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Law Notes Contract Law Notes

The Concept Of Consideration Notes

Updated The Concept Of Consideration Notes

Contract Law Notes

Contract Law

Approximately 1511 pages

Contract law notes fully updated for recent exams at Oxford and Cambridge. These notes cover all the LLB contract law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Hong Kong or Malaysia (University of London).

These were the best Contract Law notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LLB samples from outstanding law students with the highest...

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Should the consideration doctrine remain?


  • Chen Wishart: Evidence of existence and seriousness of undertaking

    • Consideration = evidentiary role, is “valuable signal” to show undertaking

    • Looks at which undertakings are enforceable rather than who can enforce

    • Problems:

      • McKendrick: existence of deeds mean that no consideration required at all sometimes

        • But Me: But in such cases, we have the written deed which provides evidence of the promise made and what the promise was for.

          • Consideration serves an evidentiary purpose without which oral contracts

      • McKendrick: Consideration need not be adequate e.g. 1 for Football Club (cos you’re actually buying the debt they’re in)

        • 1 doesn’t really reflect “seriousness of undertaking”.

        • BUT it is a clear indication that the contract is meant to be enforceable – often used as a lawyer device, parties may not even know about it and it may not be paid

          • so yes it is artificial, but has a clear evidential value – some other declaration would have to get involved otherwise.

      • 3. Couldn’t we just infer this from the surrounding circumstances?

        • Possibly, but not as quick and easy for the court to see

          • Equally, meant to be an objective concept, and we may very well get involved in a debate of the subjective views of the parties about whether it was enforceable or not

  • Chen Wishart: Intuitive justice of exchange

    • Enforceability of bargain reflects idea of reciprocity which reflects the norm between equals in social arrangements and symbolises difference between trading and talking

    • Stevens: Force behind consideration = maxim that “equity will not assist the volunteer”

      • Deed much easier to be set aside as a “mistake” rather than a contract with good consideration

  • Chen Wishart: Explains measure of relief

    • Bargain model explains extent of liability for breach of contract

      • Expectation measure gives promise value of performed contract because he has given the agreed equivalence of that performance.

  • Raz: marks boundary of appropriate legal involvement

    • Contract law facilitates institution

      • We can facilitate agreements between friends owing to trust and social sanctions

      • Much harder to do that with strangers

        • Use of contract law viz. consideration helps to bridge that gap of trust

    • Collins: consideration draws line between public enforceable transactions and private unenforceable agreements.

  • Collins: distinction between gift and contract

    • Gift = altruistic – this notion is destroyed if X is then compelled to give a promised gift.

The problem

  • All of these justifications relate to the first contract formation – where two strangers without a pre-existing contractual relationship in that transaction decide to go ahead with it

    • The difficulties come as it is too inflexible and does not seem to serve a purpose after the initial signal of the contractual relationship

      • However, it is because of the different context of formation and modification which suggests that different rules should be used

    • This formation/modification distinction is supported in other jurisdictions

      • E.g. US Art 2-209(1) of the Uniform Commercial Code dispenses with consideration requirement at contract modification

      • Or NZ Antons Trawling Co v Smith – “in absence of countervailing policy reasons”

  • So in Stylks, what we’re concerned with is whether there has been genuine agreement to change the contractual terms

    • Does requiring new consideration make sense here?

      • It does perhaps have evidential function to signal this – however, the cases (e.g. Roffey) don’t dispute that the factual events transpired, or the court finds that they have,

        • the question is merely whether the court will give effect to them or not

    • The doctrine of duress makes more sense – contract formation has already occurred

      • Now we want to know whether the parties are acting freely when they modify the terms

        • Threats to breach contracts are economic duress

        • Whereas an honest statement of financial difficulties

  • But since consideration serves that formation role, we either have to find a different replacement to serve this function

    • E.g. only give effect to written contracts – itself an inflexible rule, and doesn’t help with contract renegotiations either

    • OR Gay Choon Ing v Loh Sze Ti [2009] only require it for verbal contracts

      • Phang JA

        • There is also the proposal of the UK Committee to the effect that consideration is merely evidence of a serious intention to contract,

          • with the result that it should not be required where the promise itself is in writing

      • Me: But this in itself adds complexity to the law where a simple rule on formation applies to all contracts, whether written or oral

        • And also, while a written contract may in itself assist in evidence, even deeds have more formalities than this (e.g. witnessing and signing) –

          • an indication that writing alone is not always sufficient evidence of an intention to be bound

    • Or Atiyiah = make it so that consideration is a good reason to enforce contracts, but not the only one

      • “when the courts found sufficient reasons for a promise they enforced it, and when they for one reason or another thought it undesirable to enforce it, they did not”

    • Chen Wishart: Good point, but goes too far – inclusion of non-bargain stuff weakens contract law internal coherence rather than strengthens it

      • Contract law orthodoxy sets a threshold for enforceability based on bargain considerations, is restrictive of the scope of excuses for non-performance.

        • Expanding beyond this will require appropriate adjustments

    • Also Me: Again is a level of complexity not required at formation stage – contract law formation needs certainty b/c of the new relationship involved

      • Therefore need some kind of signal to show that want a promise...

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