Consideration Duress Part Payment Promissory Estoppel Notes

Contract Law: Consideration, Duress, Part Payment, Promissory Estoppel

Consideration

• Consideration = ‘an act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought’ (Dunlop v Selfridge, Dunedin LJ).

• If no consideration promise not enforceable.

• So a promise of the consideration (the act or forbearance) is enough to be consideration (Dunlop)

• Rules of ‘good consideration:

  • (1) must not be past (Eastwood v Kenyon; exception, Paon on v Lau Yiu Long, Lampleigh, Re Casey, Re McArdle).

  • (2) must move from the promisee (Tweddle v Atkinson).

  • (3) must be sufficient not adequate (Chappel v Nestle; White v Bluett CF Hamer v Sidway).

Consideration must not be past

• Eastwood v Kenyon—an act/forbearance prior to promise to pay = bad consideration.

• Exception—where some prior act/service was provided at promisor’s request; and was always understood payment would be made

• Pao On v Lau Yiu Long, 3 conditions

  • (1) act must have been done at (express) request of the promisor (Lampleigh v Braithwait—Braithwait expressly requested Lampleigh to get him a pardon).

  • (2) Payment understood to be due (parties understood the act to be rewarded)—may be implied, eg in commercial context.

  • implied understanding; Re Casey’s Patents, implied understanding, commercial setting—Re Casey: implied understanding of payment due to past dealings between the parties, had been paid for that work for 40 years.

  • cf domestic setting, less likely to be implied, Re McArdle).

  • (3) Contract enforceable apart from this issue:

  • (a) ICLR issues: eg if between family, no ICLR, no contract;

  • (b) offer & acceptance issues:

  • (c) any other consideration issues:

    • The consideration must be good, aside from it being past.

    • Eg, whether ‘sufficient’ consideration (Chappel v Nestle), or whether only public duty (Collins v Godefroy) etc etc

    • So might need to discuss here whether is good consideration, eg Hartley; Wiliams v Roffey etc.

• NB: not really an ‘exception’—the subsequent promise to pay is simply evidence of an obligation to pay which had already arisen.

Consideration must move from the promisee (Dunlop v Selfridge)

• Similar to privity, but separate—2 different principles, overlapping.

• Tweddle v Atkinson: consideration was between the fathers, Tweddle JR had given no consideration (was unenforceable for 2 reasons: (1) no consideration; (2) no privity.

Consideration must be sufficient, need not be adequate

• As long as courts can find value, won’t assess the relative value of each party’s contribution---freedom of contract.

• Must be sufficient, need not be adequate: Chappell v Nestle: wrappers were part of the consideration. A ‘peppercorn’ can be good consideration.

• But consideration must be sufficient, must have some value ‘in the eyes of the law’. Is forbearance good consideration?

  • NO White v Bluett: giving up something you never had a legal right to in the first place = not good consideration, not a detriment.

  • CF, yes if: consideration if giving up legal rights--Hamer v Sidway: had given up rights which he had a right to do aged 16 (smoking/drinking/gambling) = restricting his lawful freedom = good consideration.

  • No consideration if promise to resist a course of action he never intended to pursue: Arralge v Costain.

Existing obligations—good consideration?

• Public duty—performance of exiting obligation

  • Not good consideration (Collins v Godefroy, re public duty to appear in court).

  • Exceptions—going beyond duties imposed by law

  • England v Davidson, police officer went beyond duty by providing info to a private individual.

  • Police, Harris v Sheffield United—police, by protecting safety of supporters inside th stadium = ‘special serivces’, over & above normal duties—Sheffield Utd had to pay.

  • Parental, Ward v Byham: public duty to look after child; but not to keep their children happy. So was consideration.

• Courts use sufficiency of consideration as a way to decide along policey concerns.

Performance of an existing obligation to a third party

• Doing something one was already bound to do under a pre-existing contract with a 3^rd party.

• Can be good consideration, Scotson v Pegg.: delivery of coal to Pegg was god consideration for Pegg’s promise of a discount; immaterial that S had previously contracted with C to deliver the coal to Pegg. Pegg still got a benefit.

• The Eurymedon (PC): PC applied Scotson, where D already bound by a contract with a 3^rd party to unload goods. The consideration given to the promisee = the right to sue, the benefit of a direct obligation. Promi

• Pao On v Lau Yiu Long: a promise (CF actual performance) to perform a pre-existing contractual duty owed to B = good consideration to C.

• Promisor gets benefit of 2 separate contracts for doing 1 obligation; but also gets double liability.

Existing obligation within a contract (1) Stilk general rule; (2) Hartley legal benefit; (3) Roffey practical benefit

• Performance of existing obligation = not good consideration (Stilk v Myrick): re ship sailors, 3 deserting sailors, sailed ship back: had only performed existing obligations, not entitled to extra money.

  • [[NB: now, Stilk v Myrick would be covered by doctrine of economic duress. So before that, consideration was used to police duress.]]

• Exception (1), Legal benefit, ‘over & above’—Hartley v Ponsonby:

  • 16 sailors deserted; dangerous journey on way back, ship seriously undermanned—legal benefit, ‘over and above’ original obligations good consideration for a fresh contract.

• Stilk general rule + Hartley exception approved in The Atlantic Baron.

• Exception (2), practical benefit, Williams v Roffey

  • Facts: Williams a carpenter; changed working plays with extra payment promised;

  • Roffey obtained practical benefits: avoided losing money under ‘penalty’ clause with the owner; obviated disbenefit of finding alternative contractor; benefited from altered working arrangements.

  • = good consideration.

  • Court interpreted Stilk as guarding against duress; and now we...

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