Consideration

1. Definition
2. Academic/Juristic/Judges view
3. Rules of Consideration
4. Promissory Estoppel

Definitions

[Currie v Misa] – benefit-detriment analysis

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.”

[Dunlop v Selfridge] - Consideration is the price of which the promise of another is bought.

Academic/Juristic/Judges View

Ewan McKendrick: “The function of these rules is to give what we shall call the ‘badge of enforceability’ to certain
agreements.”

Prof. Guenter Heinz Trietel admits that in some cases, the courts have invented consideration. He further states that
Prof. Atiyah recognizes the presence of the benefit and detriment analysis is normally a good reason for enforcing
promises, thus, he is of the opinion that he adheres to Currie v Misa (benefit and detriment analysis)

“… the courts have never set out to create the doctrine of consideration … when the courts found sufficient reason
for enforcing a promise, they enforce it … it seems highly probable that when the courts first used the word
‘consideration’, they meant no more than there was a ‘reason’ for enforcement of the promise. If the consideration
was ‘good’, this means that the courts found sufficient reason for enforcing the promise …”. – Professor Atiyah

In [Williams v Roffey Bros], Russell LJ : “Consideration there must still be but in my judgment, the courts nowadays
should be more ready to find its existence so as to reflect the intention of the parties … and where the finding of
consideration reflects the truth of the intention of the parties.”

Q: Did Russell LJ suggest that the doctrine of consideration is part of the ideas of ITCLR?

Rule #1: Consideration must moves from the promise but need not move to the promisor

General rule: only a person who has provided consideration in return for a promise may enforce that promise as a
contract

[Tweedle v Atkinson]
- A couple were getting married. The father of the bride entered an agreement with the father of the groom
that they would each pay the couple a sum of money. The father of the bride died without having paid. The
father of the son also died so was unable to sue on the agreement.
- The groom made a claim against the executor of the will. The claim failed.
However, this case would be decided differently today due to Contract (Rights of Third Parties) Act 1999

Crompton J: “The consideration must move from the party entitle to sue upon the contract …”. OTF, the C did not
suffer detriment & therefore did not provide consideration.

[Tanner v Tanner]
- Held that the girlfriend did provide consideration, even though it did not directly benefit the boyfriend

Rule #2: Past considerations are not good considerations

[Roscorla v Thomas]
- D sold C a horse. After the sale was completed, D told C that the animal was ‘sound and free from any vice’.
This turned out to be rather far from the truth, and C sued.
- Held: D’s promise was unenforceable because made after the sale. If made before, C would have provided
consideration for it by buying the horse. As it was made after the sale, the consideration was past, for it had
not been given in return for the promise.

[Re McArdle]
- One of the daughters-in-law paid for some home improvements. Her husband’s brothers and sisters refused
to pay although promised earlier. COA held that the promise was given in return for something already
done, it was therefore past consideration, and the promise was not binding.

Exceptions:
1. The act must have been done at the promisor’s request. [Lampleigh v Brathwait]
Facts: B asked L to obtain a pardon for him from the King while he was in prison. L successfully obtained the
pardon. In the excitement, B promised to pay L £100 but later refused to pay. L’s claim was upheld.
2. It must be reasonably contemplated by both parties that payment ought to be made. [Re Casey’s Patents]
Facts: D wrote to C saying that they were going to give him one-third interest in the patents for his services as
manager. The court held that C’s services were clearly meant to be paid for.
3. The promise must be legally enforceable. [Pao On v Lau Yiu Long]

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

Adequate -> exact value; sufficient -> any value

[Thomas v Thomas]
- Widow pays $1 a year and keeps the house in good repair. D executors tried to evict the widow some time
later. She sued for breach of contract.
- Held: The widow’s promise was sufficient consideration to make the owner’s promise binding.

[Chappell & Co. Ltd v Nestle Co.]

- Nestle ran an offer involving a record of a song. Customers could get a copy of the record by sending 1s6d
and 3 chocolate wrappers by Nestle. Copyright holders of the song brought an action against Nestle.
- Held: sweet wrappers are sufficient in the eyes of law. HOL said that the wrappers did form part of the
consideration, the fact they were of no real worth to Nestle was irrelevant.

Rule #4: Considerations must have economic value

- Sufficient <-> economic value

[White v Bluett]
- A father promised not to make his son repay the money the son borrowed. In return the son must stop
boring the dad with complaints.
- Held: Son’s promise of not to keep boring his father with complaints was not sufficient consideration to
make his father’s promise binding, because it had no economic value (financial value).

[Ward v Byham]
- Mr B threw Ms W out of the house but kept their daughter. Few months later, Ms W asked to take the child
to live with her. Mr B agreed and for this, he would pay £1 a week. Mr B paid maintenance for 7 months as
agreed and stopped when Ms W married. She sued for the money.
- Held: Natural love and affection of a parent was found sufficient for consideration. By promising to ensure
the child was well looked after and happy, the mother had gone beyond her existing legal duty and therefore
had provided consideration. She was entitled to the payment from the father.

** Why nagging got no value whereas love got value? Counter argument: love including buy gifts…

Trivial acts [Chappell v Nestle]

Intangible returns [White v Bluett] [Bret v JS] [Ward v Byham] [Thomas v Thomas]
 Compromise [Wade v Simeon] [Callishier v Biscoffesheim]

Rule #5: Performance of existing duty

Existing public duty

[Collins v Godefroy]
- D promised to give him six guineas but later refused to pay. C was legally obliged to give evidence in a court
action.
- Held: D need not pay. Promise cannot be enforced.

[Glasbrook Brothers Ltd v Glamorgan County Council]

- The mine owners offered to pay the police $ 2,200 to cover the extra cost of having the police stationed at
the mine full-time during the strike.
- Held: D need to pay. The police has exceeded beyond their existing public duty.

The common law principle established in [Glasbrook] was placed on a statutory basis … s.15(1) of the Police Act
1964 …Provision of ‘special police services’ – allows for payment for ‘special police services’ rendered at the
‘request’ of another.

[Harris v Sheffield United Football Club Ltd]

- The football club chose to hold football matches on Saturday afternoons to get maximum attendance. This
created a bigger risk to law and order so the necessity for the large police presence was self-induced.
- Held: The police services had to be paid for.

[Ward v Byham]
- Mother did not just take care of the child, but made sure child was happy, which was more than her legal
duty
- Denning then added, "I have always thought that a promise to perform an existing duty
should be regarded as good consideration, because it benefits the person to whom it is
given." If the father gets the benefit for which he has stipulated, then he ought to
honour his promise. The mother's actions constituted acceptance and completion of the
unilateral contract.

Existing contractual duty

[Stilk v Myrick]
- Two sailors deserted a ship during a voyage and the captain was unable to find replacements for them. The 8
remaining crew members were promised extra wages for sailing back, but when arrived, the captain refused
to pay the extra money. The sailors sued.
- Held: There was no consideration for the captain’s promise as the sailors had already contracted to sail to
their destination and back and that was all they had done.

[Hartley v Ponsonby] (36-17=19) > than contractual duty

- Half the crew deserted a ship … the court held that there was consideration, because the crew had become
so small that the remainder of the voyage was more dangerous than it had been when they made their
contracts.

Notes: [Williams v Roffey Bros & Nicholls (Contractors) Ltd]

- The D subcontracted the C to carry out the necessary carpentry work for £20 000. The C ran into financial
difficulties in the middle of completing the work. The D were aware of the C's difficulties and promised to
pay an extra £10 300, at the rate of £575 per completed flat. The C completed eight more flats but the D only
paid him an extra £1 500. The C stopped working and sued the D. It was held that the D had obtained a
benefit by making the promise so it was enforceable. The D gained practical benefits as they did not have to
 find replacement carpenters and avoided liability under the penalty clause. There was no detriment suffered
by the C.
- Principle: If a promise to perform an existing contractual duty … confers an additional practical benefit on
the other party … provided no duress (violence) is involved, it would amount to sufficient consideration

Avoidance of hassle on the part of Roffey Bros is a practical benefit that William has confer, as he need not put up
additional cost or find another contractors

Existing contractual party to third party

Performing a pre-existing duty can constitute consideration as long as it is for a third party, and not for the promisor

[Shadwell v Shadwell]
- The C was engaged to be married, in 1860 this was a binding contract. The D, the C's uncle, promised to pay
C £150 yearly during his life and until C’s annual income derived from the profession of a Chancery barrister
shall amount to 600 guineas.
- The C claimed the outstanding money from his uncle’s estate but the estate refused to pay on the ground
that Mr Shadwell had given no consideration.
- Held: Claim allowed, and the majority found that the C provided good consideration by marrying Ellen
Nicholl. Detriment to C, financial responsibilities without the uncle’s allowance; Benefit to uncle, pleased
about the marriage

[Scotson v Pegg]
- Scotson contracted with A to supply a cargo of coal to A or to anyone A nominated. Pegg, was a third party,
who promised to unload the coal at a stated rate but failed to do the agreed unloading.
- Held: Delivery of the coal was consideration, because it was a benefit to Pegg, a detriment to Scotson, in that
it prevented them from having the option of breaking their contract with A and having no liability to Pegg.

ARTICLE – Prof Mindy Chen ‘Emperor New Clothes’

#6 Considerations can be a promise not to be sue

- A person who has a reasonable ground for suing, his forbearance to sue will constitute good consideration.

[Alliance Bank Ltd v Broom]

- Broom had an overdraft of $22,000 with the bank and they asked him to provide some security. Broom
promised to do so but never did, the bank sued him after some time. Broom argued that the bank had
provided no consideration for his promise to provide security.
- Promising not to sue Broom constitute good consideration for his promise to provide security for the debt.

[Wade v Simeon]
- Where a party promises not to enforce an invalid claim and he knew that such a claim was invalid at the time
of his promise, forbearance is no consideration.

Part-payment of debt

General rule: Paying a lesser sum is no satisfaction to the full sum.

Pinnel’s case
- Facts: Cole owed Pinnel £ 8.50 which was due to be paid on Nov 11, 1600. At Pinnel’s request, Cole paid £
5.11 on Oct 1, 1600, in full satisfaction of the debt.
- Held: Due to a defect in D’s pleadings, Pinnel was able to recover the balance.
- Create exceptions, but have not used the exceptions.
Exceptions:
1. The debt is paid at an earlier time.
 2. The debt is paid at a more convenient place.
3. The debtor gives something else as well as part of the settlement of the sum.
4. Composition agreement – when a debtor cannot pay the amount owed to several people and offers to pay
each a certain percentage of their claim, such agreement is binding.
5. Payment by third party.

***[Hirachand Punamchand v Temple]

- Facts: C were money lenders in India. They lent money to the D, Lieutenant Temple. C sought return of the
money from the D but were unable to get any response so they contacted his father. C asked how much the
father would be prepared to pay to settle the son's accounts. An amount was agreed which was a
substantial, amount although not the full amount due. C promised to send the promissory note relating to
the son's debt to the father once they received payment. The father paid, but the C retained the promissory
note and sued the son to enforce the balance.

Held: The payment made by the father was sufficient to discharge the full balance. Where the person making
payment in return for discharging the debt owed by another, this will amount to good consideration as the
existing duty to make payment was not owed by them but a third party.

[Foakes v Beer]
- Dr Foakes owed Mrs Beer £ 2,090 after she had gained a court judgment against him, which it was agreed
could be paid in instalments. Later, Mrs Beer demanded interest on the payments, which is always payable
on a judgment debt. Dr Foakes refused to pay. The court ruled in Mrs Beer’s favour, following the rule in
Pinnel.

Question usually requires to advise DEBTOR.

[William v Roffey Bros] ‘practical benefit’ cannot be used in situation like [Foakes v Beer]

[Re Selectmove] Peter Gibson LJ disagree to extend [Williams v Roffey] principle

[Re Selectmove Ltd]

- A company owed money to the Inland Revenue. The company promised to pay off its existing and future
debts by instalments. The Inland Revenue sought to have the company wound up and to recover the debt
due.
- COA ruled that they cannot rely on the case of Williams v Roffey.
- COA found in favour of the Inland Revenue – there was no binding contract.
- ‘Practical benefit’ is a good consideration for the promise to supply goods or services, but not for part
payment of debt.

Waiver & Promissory Estoppel

- Both are ways to make some kind of promise binding, even where there is no consideration

Waiver:

- Where one party agrees not to enforce their strict rights under the contract

[Hickman v Haynes]

- Buyer asked the seller to deliver the goods later than agreed & then refused to accept the goods when the
delivery was made.
- The court rejected the buyer’s argument that the seller breached the contract by delivering later than
specified (as the later delivery was made at the buyer’s request)

Promissory estoppel:
 - An equitable remedy that is used to prevent/stop someone from going back their promise

Requirements for promissory estoppel:

1. * There must be a pre-existing contractual relationship [Michael Jackson v Durham Fancy Goods]
2. There must be clear and unequivocal promise not to enforce a person’s legal rights. [China-Pacific SA v Food
Corp of India]
Facts: D claimed that the contents of one of the letters and remarks made during a discussion of two parties’
barristers were grounds for promissory estoppel. The courts rejected as no unambiguous promise had been
made.
3. * The promisee must have acted in reliance to the promise (must have influenced their conduct) [Alan v El
Nasr]
4. ***Future rights must not be destroyed. Promissory estoppel is only used to prevent rights being exercised
for a long period of time and not destroy the rights forever. [Tool Metal Manufacturing v Tungsten Electric]
(rights can be revived for the future, but not claimed back for the past)
Facts: D paid royalties to the C under a 1938 agreement for the manufacture and sale of certain alloys in which
the C owned the patents. D also paid compensation if the amount of alloys manufactured exceeded certain
limits. At the outbreak of World War II, C agreed to suspend their rights to claim compensation. Once the war
was over, the C said they had revoked their suspension and started claiming the compensation.
Held: They were due the compensation from the time they gave notice at the end of the war.
5. No new rights can be created, as promissory estoppel is a shield not a sword. [Combe v Combe]
Facts: A wife separated from her husband and sued on a promise that he had freely made to pay her £2 a week.
Held: The wife had provided no consideration for her husband’s promise, and could not rely on PE.
6. ***Whoever relies on promissory estoppel must come with clean hands. [D & C Builders v Rees] – held that
the Ds cannot rely on promissory estoppel as they had deliberately taken advantage of the builders financial
position.
Facts: C, a small firm of builders, were owed £ 482 for some work which they had done for the D. D offered £ 300
in full satisfaction of the debt. C reluctantly accepted because they were close to bankruptcy. Subsequently, C
sued for the balance.
7. Promissory estoppel must not be prohibited by legislation. [Evans v Amicus Healthcare]

[Hughes v Metropolitan Railway]

- A landlord gave a tenant 6 months’ notice to carry out repairs failure to do so would result in forfeiture of
the lease. The landlord and tenant then entered into negotiations for the tenant to purchase the freehold of
the property. The tenant had not carried out the repairs. At the last minute negotiations broke down and the
Landlord gave the tenant notice to quit for failure to carry out the repairs.
- The court ruled that the landlords’ conduct implied a promise to the tenants that he would not enforce the
forfeiture at the end of the notice period.

[Central London Property v High Trees House]

- World War II broke out and many people left London. C allowed D to pay half the rent stipulated in the lease.
By 1945, the flats were full again. C claimed full ground rent for the last two quarters of 1945.
- Denning J stated obiter that the C would not have been entitled to recover the rent for the period 1940-45,
even though there was no consideration for the promise to accept the reduced rent.

X cheques/promissory notes

Utilised in the absence of consideration