DIL 1103: Contract Law

Tutorial 2: Q&A
Please attempt all questions
before Tutorial discussions.
Tutorials are meant to gauge your level of understanding and are good indicators of
what to expect in your tests and final exams.
The difficulty level is similar to that of your examinations.
Apply IRAC – Problem Questions

I R A C
• Issue • Rule • Application • Conclusion

Relevance to the scenario Your answer to the question

Case law/Authorities,
The question in issue provided by the problem posed in consideration of all
Statutes or Legal principles
question of the above
Question 1
Explain the doctrine of consideration.
Question 1
• Currie v Misa:
• “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.”
• Dunlop Pneumatic Tyre Co v Selfridge & Co:
• "An act or forbearance of one party, or the promise thereof, [which] is the
price for which the promise of the other is bought, and the promise thus given
for value is enforceable”
• These definitions have been adopted in the Malaysian case of Macon Works
& Trading Sdn Bhd v Phang Hon Chin
Question 2
Explain and distinguish the theories upon which the doctrine of consideration is based upon.
Question 2
1. Will theory – Consideration is about reciprocity or bargains and only
bargains are enforceable as contracts – promises to make gifts are not.
2. Bargain theory – Contracts are enforceable simply because promises
have been made; it would be enough that parties have exercised their
free will. Therefore consideration is not required (Not English law).
3. Reliance theory – Liability in contract arises because the plaintiff has
relied on the defendant’s word or conduct, or that the defendant has
received benefits and therefore consideration is not required (Not
English law).
Question 3
How much consideration is deemed to be sufficient for the formation of a contract?
Question 3
• In both England and Malaysia – GR is that the legal sufficiency of
consideration is determined by the parties
• Adequacy of consideration is irrelevant
• The benefit or detriment need not be equivalent in value to that
which is received in return.
Question 4
List the different types of considerations and briefly explain each of them.
Question 4
1. Past considerations
• Promisee has given something of value to the promisor before the promisor makes his promise;
• Promisee does not give anything new in return for promisor’s promise.
• GR: Past consideration is not good consideration (Roscorla v Thomas)
• Exception: May be good consideration at the promisor’s request (Pao On v Lau Yiu Long)
2. Pre-existing duties
• Promisee is in an existing contractual agreement with the promisor
• GR: A promise or actual performance of a pre-existing duty is not good consideration (Stilk v Myrick)
• Exception: A promise to fulfil a pre-existing contractual obligation owed to a 3rd party or performance of such an obligation may amount
to good consideration.
3. Pre-existing duties owed to 3rd parties
• Exception to the GR (The Eurymedon/Williams v Roffey Bros & Nicholls )
4. Part payment of debt owed to promisor
• Part-payment of a debt is when the promisor promises to take less from the promisee than originally agreed
• GR: part-payment of debt does not amount to a full discharge of debt even if it can be said that the promisor gains a practical benefit
(Pinnel’s Case/Foakes v Beer)
5. Pre-existing duty imposed by law
• Performance of duty imposed by law, or the promise to perform such a duty does not amount to provision of consideration (Collins v
Godefroy)
• However, performance of something beyond a pre-existing legal duty is good consideration (Glassbrook Bros Ltd v Glamorgan CC)
Question 5
Margaret is Daisy’s cleaner. She cleans for 4 hours each week and is paid £25. Last week, Daisy asked Margaret if she would be prepared to do
extra for her as she is having a garden party on Saturday evening and all of the patio furniture needs polishing, the conservatory windows need
cleaning and the decking needs to be scrubbed. Margaret carried out the additional tasks which took her 6 hours. Daisy was extremely pleased
with Margaret’s work and told her that there would be a bonus in her pay packet.
When Margaret was paid at the end of the week she was surprised to see only £25 in her pay packet especially due to the fact that she had
worked 10 hours instead of her usual four, in cleaning the deck, windows and furniture as requested. Daisy has now refused to pay her. She says
that her promise of payment came after the additional cleaning had been carried out. Is Margaret entitled to the bonus?
Question 5 Structure and Pointers
• Faced with this question then, you would initially explain that the issue
centred on the area of contract law falling under consideration:
1. You would define consideration and explain how it is an essential
ingredient of a contract
2. You would then hopefully identify that the issue lay in the area of
past consideration
3. You should define past consideration and the exceptions to the rule,
citing any relevant case law
4. You would then apply the law to the facts as they are presented and
hopefully reach a fully reasoned conclusion.
Question 5
Issue • Was there consideration from Margaret/Daisy? – does past consideration amount to good consideration and what are the
exceptions?
• Is Margaret entitled to the bonus?
Rule Consideration – benefit or forbearance by one party or the other – essential element of a legally enforceable contract (Currie v
Misa)
Past Consideration – promisee has given something of value to the promisor before the promise was made. GR: past
consideration is NOT good consideration (Roscorla v Thomas), however the exception: when it is made at the request of the
promisor (Pao On v Lau Yiu Long)
In Pao On; an act done before the giving of a promise could be valid consideration for that promise if 
(i) The act had been done at the promisor's request,
(ii) The parties had understood that the act was to be remunerated either by payment or conferment of a benefit, and 
(iii) The payment or conferment of a benefit would have been enforceable had it been promised in advance.
Application Daisy told Margaret that there would be a bonus in her pay packet. This was a promise made by Daisy in reference to a past
forbearance by Margaret (cleaning for 6 hours) and a benefit for Daisy (extra cleaning for her party). It fulfils the criteria of the
decision in Pao On as;
(i) Margaret had cleaned at the request of Daisy,
(ii) Both parties understood that Daisy would renumerate Margaret as Daisy had promised a bonus in Margaret’s packet
(iii) Under general rules, the bonus would have been enforceable had it been promised in advance rather than later (after
Margaret cleaned)
Conclusion Therefore, Margaret is entitled to the bonus as past consideration is good consideration at the promisor’s (Margaret’s) request.
Question 6
Arthur sees his neighbour Jake in the local pub. Arthur is aware that Jake operates an airport shuttle service.
Arthur asks Jake if he can take him and his wife to the airport next Thursday. At the airport he promises to pay
Jake £50 upon his return from Madrid. Can Jake enforce the payment?
Question 6 Structure and Pointers
• Here you would explain that the issue concerned consideration.
• It may appear to you initially that this is just a favour between two neighbours – It may even prompt you to ask whether
there was an intention to create legal relations.
• The promise to make the payment comes after Jake has driven Arthur to the airport. This should prompt you to discuss
past consideration. You should explain that past consideration will not constitute good consideration and cite the
relevant case law.
• The act of driving Arthur to the airport was carried out before any promise of payment was made. Mention such cases
as Re McArdle or Roscorla v Thomas.
• You should then consider whether any of the exceptions apply. Precedent arises from Lampleigh v Braithwait and the
later cases such as Pao on v Lau Yiu Long should be discussed here and the possibility of whether any of the stated
exceptions could apply in the current case.
• You will probably conclude that there may be grounds for Jake to recover the money, but you need to make it very clear
to the examiner how you came to this conclusion.
• So, for example, state that the act of Jake driving Arthur to the airport had been carried out at the promisor’s request,
that is, at Arthur’s request. A strong argument could be put forward to suggest that the parties would have understood
that the act would be rewarded in some way. Arthur knew that Jake undertook airport runs for a living and human
common sense would tell him that he did not operate the service for free.
• Finally state that this type of agreement would be enforceable if the promise had been made beforehand, it is a very
normal kind of transaction.
Question 6
Issue • Was there consideration from Arthur/Jake? – does past consideration amount to good consideration and what are the
exceptions?
• Is Jake entitled to payment?
Rule Consideration – benefit or forbearance by one party or the other – essential element of a legally enforceable contract (Currie v
Misa)
Past Consideration – promisee has given something of value to the promisor before the promise was made. GR: past
consideration is NOT good consideration (Roscorla v Thomas), however the exception: when it is made at the request of the
promisor (Pao On v Lau Yiu Long)
In Pao On; an act done before the giving of a promise could be valid consideration for that promise if 
(i) The act had been done at the promisor's request,
(ii) The parties had understood that the act was to be remunerated either by payment or conferment of a benefit, and 
(iii) The payment or conferment of a benefit would have been enforceable had it been promised in advance.

Application Past consideration is not good consideration – following this general rule, there would be no good consideration as the act of
driving Arthur to the airport took place before Arthur’s promise. However, Jake may be entitled to payment on the basis that it
is reasonably expected as a regular business transaction that he would be paid for his service and Arthur knew of Jake’s work. In
this regard;
(i) Jake had driven Arthur to the airport as requested
(ii) It is normally anticipated that payment would be given for a working service
(iii) Under general rules, the payment would have been enforceable had it been promised in advance rather than later

Conclusion Therefore, on the facts, Jake may be entitled to the payment as the transaction was clearly an exchange for payment. This
would not be in issue had promise been made before Jake had driven Arthur to the airport.
Question 7
What is a promise to do something that the promisee has no legal duty to do a form of?
Question 7
• Promissory estoppel
• Promissory estoppel is the legal principle that a promise is
enforceable by law, even if made without formal consideration when
a promisor has made a promise to a promisee who then relies on that
promise to his subsequent detriment.
Question 8
While on duty, PC James spots a stolen sports car. A few day earlier, he saw a poster offering a £1,000 reward to
anyone who helped the owner recover the stolen car. Why is PC James not allowed to accept the reward?
Question 8
• Pre-existing duty imposed by law
• Performance of duty imposed by law, or the promise to perform such
a duty, does not, in law, amount to provision of consideration
• Collins v Godefroy
• As a PC, it is not outside the scope of his public duty to report/help
the owner find his stolen car
• Glassbrook Bros Ltd v Glamorgan CC – performance of something
beyond a pre-existing legal duty is good consideration.
Question 9
Martha promised to give her sister, Sue, a sum of RM500 monthly on the condition that their mother transfers
some land to her. Their mother agreed and transferred the land to Martha. However, Martha failed to fulfil her
promise and Sue sues her on the promise. Does Sue have legal grounds to sue Martha for a breach of contract?
Provide your answer from the position of Malaysian Contact Law only.
Question 9
Issue Does Sue have the right to sue Martha for a breach of contract?
Rule S.2(1) CA 1950: definition of proposal – “when one signifies…his willingness…he is said to make a
proposal”
Essentially, a proposal made by one party to another party with the intention that other party would
accept his proposal
S.26 CA 1950 – an agreement made without consideration is void
S.2(d) CA 1950: definition of consideration – something that is given in return for something else. This
provision allows for consideration to move from the promisee or other person (Kepong Prospecting Ltd
v Schmidt).

Application Consideration is an act or abstinence or promise by the promisee (Sue) or any other person (their
mother) as required by the promisor (Martha) in return for their promise (RM500). When something is
given is given in return for something, it clearly shows consideration that makes the agreement valid.
RM500 is consideration for her mother to give Martha some land. The land is the consideration for
Martha to give RM500 to Sue. In this case, only the mother and Martha provide consideration and not
Sue. In accordance to S.2(d), consideration can move from the promisee or any other person.

Conclusion Therefore, the agreement is still valid and there has been a breach of contract. Martha is hereby
advised to pay the RM500 monthly to Sue. Sue is entitled to sue Martha for the breach of contract.
Question 10 (a)
Mahmud (M) owns a business which supplies carpets to shops and offices. He agrees to supply and fit carpets in Kate’s (K)’s office for an agreed price of £5,000
payable 21 days after fitting.
M fits the carpet on 1 July and hands K an invoice requiring payment on 22 July. On 10 July, one of K’s main clients cancels her account and this threatens to
cause K significant financial problems. Advise M on the basis of each of the following independent hypotheses:
a) K contacts M on 14 July, explaining that she is suffering from financial difficulties’ as a result M accepts immediate payment from K of £3,000 in full and final
settlement of what K may owe under the contract for the carpets.
Question 10 (a)
Issue Was there consideration given by K to M, i.e. if the agreement constituted a bargain between the two
parties?
Rule Foakes v Beer (relying on Pinnel’s Case) – a promise to accept the part-payment of a debt does not
constitute good consideration. However, there is an exception where there will be consideration if the
promisor’s request varied the obligation in “some respect other than a reduction in the amount to be
paid, [for example if the payment was]... on a date earlier than the due date.”
Application Here, there has been a modification of the original contract whereby M has accepted ‘less for the
same’, or part-payment of the sum owed by K. Following the rule in Foakes v Beer/Pinnel’s Case, M’s
promise to accept K’s part-payment will not be good consideration and so the modification will not be
enforceable.
However, As K promised to pay the part-payment of £3,000 on 14 July rather than on 22 July which was
the original payment date, the requirement of the Pinnel exception is satisfied and so the consideration
will be good, meaning that M can recover the full sum. This exception, however, only applies where M
requested the immediate payment. Given that K contacted M and the question states that “M
accept[ed]...immediate payment”, it is likely that K suggested the reduced payment of £3,000 rather
than M requesting the payment. If this is the case, there will be no consideration.
Conclusion As a result, M will not be able to recover the full amount from K, who will only have to pay £3,000
Question 10 (b)
(b) Hearing that M is himself in severe financial difficulties, K contacts M on 14 July and tells him that she will
pay M nothing unless he accepts £2,000 in full and final settlement. Reluctantly, M agrees to do so.
Question 10 (b)
Issue Has there been good consideration for the modified agreement?

Rule D&C v Rees – it was held that an agreement to accept £300 instead of £400 by virtue of P being “held to ransom” was
unsupported by consideration and so P was entitled to obtain the original sum
Lord Denning’s approach (traditional equity) – the creditor is only barred from his legal rights when it would be
inequitable for him to insist upon them
Foakes v Beer (relying on Pinnel’s Case) (Winn LJJ and Danckwerts’ approach) – a promise to accept the part-
payment of a debt does not constitute good consideration. However, there is an exception where there will be
consideration if the promisor’s request varied the obligation in “some respect other than a reduction in the amount to
be paid, [for example if the payment was]... on a date earlier than the due date.”
Application Given that K gives M no choice but to accept the reduced payment of £2,000 because otherwise M will receive
nothing, this is a case of involuntary agreement, or an ultimatum. Applying Lord Denning’s equity approach; “[t]he
creditor is only barred from his legal rights when it would be inequitable for him to insist upon them” because M did
not agree to accept a lesser sum in satisfaction voluntarily, and K had no right to present M with the ultimatum of
£2,000 or nothing. Similarly, the present case is similar to D&C because K knew of M’s dire financial position and so
sought to take advantage of that by “using his [M’s] awkward situation to intimidate M.”
Further, applying Foakes v Beer, the modified agreement would not enforceable because a promise to pay part of a debt
is not good consideration for the discharge of the entire debt.
Conclusion Applying either the equity or Foakes v Beer approach would mean that M will be able to recover the full £5,000 from
K.
Question 10 (c)
c) K contacts M on 25 July, and explains that she is suffering from financial difficulties and offers to
pay M £2,000 immediately and £500 at the end of every month until she has paid the whole
amount. Having accepted this arrangement and having received the initial £2,000 and the first
monthly payment, M wishes to recover immediately the full amount of the original contract price.
Question 10 (c)
Issue Is there good consideration to enforce the modified agreement?
Rule Re Selectmove – a practical benefit does not constitute consideration for an agreement to accept ‘less for the same’ (or
part-payment).
Foakes v Beer – Part payment is not good consideration. Where the agreement was one of ‘less for the same’ because
although P agreed to accept monthly instalments, P also agreed to accept repayment without interest which constituted
a reduction in the amount repaid.
Application Here, the facts bear similarities to the Foakes v Beer.
If the modified agreement is an agreement to accept less for the same, then the practical benefit of M receiving the full
payment in the long run by virtue of the monthly instalments rather than K failing to pay, will not constitute good
consideration. Although M will receive the full payment in the long run, i.e. at the end of the monthly instalments, he
will not receive interest on the late payments, and will not be in the position he would have been in if the contract had
been performed in accordance with its terms. Although the issue of interest was not discussed by the parties in the
question, the fact that M will not be paid interest by K means that the modified agreement is in the ‘less for the same’,
or part-payment category. Foakes v Beer provides that a promise to accept the part-payment of a debt does not
constitute good consideration and so the modified agreement will not be enforceable.
Conclusion As a result, M may recover the full amount from K immediately.
Question 11
What criticisms do Pinnel’s Case and Foakes v Beer receive in the law of consideration?
Question 11
• Foakes v Beer/Pinnel’s Case – part payment of a debt does not constitute a full discharge of debt even if it can be
said that the promisor has had a practical benefit
• Part payment of debt is generally beneficial to the creditor
• Contrary to the general approach of the courts to uphold variation agreements. This can be seen in Williams v
Roffey Bros.
• The approach in Williams v Roffey has been commended for being ‘more flexible, less formalistic, and closer to
modern commercial practice where there is a need for fluidity to take account of changing market condition.’
• In any case, the general rule is easy to evade due to the numerous exceptions to it;
1. Promise to accept lesser sum made by deed
2. Providing fresh consideration/accord and satisfaction
3. e.g. making payment at an earlier time, at a different place, different method (but payment by cheque is not
different from payment by cash), giving something other than money (e.g. hawk, horse, etc) provided this is
acceptable to the creditor
4. Original claim not for a fixed sum or amount disputed in good faith
5. Payment accompanied by additional benefit
6. Composition agreement with creditors