04 - Consideration

Question 1

What are the three types of consideration?

Answer 1

Past, present and future

Question 2

What is present consideration?

Answer 2

When an act or promise is given by one party on or around the time of signing the contract with the other side of the contract not yet being fulfilled. For example, paying for goods that are yet to be delivered.

Question 3

What is future consideration?

Answer 3

When either party decides to act at a future date. The contract has already been executed. However, the obligation is in the future and had not yet been performed. For example, a contract to deliver goods where payment is made on delivery

Question 4

What is past consideration?

Answer 4

Something that has already been done at the time a contract is made. However, this is NOT considered valid consideration

Question 5

What is the exception to past consideration?

Answer 5

If there is implied promise to pay (legally binding commitment to pay). For example, at a hairdresser or in a taxi. However, this is only enforceable if an agreement is reached before the service is carried out

Question 6

When may a promise for additional consideration be enforceable?

Answer 6

If there is additional work other than what has already been agreed (fresh work for a new promise) and there is a practical benefit to both parties

Question 7

What is the rule in pinnels case?

Answer 7

A creditor will always be able to sue for the full outstanding amount, regardless of any agreements that had been made regarding repayment of the amount outstanding i.e. payment plans

Question 8

What is promissory estoppel?

Answer 8

A legal principle that prevents someone going back on a promise (even if a formal contract does not exist) if another party has relied on that promise. This does not apply to amounts already due, just amounts that may be due. For example, if a landlord agrees to lower rent due to hardship, they cannot claim back the rent reduction at a later date