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LLB Contract Law: Consideration'

This document provides an overview of the key concepts relating to consideration in contract law. It defines consideration and outlines the main rules - that consideration must not be past, must move from the promisee, and must be sufficient though not necessarily adequate. It examines exceptions, such as past consideration in certain situations. The document also discusses when performance of an existing obligation can constitute consideration, such as under the Williams v Roffey exception. It previews that the next lecture will cover part payment and promissory estoppel.

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Abbas Khan Mirani
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133 views12 pages

LLB Contract Law: Consideration'

This document provides an overview of the key concepts relating to consideration in contract law. It defines consideration and outlines the main rules - that consideration must not be past, must move from the promisee, and must be sufficient though not necessarily adequate. It examines exceptions, such as past consideration in certain situations. The document also discusses when performance of an existing obligation can constitute consideration, such as under the Williams v Roffey exception. It previews that the next lecture will cover part payment and promissory estoppel.

Uploaded by

Abbas Khan Mirani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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LLB Contract Law

Lecture 3
‘Consideration’
Aims

By the end of this lecture, students should be able to:


• Explain what is meant by ‘consideration’
• Understand the rules relating to ‘past’ consideration
• Explain the case law on ‘sufficiency’ of consideration
• Recognise the development of the law in relation to existing obligations.

BPP University Law School


Definitions

“… some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or
responsibility given, suffered, or undertaken by the other.”
per Lush J, Currie v Misa (1875)

“... An act or forbearance of one party, or the promise thereof, is the price for which the promise of the
other is bought, ...”
per Dunedin LJ, Dunlop v Selfridge (1915)

BPP University Law School


The Rules of ‘Good’ Consideration

• Does the consideration fall within the rules?

• If ‘no’, does it fall within an exception?

• If there is no consideration, when can the promisee rely upon the promise? Promissory estoppel (next
lecture)?

BPP University Law School


The Rules of ‘Good’ Consideration

Consideration must:

1. Not be ‘past’;
2. Move from the promisee;
3. Be sufficient but need not be adequate.

Note:

• An existing obligation is not usually good consideration.


• Part-payment of a debt is not good consideration.

BPP University Law School


Rule 1: Consideration must not be ‘past’

Where a benefit has already been provided, a promise in return for that benefit is a promise in return for
‘past’ consideration and is not enforceable.
• Eastwood v Kenyon (1840)
• Roscorla v Thomas (1842)

Exception
• Pao On v Lau Yiu Long (1980)
1. At the request of the promisor? Lampleigh v Brathwait (1615)
2. Was it understood that payment would be due? Re Casey’s Patents (1892); Re McArdle
3. Would the contract be enforceable apart from this issue?

BPP University Law School


Rule 2: Must move from the promisee

A claimant can only claim on a contract if he has given consideration.


• Twiddle v Atkinson (1861)

The other side of the same coin as ‘privity’.


• Dunlop v Selfridge (1915)

Note: Section 1 of the Contracts (Rights of Third Parties) Act 1999

BPP University Law School


Rule 3: Consideration must be sufficient but
need not be adequate

“… a peppercorn does not cease to be good consideration if ... the promisee does not like pepper and will
throw away the corn ...”
per Lord Somervell, Chappell v Nestle (1960)

Giving up a legal right? White v Bluett (1953)

Contrast with: Hamer v Sidway (1891)

BPP University Law School


Performance of existing obligations

Existing public duty

Police
• Harris v Sheffield United (1988)

Parental
• Ward v Byham (1956)

Al law
• Collins v Godefroy (1831)

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Performance of existing obligations

Contractual duty
General rule – not good consideration
• Stilk v Myrick (1809)

Distinguished in
• Hartley v Ponsonby (1857)

Important exception: Williams v Roffey Bros (1991)


1. A has a contract with B to supply goods or services;
2. B has reason to doubt that A will, or will be able to, complete his obligations;
3. B promises to pay A extra to complete on time;
4. B obtains a practical benefit or obviates a disbenefit;
5. B’s promise was not given as a result of fraud or duress.

BPP University Law School


Performance of existing obligations

Obligations owed to a third party

Performance of existing obligations that are owed to a third party can be good consideration.
• Scotson v Pegg (1861)

Confirmed in:
• New Zealand Shipping v Satterthwaite (The Eurymedon) (1975)

BPP University Law School


Next lecture
Lecture 4
Part payment and ‘promissory estoppel’

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