if subcontractor finishes on time). - 10Discharging of debtGP: Part payment of debts/promise to accept payment of less than agreed is not good C - Pinnel’s Case, affirmed in Foakes v Beer; Re Selectmove Ltd)
Exceptions:
- new/additional consideration
- promissory estoppel - 11Discharging of debt (new/additional consideration)(1) Must be requested by the creditor (Pinnel's Case):
- less payment before the due date;
- with a chattel e.g. object instead of money even if the chattel's worth is less than what is owed;
- to a different destination - Preston instead of Manchester.
(2) part payment made by third party (TP) (Welby v Drake);
(3) the promise is part of a composite agreement with the other creditors (Good v Cheesman). - 12Discharging of debt (promissory estoppel)An equitable doctrine designed to prevent the promisor going back on their promise where this would be inequitable (unfair) because the promisee has relied on it. - (High Trees obiter Denning - landlord going back on his promise to accept less rent during the WW II)
- 13Promissory Estoppel (requirements - High Trees)(1) A pre-existing contract or legal obligation which is then modified;
(2) There must be a clear and unambiguous promise that existing legal rights will not be enforced;
(3) The promise must be intended to be binding, relied on and acted upon;
(4) The promisor must have taken an action to go back on their promise;
(5) It must be inequitable to allow him to do so (D & C Builders v Rees not inequitable to go back on a promise made under duress). - 14Promissory Estoppel (limitations)- Operates only in the context of alteration promises;
- Suspends, does not extinguish legal rights;
- It is possible to go back to the original position with reasonable notice given and notice period expired (Tool Metal Manufacturing Co. Ltd v Tungsten Electric Co. Ltd);
- Periodic payments made while the estoppel operated, will be extinguished, no requirement to pay the balance;
- Equitable principles are discretionary and clean hands are required;
- Shield not a sword (Combe v Combe);
Information
- Description
- Principles of whether the promise is enforceable with focus on consideration.
- Created by
- pavlina.hunt
- Views
- 66
- Tags
- Rating