consideration

Question 1

a contract needs

Answer 1

OFFER
ACCEPTANCE
CONSIDERATION
INTENTION TO CREATE LEGAL RELATIONS

Question 2

basic theory of contract

Answer 2

Freedom to contract (you can contract what you like, with who you like)
Sanctity of contract (the law does not want to interfere or invalidate contracts unless it has to.)

Question 3

What is consideration

Answer 3

An exchange of something of value
Both parties must give something to the other by the way of exchange

Question 4

Executed and executory consideration

Answer 4

Executed- an act in return for a promise
Executory- a promise in return for a promise

Question 5

4 rules

Answer 5

1.consideration must be sufficient but not adequate (Thomas v Thomas)
2.past consideration is no consideration (McAcdle)
3.the consideration must move from the promisee (Tweddle v Atkinson)
4.performing a pre existing duty cannot be consideration for a new contract

Question 6

Adequacy

Answer 6

The law does not concern itself with whether the consideration is equivalent only that something of value is supplied (Thomas v Thomas)

Question 7

Performing a pre existing duty cannot be consideration for a new contract. This can occur when:

Answer 7

-A duty is imposed by a public duty to act (Colin’s v Godefry)
-a duty under a existing contract (Williams v Roffey)
-a promise to pay an existing debt

Question 8

Implied consideration

Answer 8

(Re Casey’s patent) people do not do work without being expected to be paid

Question 9

Why is it required

Answer 9

Formal mechanism to distinguish an enforceable agreement
Signals intention
Controls contract variations

Question 10

Good consideration

Answer 10

An exchange of promises

Performance of a requested act that benefits promisor or subjects promised to a detriment

Must be something of tangible value but this is for parties to decide (Thomas v Thomas)

Question 11

Problematic consideration

Answer 11

Past consideration (McArdle)
Performance of a pre existing duty
Performance of a presxisting contractual duty owed to a therd party (Shadwell v Shadwell)
Pre existing contractual duties and contract modifications

Question 12

Part payment rule

Answer 12

Rule in Pinnels case 1602 and Foakes v Beer1884 a promise to accept less money in satisfaction of a debt is unenforceable for lack of consideration. Paying less money = not enough
• But paying less + something extra/different = can be enough

Collier v Wright- no consideration for agreement not to pursue C for the debt, but C succeeded on grounds of promissory estoppel

If you owe someone money, paying only part of it usually does NOT cancel the whole debt, even if the other person says they’ll accept less.

Example:
• You owe £100
• You offer £60 and the other person agrees to accept it
• Later, they can still legally ask for the remaining £40

👉 Why? Because you didn’t give anything “extra” in return

Question 13

Significance of Williams v Roffey

Answer 13

Recognition of importance of economic duress (rather than consideration) to deciding if contract modification is enforceable

Unpopular and controversial decision, leaving law in confusion

Question 14

Problems with Williams v Roffey

Answer 14

Decision creates negative incentive effects amongst contractors

Reflects commercial reality but makes law more uncertain and uncertain law promotes disputes

Decision is inconsistent with the part payment rule

Question 15

Can the decisions be reconciled

Answer 15

Money and services are not the same thing
Creditor under no legal duty to mitigate losses in relation to debts they are owed