Contract Law Consideration

Core Reading Textbook Koffman and MacDonald Chapters 4 Casebook Poole Chapter 4

Essential Element An agreement is not enforceable unless it is accompanied by consideration. Re Hudson (1885) 54 LJ Ch 811 Consideration can be thought of as the price of the promise.

Definition A Currie v Misa (1875) LR 10 Ex 153 Per Lush J. “A valuable consideration, in the sense of the 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.” This is clearly economic in tone- profit, benefit, detriment or loss

Definition B Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 Sir Frederick Pollock’s views accepted by HL “An act or forebearance of one party, or the promise thereof, is the price for which the promise is bought and the promise thus given for value is enforceable”. The use of price conveys a wider notion

Past Consideration One point which emerges from the definitions is that consideration may also be seen as the exchange element, what you give and what you get. What if there is no exchange?

Past Consideration- The Traditional View Eastwood v Kenyon (1840) 11 AD & El 438 Re McArdle [1951] Ch 669

A Clarification Pao On v Lau Yiu Long [1979] 3 All ER 65Per Lord Scarman. “An act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise. The act must have been done at the promisor’s request: the parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit: and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance.”

Breaking that down- point 1 The Act must have been done at the promisor’s request Lampleigh v Brathwait (1615) Hob 105

Breaking that down- point 2 The parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit Re Casey’s Patents (Stewart v Casey) [1892] 1 Ch 104

Breaking that down- point 3 Payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance

Consideration must move from the promisee Tweddle v Atkinson (1861) 25 JP 517 This has developed into the doctrine of privity of contract

Consideration Need Not Be Adequate Thomas v Thomas (1842) 2 QB 851 Lloyds Bank Ltd v Bundy [1974] 3 All ER 757

But Consideration Must Be Sufficient This has traditionally meant it must have economic value: White v Bluett (1853) 23 LJ Ex 36 Chappell v Nestle [1960] AC 87

Sufficiency- a new perspective Ward v Byham [1956] 2 All ER 318

Further Issues A major issue which has several variants is just whether you can use something you are already bound to do as consideration in a contract- EXISTING DUTIES

Existing public duty imposed by law Traditional approach Collins v Godefroy (1831) 1 B & Ad 950

Exceeding your public duty imposed by law Going beyond your duty –Glasbrook Brothers ltd v Glamorgan CC [1925] AC 270 –Chief Constable of Greater Manchester v Wigan Athletic AFC Ltd [2008] EWCA Civ 1449 –Ward v Byham [1956]

Existing Duty to a third party Shadwell v Shadwell (1860) 9 CBNS 159 New Zealand Shipping Co Ltd v Satterthwaite (AM) & CO Ltd (The Eurymedon) [1974] 1 All ER 1015

Existing duty to the promisor Traditional approach Stilk v Myrick (1809) 2 Camp 317 Hartley v Ponsonby (1857) 7 El & Bl 872

The Rethink Williams v Roffey & Nicholls (Contractors) Ltd [1990] 1 All ER 512 Two Factors- 1 Lack of Duress 2 Practical Benefit

Williams v Roffey a step forward? Inconsistency with other areas of contract law –Davis Contractors Ltd v Fareham UDC [1956] AC 696 South Caribbean Trading v Trafigura Beheer [2004] EWHC 2676 (Comm) per Colman J –‘but for the fact that Williams v Roffey Bros Ltd was a decision of the Court of Appeal, I would not have followed it.’ Adam Opel GmbH v Mitras Automotive (UK) Ltd [2008] EWHC 3205 (QB). –The primary aspect of the test is whether the payment is the result of duress.

Part Payment of a debt The traditional stance –Pinnel’s Case (1602) 5 Co Rep 117a ‘a horse, a hawk, a robe etc’ –Foakes v Beer (1884) 9 App Cas 605 Exceptions –Promissory notes Sibree v Tripp (1846) 15 LJ Ex 318 –Third party payment Hirachand Punamchand v Temple [1911] 2 KB 330

Is this consistent? An explanation –D&C Builders v Rees [1966] 2 QB 617 What about Williams v Roffey? –Re Selectmove Ltd [1995] 2 All ER 531 Equity may assist –Collier v P and MJ wright Holdings LTD [2008] 1 WLR 643