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What is Consideration?
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What are the elements of consideration?
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consideration
Contract Law Ireland Consideration
| Question | Answer |
|---|---|
| What is Consideration? | Laythoarp v. Bryant "Any act of the plaintiff from which the defendant derives a BENEFIT or ADVANTAGE any labour detriment or inconvenience sustained by the plaintiff,provided ..[with].. the consent, either express or implied, of the defendant." |
| What are the elements of consideration? | defendant - gets benefit or advantage Plaintiff - labour- inconvennience or detriment undertaken with the actual or implied consent of the defendant. |
| In what 2 ways is a promise enforceable? | EITHER: 1) Contained in a deed under seal or 2) Made in exchange for sufficient consideration |
| Is "moral consideration " sufficient to make a promise contractually enforceable? | No: Moral consideration = gratituous promise (without legal force)Eastwood v. Kenyon (1840) Heiress not required to repay guardian for education as promised. |
| From whom must consideration move? | From the promisee: A promise B book for €10. A & B both can enforce contract if book and money given. |
| Can a third party who neither gave the promise or participated in its execution claim under a contract? | No: Tweedle v. Atkinson (1861) 1 B & S 393 – son in law could not claim money promised to his wife by her father. He was a “stranger to the contract” as he provided no consideration. |
| What was the point in McCoubray v Thompson (1868) 2 IRCL 226? | A agreed to sell land to B with B to pay half the value of the property to C. Held: C could not enforce contract since he had not INCURRED a DETRIMENT or CONFERRED a BENEFIT |
| In what exceptional circumstance can a person enforce a contract when they have not given consideration? | Where they were one of two or more parties to whom the promise was made and the other parties have already paid consideration.McEvoy v Belfast Banking Co Ltd [1935] |
| Is a contract enforceable if the promise is made AFTER the claimed consideration has been given? | Not generally: "Considertation must not be past consideration".Roscorla v. Thomas (1842) 3 QB 234 – warranted horse was healthy after payment made – warranty unenforceable due to no new consideration (i.e. only past consideration). |
| What was the point in Provincial Bank of Ireland v. Donnell (1932)? | Bank asked for wife to add new security to existing loan and to cover future liabilities.Held: Security for past money unenforceable as promise after the fact and future monies unenforceable until money actually advanced. |
| What was the point in Re Mc Ardle [1951]? | Woman fix up house and relatives promise money after she finished. Held - gratuitous unenforceable promise as offer made after consideration was already given. |
| What exception is there to the rule that consideration must not be past? | Where the promisee acted upon the expectation that the consideration they were about to give would be reciprocated. |
| What were the three conditions mentioned in Pao On v. Lau Yiu Long [1980]which would allow past consideration to make a subsequent promise enforceable? | a)The promisee acted at the request of the promisor b)It was understood by both parties that some form of payment or consideration would result. c)The consideration would have been enforceable had it been promised in advance. |
| What was the point in Re Casey’s Patents, Stewart v. Casey.? | Letter offering money “in consideration of your past services” deemed only to be fixing price – the principle that manager should be paid was implied from the activity to have been agreed before he took action. |
| Will a court question the adequacy of consideration given? | No: "consideration need not be adequate" it is for the parties - not the court- to decide on the relative value of promises given and price paid. Peppercorn rent acceptable. Thomas v. Thomas widow pay £1 per year rent in dead husband’s house. Held: valid. |
| Can consideration be of NO value? | No: "consideration must be sufficient". Not sufficient PRAYERS O’Neill v. Murphy [1936] – builder promise priest work for prayers. |
| What was the point in White v. Bluett (1853) ? | Father promise to pay son's debts if son stopped complaining. Held: unenforceable - not sufficient consideration. |
| What happens if two parties pretend to be under contract and say they have paid consideration which was not paid? | Not a valid contract: "Sham consideration is not sufficient" Revenue Commissioners v. Moroney [1972] IR 372 – father pretended to sell pub for consideration of £ 16,000 but it was never paid- = gift. |
| Are forebearance and compromise good consideration? | Yes: Sacrifice and detriment involved - Hamer v. Sidway (1891) 124 NY 538 – Uncle promise £ 5,000 if gave up smoking and drinking until age 21. Foregoing pleasure was good consideration. |
| Is consideration already given under a different contract or because it was required by law - good consideration for a further contract? | Not generally: "no consideration if already bound to give" Collins v. Godfrey witness not entitled to promised money when testified on behalf of a defendant as witness was already obligated under a subpoena. |
| What was the point in Stilk v. Myrick ? | it is no consideration to give something you are already bouind to give under a contract with someone else. Sailors promised extra pay if sail ship home after deserters left. Held: obligated to do so anyway. |
| What exceptions is there to the rule that no contract can come from consideration you are already obliged to give (by law or under contract to others)? | Where the contract varied to give additional obligation and benefit or where terms are merely altered giving different benefit. Williams v. Roffey & Nicholls (Contractors) Ltd - contractor entitled agreed extra money for timely delivery-avoided penalties. |
| What was the point in Glasbrook v. Glamorgan [1925]? | Police provide extra requested protection for mine owner during a strike = extra = good consideration. Distinguished from general rule that cannot be bound to contract when the consideration given is already pledged under existing contract- this= change |
| What is the "Rule in Pinnel's Case"? | Part payment of debt not sufficient to satisfy whole debt unless further consideration given. |
| Give an example of where the "rule in Pinnel's case" was applied. | D and C Builders v. Rees [1965] 3 AER 837 – builder offered £ 300 in settlement of larger debt otherwise would get nothing. Successfully sued for rest because of rule in Pinnel’s Case. |
| What are the 3 exceptions to the "rule in Pinnel's case"? | 1) Where contract is altered with a new element 2) Where part payment accepted from 3rd party 3) Composition with multiple creditors. |
| Why is a composition with multiple creditors treated as an exception to the rule in Pinnel's case when no extra consideration is given? | composition with single creditor require consideration. but composition with multiple creditors not covered by Pinnel's case as Creditor subsequently enforceing debt defrauds other creditors who compromised thinking all other creditors would do the same. |
| Why does acceptance of part payment from a third party in settlement of someone's contractual obligations create an exception to the rule in Pinnel's case that part payment is not adequate consideration? | Would be fraud on person who made part payment in hope of assisting defaulting party.Father offer £100 in settlement of £200 debt of son. If accepted cannot sue son for balance as would be a fraud upon the father. |
| Give an example of a scenario where the rule in Pinnel's case would be avoided by the introduction of a new element into the contract. | Where it is subsequently agreed that instead of paying money for a debt as agreed - a book would be exchanged instead. value of book may be short of the debt but cannot sue for balance. |
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Solomon