Consideration

Front 1

Definition of Consideration

Lord Pollock in Pnuematic Tyre Co Ltd v Selfridge and Co Ltd (1915)

Back 1

"An act or forbearance of one party, or a promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value in enforceable"

Front 2

Types of Consideration

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Executory Consideration: Where contracting parties make promises to each other to perform something in the future after the contract has been formed

Executed Consideration: At the time of formation of the contract, the consideration has already been performed

Front 3

Eastwood v Kenyon (1840)

Roscorla v Thomas (1842)

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Consideration cannot be past

Father died leaving his daughter in the care of a guardian. The daughter's subsequent husband promised he would pay off the debt incurred through raising Sarah. Held: That is was not good consideration to raise Sarah as it was in the past.

Bought a horse then after the purchase was told it was sound. Turned out to be vicious but no consideration was given for that promise.

Front 4

Lampleigh v Brathwait (1615)

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Exceptions to the past consideration rule

Killed a man and asked L to get a pardon for his actions. When L expended much effort to B then said he would give him £100.

Held: At the time of the request, there was an implied understanding that payment would be made. The later promise was simply an express confirmation to fix the reward amount.

Front 5

Re Casey's Patents (1892)

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Exceptions to the Past Consideration Rule

More likely that implied payment would be due in a commercial context. Owners of the patent rights promised their manager a share in those rights in consideration for his previous services.

Front 6

Three Conditions for an Exception to the Past Consideration Rule

Lord Scarman in Pao On v Lau Yiu Long (1980)

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1. Act must have been done at the promisor's request
2. Parties must have understood the act was to be rewarded
3. The payment must be legally enforceable had it been promised in advance

Front 7

Dunlop Pnuematic Tyre Co Ltd v Selfridge and Co Ltd (1915)

Tweddle v Atkinson (1861)

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Consideration Must Move from the Promisee

A party who has not provided consideration may not bring an action to enforce a contract.

Doctrine of Privity: Only a person who is party to a contract may sue or be sued on that contract

Front 8

Chappell & Co v Nestle Co Ltd (1960)

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Consideration Need not be Adequate

Wrappers and money for a record case. Held: The wrappers could amount to part of the consideration even though they were of no further value once received.

Front 9

White v Bluett (1853)

Hamer v Sidway (1891)

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Consideration Must be Sufficient

Father said he's discharge his son from his debt if he stopped complaining about distribution of his houses. Wasn't sufficient

Give his nephew £1000 to stop drinking and gambling. Was sufficient as his nephew regularly drank and gambled.

Front 10

Arrale v Constain Civil Engineering Ltd (1976)

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Where an individual promises to resist a course of action which he never intended to pursue, no consideration will stem from the promise to forbear

Front 11

Stilk v Myrick (1809)

Hartley v Ponsonby (1857)

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Existing Obligations within a Contract

Captain of a ship promised his crew to pay extra wages if they picked up work from 2 deserters. Held: They would've had to do the work anyway and as such was not sufficient consideration

Most of the fisherman deserted and as such the job they contracted the remaining to do changed significantly so could amount to consideration

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Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991)

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Employed a contracted who had financial difficulties. When he couldn't finish the work they offered him more money to finish it on time and do the work in a different manner.

Was held that Roffey gained enough benefits from the new work arrangements and by not breaching their other contract that it was enough consideration

Front 13

Collins v Godefroy (1831)

England v Davidson (1840)

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Obligations under a Public Duty

Collins subpoenaed and then tried to charge for appearing as a witness. Held: He was under a public duty and as such was no consideration

D offered reward for info on a criminal. P (police officer) gave him the information and tried to claim the reward. Held: P was not under a public duty as it was not his job to supply individuals with information.

Front 14

Harris v Sheffield Utd Fc (1988)

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Obligations Under a Public Duty

Football club needed more policeman to avoid public harm at their game requiring a lot of officer overtime. Was held that the policeman's attendance was sufficient consideration as they were not under a public duty to attend the game as overtime

Front 15

Scottson v Pegg (1861)

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Existing Obligations to a Third Party

Coal was sent by X and Pegg paid to unload it. Pegg told by X to deliver to Scottson. Scottson separately agreed to give a discount to Pegg if he delivered to them. Found that there was consideration for Scottson and Pegg's contract as it was immaterial he was already contracted to do it.

Front 16

Lord Wilberforce in New Zealand Shipping Co v AM Satterthwaite & Co (The Eurymedon) (1975)

Po On v Lau Yiu Long (1980)

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This case applied the ruling from Scottson and Pegg on appeal. LW stated that although he was already contractually bound he was also taking on double liability

Extended the Eurymedon by treating a promise by A to perform a pre-existing contractual duty owed to B as valid consideration for a promise made to C