What is consideration?

1
What is consideration?

• Consideration is the price paid for the
  promisors promise and is the benefit received
  under the contract.
• The promisor is the person undertaking the
  promise, while the promisee is the person who is
  receiving or the recipient of the promise.
• It may be-
• something the promisee gives the promisor or
• the carrying out of some act (an act of
  consideration may be a forbearance, deliberately
  and intentionally not doing something, e.g.
  forbearance to sue) or
• not doing something that the promisee had a legal
  right to do.

2
Rules relating to consideration

• Consideration
• is essential in every simple contract.
• should be present or future but not past.
• must move from the promisee.
• must have some value, although the court is not
  concerned with its adequacy.
• must be something more than the promise of an
  existing obligation.
• must be possible of performance.
• must be definite, legal and referable to the
  other partys promise.

3
Consideration in contracts
Formal Contracts No need for consideration as the
contract is valid because of its form (e.g.
deeds). Simple Contracts Valuable consideration
is required for the agreement to become a
contract.
4
Past, present and future

• Principles
• Consideration may be executed or executory but
  may not be past
• executed consideration the act of consideration
  has been performed in return for the promise (in
  the present)
• executory consideration the act of
  consideration is yet to occur, e.g. a promise to
  do something (in the future)
• past consideration the promise is given after
  the act of consideration
• CASE Roscorla v Thomas 1842
• CASE Anderson v Glass 1869
• CASE Lampleigh v Braithwait (1615)

5
Movement of consideration

• Principle
• Consideration must move from the promisee, but
  not necessarily to the promisor.
• CASE Dunlop Pneumatic Tyre Co Ltd v Selfridge
  Co Ltd 1915
• CASE Coulls v Bagots Executor Trustee Co Ltd
  (1967)

6
The value of consideration

• Principles
• Consideration need not be adequate.
• CASE Chappell Co Ltd v Nestle Co Ltd
  1960
• BUT consideration must be sufficient, i.e. not
• performance of a public duty or a duty imposed by
  law
• CASE Glasbrook Bros Ltd v Glamorgan County
  Council 1925
• performance of a previous contractual obligation
• CASE Stilk v Myrick 1809
• CASE Hartley v Ponsonby (1871)
• CASE Williams v Roffey Bros Nicholls
  (Contractors) Ltd 1990

7
The value of consideration cont

• consideration must be sufficient, cont
• not illusory (Consideration must be something of
  value in the eyes of the law. An agreement will
  not be enforced if the consideration is so vague
  as to be illusory.)
• CASE Eastwood v Kenyon (1840)
• not past
• part-payment of an existing debt
• CASE Foakes v Beer (1884)

8
Promissory estoppel
Principle A party may be prevented from
insisting on his or her strict rights if, having
regard to the dealings that have taken place
between the parties, it would be inequitable to
allow such insistence because the promisee has
altered his or her position in reliance on the
promise. CASE Central London Property Trust v
High Trees House Ltd 1947 CASE Waltons Stores
(Interstate) Ltd v Maher (1988)
9
Elements of estoppel

1. There must be a clear and unambiguous assumption
   or expectation on the part of party A which was
   encouraged or induced by party B
2. Party A acts in reliance upon the assumption or
   expectation
3. Party A will suffer detriment if the assumption
   or expectation goes unfulfilled
4. Party B knows party A will suffer detriment if
   the assumption or expectation is unfulfilled
5. Party B fails to avoid that detriment by
   fulfilling the assumption or expectation or
   otherwise