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TABLE OF CONTENTS

Introductory Ideas......................................................................................................3
I - Consideration.........................................................................................................3
- Currie v Misa (1875) LR 10 Ex 153 (definition).......................................................................3

A - Something of value (consideration must be sufficient but need not be adequate)........31 - Where the consideration is promise to pay money for a service/product - nominal consideration (usually) sufficient............................................................................................. 32 - Where the consideration is promise to provide some non-monetary benefit - more complex......................................................................................................................................... 3
- Chappell v Nestle [1960] AC 87............................................................................................... 4
- Lord Wedderburn (1959, CLJ)................................................................................................. 4
- Thomas v Thomas (1842) per Patteson J.................................................................................4
- Hamer v Sidway (1891, NY) per Parker J................................................................................4
- Atiyah, "Consideration in Contracts: A Fundamental Restatement" (1971)............................5
- Smith, The Law of Contract - Alive or Dead?..........................................................................5

B - Past consideration.......................................................................................................... 5
- Eastwood v Kenyon (1840) (past consideration is not good consideration)............................5
- NOTE Atiyah (The Rise and Fall of Freedom of Contract, 1979).............................................5
- PaO On v Lau Yiu [1980] AC 614 (exceptions to the rule that past consideration is not good consideration)............................................................................................................................. 6

C - Pre-existing Duty Rule (Good consideration to promise to do something you're already bound to do?)....................................................................................................................... 61 - Performance of a contractual duty owed to a third party - good consideration..........6
- Shadwell v Shadwell (1860) (performance of a contract with third party is good consideration)............................................................................................................................. 6
- New Zealand Shipping v Satterthwaite, The Eurymedon [1975] AC 154 (ibid.).....................7
- Pao On v Lau Yiu [1980] AC 614 (promise to perform a contract with third party is good consideration)............................................................................................................................. 72 - Performance of a contractual duty owed to the promisor - not clear...........................7
- Stilk v Myrick (1809) 2 Camp 317 (not good consideration)...................................................7
- Williams v Roffey [1990] 1 All ER 512 (may be good consideration if practical benefit and no economic duress or fraud)........................................................................................................... 7
- Antons Trawling Co Ltd v Smith [2003] 2 NZLR 23 (New Zealand)........................................9
NOTE Coote (2003) 120 LQR 19................................................................................................. 93 - Performance of a duty imposed by law - probably not, except Lord Denning who says yes......................................................................................................................................... 9
- Ward v Byham [1956] 1 WLR 496 (might be good consideration)...........................................9
- Williams v Williams [1957] 1 WLR 148..................................................................................10
- Glasbrook Bros v Glamorgan CC [1925] AC 270...................................................................104 - Part Payment of a Debt.................................................................................................. 11
- Foakes v Beer (1884) 9 App Cas 605.....................................................................................11
- NOTE Treitel, Some Landmarks of Twentieth Century Contract Law...................................11
- D & C Builders v Reees [1966] 2 QB 617 (rejection to protect creditors).............................12
- Re Selectmove [1995] 2 All ER 531 (rejection because Foakes is HL precedent).................12
- Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723, 747 (New South Wales test inspired by
Williams v Roffey)...................................................................................................................... 13
- MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] EWCA Civ 553 (not part payment of a debt?)........................................................................................................... 14
- O'Sullivan, "In Defence of Foakes v Beer" (1996).................................................................14
- Treitel, Some Landmarks of Twentieth Century Contract Law (2002)..................................14

D - Consideration must move from the promisee (not from third party)..........................14
E - Necessary Link Between Consideration and Promise.................................................14

CONTRACT: CONSIDERATION

Page 1 - Combe v Combe [1951] 2 KB 215..........................................................................................15
- NOTE Goodhart (1951).......................................................................................................... 15
- NOTE Atiyah (Consideration: A Restatement).......................................................................15

F - The future of consideration.......................................................................................... 15
- Gay Choon v Loh Sze [2009] SGCA 3 (Singapore Court of Appeal, suggesting alternatives)15

II - Promissory Estoppel...........................................................................................17
A - Scope of Estoppel........................................................Error! Bookmark not defined.1 - Definition of estoppel.................................................................................................... 18
- Cooke, The Modern Law of Estoppel (2000)..........................................................................18
- Birks (Equity in the Modern Law)..........................................................................................182 - Foundational Cases....................................................................................................... 18
- Hughes v Metropolitan Rly (1877) 2 App Cas 439.................................................................18
- Central London Property v High Trees House [1947] KB 130...............................................18
- Treitel (Some Landmarks of Twentieth Century Contract Law)............................................193 - The ingredients of promissory estoppel........................................................................19
- Ajari v R T Briscoe (1964)...................................................................................................... 19
- Collier v Wright Holdings [2007] EWCA civ 1329, [2008] 1 WLR 643 (part payment of debt)
.................................................................................................................................................. 19
-a - Clear and unequivocal promise...................................................................................20
- Woodhouse AC Ltd v Nigerian Produce Ltd [1972] AC 741..................................................20
-b - The promisee has altered his position to the extent that it would be inequitable to allow the promisor to go back on the promise (though not necessarily to his detriment).....20
- Societe Italo-Belge v Palm and Vegetable Oils (1982) "The Palm Chaser"...........................20
-c - Inequitable for the promisor to go back on his promise.............................................20
- D and C Builders v Rees [1965] 3 All ER 837........................................................................20
-d - Generally of suspensory effect as to obligations for the future, but can be extinctive of past obligations.................................................................................................................. 21
- Tool Metal v Tungsten Electric [1955] 1 WLR 761 (H.L.)......................................................21
-e - Estoppel cannot act as a cause of action....................................................................21
- Combe v Combe [1951] 2 KB 215..........................................................................................21
- Halson, "The Offensive Limits of Promissory Estoppel" (1999).............................................214 - The different types of estoppel......................................................................................23
Amalgamated Investment v Texas Commerce Int. Bank [1981] 3 All ER 577...........................22
Baird Textile Holdings Ltd v Marks and Spencer Plc [2002] 1 All ER (Comm) 737..................23
MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] EWCA Civ 553..............20
Crabb v Arun D.C. [1976] Ch 179............................................................................................. 24
Commonwealth of Australia v Verwayen (1990) 64 ALJR 540, (1990) 170 CLR 394................26
Walton Stores v Maher (1988) 62 ALJR 110, (1988) 164 CLR 387...........................................25

III - Commentary......................................................................................................27
Atiyah (Introduction to the Law of Contract) 68-9, 106-130.....................................................17
Atiyah, "Consideration in Contracts: A Fundamental Restatement" (1971) pp. 27-34, reprinted
(with slight revision) as Essay 8, Essays on Contract (1986) pp. 206-214, 179........................16
Treitel, "Consideration: A Critical Analysis of Professor Atiyah's Fundamental Restatement"
(1976) 50 ALJ 439..................................................................................................................... 16
Atiyah, "When is an Enforceable Agreement not a Contract? Answer: When it is an Equity"
(1976) 92 LQR 174.................................................................................................................... 24
Millett, "Crabb v Arun DC - A Riposte" (1976) 92 LQR 342.....................................................24
Burrows, "Contract, Tort & Restitution - A Satisfactory Division or Not?" (1983) 99 LQR 217,
239-244..................................................................................................................................... 27
Peel, "Part Payment of a Debt is no Consideration" (1994) 100 LQR 353................................13
Chen-Wishart, "A Bird in the Hand: Consideration and Promissory Estoppel".........................28
Chen-Wishart, "In Defence of Consideration" (2013) 13 OUCJL 209........................................17
Cooke, "Estoppel and the Protection of Expectations" (1997) 17 Legal Studies 258...............28
Chen-Wishart, "Reform of Consideration: No Greener Grass" in S Degeling, J Edelman and J
Goudkamp (eds)........................................................................................................................ 28

CONTRACT: CONSIDERATION

Page 2 I - CONSIDERATION-Orthodox view = consideration is about reciprocity or bargains (in order to be entitled to enforce a promise, a promisee must have given something in return) - a bargain is enforceable, whereas a promise to make a gift is not unless under deed.
Criticisms of the doctrine:
o It is too narrow in scope so fails to give effect to promises that ought to have legal effect
(Dawson)
o It is too technical

It is divorced from commercial reality (but this question usually isn't at issue in commercial transactions because lawyers can relatively easily ensure that consideration is provided, and the law does not (in general) inquire into the adequacy of consideration) or just use a deed)
o It is difficult to reconcile with any modern theoretical model of contract law

It is over-broad and its function can more effectively be achieved by more specific doctrines like duress/unconscionability/intention to create legal relations
Support of the doctrine (Chen-Wishart):
o It expresses our deep instinct for reciprocity which enhances cooperation and division of labour while preserving social equilibrium

It represents the terms of engagement between equals deserving of respect - it keeps the state away from the private domain (where external coercion would distort the practice of gift-giving and so destroy much which is valuable about it)

- Currie v Misa (1875) LR 10 Ex 153 (definition)"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."

- Atiyah (Introduction to the Law of Contract) 106-130
What purpose is served by consideration?-

Ensure that only bargains are enforced?
o Why are bargains more deserving of enforcement?
o Why can token benefits be enforced?
o Why are unilateral contracts enforced (where the person who performs an act is not involved in any exchange)?
Identifies situations where one party gained a benefit or the other suffered a detriment or both?
o But why are executory contracts binding from the moment of formation, where no party has received a benefit yet?

Indeed consideration doesn't fulfil any single function - as its historical development shows:Medieval times: [Stopped at 108]

A - SOMETHING OF VALUE (CONSIDERATION MUST BE SUFFICIENT BUT NEED
NOT BE ADEQUATE)
Who decides whether consideration is sufficient?

*

1 - Where the consideration is promise to pay money for a service/product - nominal consideration (usually) sufficient

Nominal consideration is "just about the clearest possible indication that the promisor intended his promise seriously and intended to give the promisee a legally enforceable right" (Atiyah) because the person was probably instructed by a lawyer to do it (and if he were coerced other doctrines (duress)
would vitiate it)

CONTRACT: CONSIDERATION

Page 3 *

2 - Where the consideration is promise to provide some non-monetary benefit - more complex

- Chappell v Nestle [1960] AC 87Facts: D, Nestle, offered to supply records to anyone sending in a postal order for 1s 6d with three Nestle wrappers. The question was whether the sending in of the wrappers was part of the consideration (YES) or merely a condition of purchase.Viscount Simonds (DISSENTING) : the wrappers are valueless and thrown away, and the purchase of the chocolate bars is not necessarily part of the same transaction as the subsequent purchase of a record (because the "purchaser" could have acquired the wrapper through another, through a retail store... not necessarily through Nestle itself)Lord Reid: to determine the nature of a contract one must find the intention of the parties as shown by what they said and did. Nestle's intention was to use the records to increase their sales of chocolate by inducing people interested in this kind of music to buy chocolate that they otherwise wouldn't buy.
It doesn't matter that some of the wrappers come from chocolate already bought or some buyers would have bought the chocolate anyway - where there is a large number of transactions we should not consider an isolated case where it would be impossible to say whether there was a direct benefit from the acquisition of the wrappers. Cannot divorce the sale of chocolate from supplying of records. The possibility that in some cases the acquisition of the wrappers does not directly benefit Nestle should not require the court to exclude from consideration the cases where it did - even indirect benefit from advertisement.-

Lord Somervell: The wrappers are described as consideration in the offer ("they will help you to get smash hit recordings") and the record itself. The fact that the wrappers when received are of no value to Nestle is irrelevant - a contracting party can stipulate to whatever consideration he chooses. A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw it away.

It is not always easy to draw the distinction between condition and consideration:
- Lord Wedderburn (1959, CLJ)It is "notoriously difficult to set out satisfactory theoretical distinctions between bare promises of gifts subject to contingent conditions, and offers proper"

Chappell did not ask the court to enforce a contract, but the question of consideration was still of central importance... Nevertheless, did it hold that three chocolate bar wrappers would always be good consideration in whatever context, or was the court influenced by the fact that Nestle had good commercial reasons for asking for the wrappers?Perhaps if there is no objectively good reason for asking for chocolate wrappers, it would not be good consideration? (MI seems to support Lord Reid's view)
Perhaps it is no concern of the law if a party chooses to ask for a performance which the others would regard as bizarre? (MI seems to support Lord Somervell)

Nevertheless, the courts do appear to care:
- Thomas v Thomas (1842) per Patteson J"Consideration means something which is of some value in the eye of the law"

Difficult to reconcile with Lord Somervell's view. But the court should be slow to conclude that something which the parties believed to be of value is not in fact of value. Per Lord Wedderburn:It is not open to the courts to speculate about whether it has any real value in the mind of the offeror - such an inquiry would approach perilously near to an investigation of motive.

CONTRACT: CONSIDERATION

Page 4 Provided it is not wholly illusory, the act becomes part of the consideration because it is asked for by the offeree.
Note, however, a New York case that adopts a different approach:
- Hamer v Sidway (1891, NY) per Parker J-

The "contract" was to pay $5000 for nephew to stop drinking, using tobacco, swearing and playing cards for money until he should become 21, argued that it was void without consideration as the uncle obtained no benefit and the nephew suffered no detriment as he was actually benefited from the promise.
Held that it was a valid contract as the definition of consideration is less about one party profiting than the other abandoning some legal right in the present or limits his legal freedom of action in the future as an inducement for the promise - in this case the son limited his freedom to drink and use tobacco.

- Atiyah, "Consideration in Contracts: A Fundamental Restatement" (1971)-

The promise in Hamer has been held enforceable in America and is generally thought that it would be enforceable in England, even though there appears to be no benefit or detriment.
o No benefit: Possible to argue indirect benefit (gratification, uncle had his reasons...) but this is a matter of motives and not benefit. If it were a benefit, then many gratuitous promises would become enforceable simply because the promisor derives a sense of satisfaction from his generosity.
o No detriment: Treitel argues that he gave up a right, but in unilateral contract cases there need be no giving up of a right (ex. in reward cases even if the winner would have run just as effectively absent the promise of a reward, such a promise is still generally believed to be legally enforceable).
Thus it appears that the promise may be enforced because, if the promisee is induced to act on it, it may appear to the courts just to enforce it - though a detrimental change of position is the usual reason for thinking it would be just, the absence of detriment does not by itself seem fatal.

- Smith, The Law of Contract - Alive or Dead?Language of benefit and detriment, and the idea that consideration must be an economic benefit, is out of date - all that is necessary is that D should (expressly or impliedly) ask for something in return for his promise. If he gets what he asks for, there is consideration unless there is a vitiating factor. "Benefit" and "detriment" have no substantial meaning in light of the principle that the court will not inquire into the adequacy of consideration:
o Wrappers are good consideration, though they are of no value for me and you suffer no detriment from giving them away

B - PAST CONSIDERATION
General rule = past consideration is not good consideration because of the bargain theory of consideration. Thus distinction between a bargain (I wash your car on the basis of an unexpressed bargain that you would pay me PSX, then you promise to pay me PSX - enforceable) and a gift followed by a promise to make a gift (I wash your car as a favour then you promise separately to pay me PSX as a gift - unenforceable).
- Eastwood v Kenyon (1840) (past consideration is not good consideration)Facts: C, guardian of Sarah, took out a loan and spent it for the benefit of Sarah, which she promised to repay when she became of full age. Sarah later married D and he promised that he would discharge C's liability to the lender. Issue was whether the promise was binding.Held (Lord Denman CJ):

CONTRACT: CONSIDERATION

Page 5 --

The promise was not binding because the consideration was "past and executed" long before the express promise to pay was made. Indeed C performed services that were of value to Sarah and D promised to pay for them, but there was never a bargain between them to the effect that if C performed the services, D would pay for them - instead, there was one event (loan by C)
followed by a second event (D's promise to reimburse C) but no sufficient connection between the two to constitute a bargain to this effect. C had merely conferred a gift on Sarah, and her husband (out of gratitude or moral obligation) promised to repay the money borrowed, but the promise is unenforceable in law.
The rule that past consideration is no consideration is subject to exceptions

ex. where the earlier act was performed at the request of the promisor (citing
Lampleigh v Brathwait)
o ex. where the promisor later ratifies an obligation which was not binding on him
(ex. a child who ratifies a contract that was not binding on him during his childhood)
A promise to perform a pre-existing moral obligation cannot constitute good consideration.

- NOTE Atiyah (The Rise and Fall of Freedom of Contract, 1979)-

This is a "puzzling" decision - despite the whole trend of contract law in stressing the importance of the promissory basis, the Court invoked the doctrine of consideration, which
"elsewhere had been reduced by this time to a bare technicality"), to defeat a clear and express promise?
Three factors might have influenced this decision:
o Growing strength of positivism - reluctance of the courts to convert moral obligations into legal ones

Downgrading quasi-contractual duties - the decision might be significant not so much in denial of liability on the express promise, but in the denial of any pre-existing quasicontractual duty, as part of a process (since 1840) of the courts cutting down on quasicontractual liabilities consistently with the idea that one is not to be held liable for some benefit conferred upon his wife or child, unless authorized by him (and this authority must be contemporaneous with the conferring of benefit)
o Disappearance of the idea that the binding nature of promises rests upon some preexisting obligation - Lord Denman rejects the argument that a moral obligation can amount to consideration by arguing that all promises give rise to moral obligations, and the doctrine, literally applied, would eliminate the need for consideration altogether.

There are exceptions to the rule:
- PaO On v Lau Yiu [1980] AC 614 (exceptions to the rule that past consideration is not good consideration)-

Facts: C and D agreed to buy each other's shares, and C agreed (i) that the market value of the shares was to be deemed at $2.50 and (ii) that they would not sell D's shares before a certain date to prevent a depression in value of the shares. To protect C against the risk of drop in value of the shares, D entered into a subsidiary agreement, agreeing to buy back the shares before that date for $2.50. However, the agreement was advantageous for D because D
could require C to sell back the shares at $2.50 even if the market value rose. When C
discovered this, they informed D that they would not perform the main agreement unless the subsidiary agreement was replaced by a guarantee that only came into operation if the price of the shares fell below $2.50. D agreed to the terms because they were anxious to complete the transaction so that public confidence in their newly formed company would not be undermined.
When the market value of the shares dropped, C sought to enforce the guarantee against D and
D argued that there was no consideration and that there was duress.
Held (PC): there was good consideration and no duress.
Lord Scarman: C contends that the consideration is not in reality a past one, because the instrument refers to the main agreement, so incorporates the promise to buy the shares and not sell them before the agreed date. Thus, at the time of the guarantee, the promise of the main agreement still lay in the future.

CONTRACT: CONSIDERATION

Page 6 -An act done before the promise can sometimes be consideration for the promise if it is done at the promisor's request, the parties understood that the act was to be remunerated by payment/other benefit, and that the payment/benefit is legally enforceable had it been promised in advance.
All three features are present in this case.

C - PRE-EXISTING DUTY RULE (GOOD CONSIDERATION TO PROMISE TO DO
SOMETHING YOU'RE ALREADY BOUND TO DO?)
Law is in a state of flux, but can identify three categories, with some important questions:
1) Is there any continued justification to differentiate between the categories?
2) Role of duress (perhaps reluctance to impose a duty is to protect the promisee from duress on the part of the promisor?)
3) Conception of benefit and detriment - if we adopt a view of "legal" benefit/detriment then it seems like the promisor is only getting what he was entitled to anyway, but if we use "factual"
benefit/detriment then it seems different...
4) Should the law distinguish between formation and modification of contract?

*

1 - Performance of a contractual duty owed to a third party - good consideration

- Shadwell v Shadwell (1860) (performance of a contract with third party is good consideration)-Facts: C engaged to marry a woman (a binding contract) in exchange for his uncle's promise to pay him a sum of money. Was there consideration? There can be good consideration for fulfilling a pre-existing contractual obligation, as long as it is with a third party.
Erle J: In looking at C's loss (if he married the woman relying on the promise, then that is a type of loss, and so is if he had non-pecuniary loss (embarrassment etc.) or lowering of status)
and D's benefit (marriages are usually of interest to nearly relatives, and if he wanted C to marry the woman it may be regarded as an "inducement" to marry), they are both present, so there is good consideration.
Boyle J (dissenting): A testator requesting C to marry is ample consideration, but this was not the case. Indeed, C may suffer loss due to the marriage, but this is not enough as D must also receive some gain, which was not the case here, because D knew that, at the time he wrote the letter, C was already legally bound to marry the woman, so it was not a marriage by request.

- New Zealand Shipping v Satterthwaite, The Eurymedon [1975] AC 154 (ibid.)PC held that a shipper of goods had made a promise to D (stevedores) who unloaded its goods from a ship, that it would not sue them for any damage that was done to the goods while they were being unloaded. The PC held that the stevedores had provided good consideration for the shipper's promise not to sue, because performance of their contractual duty (to a third party -
the carrier) was good consideration.

More difficult is the case of a promise to perform (as opposed to actual performance) of a contractual obligation owed to a third party. In Jones v Waite (1839) the courts thought that it was NOT good consideration, but Pao

v Lau Yiu held that it was:
- Pao On v Lau Yiu [1980] AC 614 (promise to perform a contract with third party is good consideration)Lord Scarman: "a promise to perform, or the performance of, a pre-existing contractual obligation to a third party can be valid consideration", because the promisee obtains the benefit of a direct obligation."

*

2 - Performance of a contractual duty owed to the promisor - not clear

CONTRACT: CONSIDERATION

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