Consideration

Question 1

What are the key elements that relate to consideration?

consideration = “something of value”

Answer 1

1. Consideration
2. Existing obligation
3. Promissory estoppel

Question 2

What are the two types of considerations?

Answer 2

1. Executory consideration:
   * where contracting parties make promises to each other to perform something in the future after contract has been formed.
   * mainly in bilateral contract
2. Executed consideration:
   * where consideration has been performed.
   * mainly in unilateral contracts as performance of required act is both acceptance, offer and executed consideration.

Question 3

What are the 4 rules in relation to consideration?

Answer 3

1. Must not be past
2. Must move from the promisee
3. Need not be adequate
4. Must be sufficient

Question 4

Explain consider must not be past?

Answer 4

• consideration must be given in exchange for promise of the other party, if act has taken place prior to promise, then it cannot be in exchange for that promise.
• an exception exists where some prior act or service was provided by promisee at the promisor’s request and it was always understood that payment would be made for that act or service. Conditions is which it applies:
  1) act must have been done at promisor’s request
  2) parties must have understood that act was to be rewarded either by payment ot some other benefit
  3) payment or conferment of other benefits, must have been** legally enforceable had it been promised in advance.**

Question 5

Explain consideration must move from the promisee?

Answer 5

• a party which has not provided consideration may not bring an action to enforce a contract.
• a person to whom a promise is made can only enforce the promise if they have provided consideration forthe promise.

e.g., case where fathers of bride and groom agreed to pay a certain about to groom, William (claimant) - C sought to enforce father-in-law’s promide, but held that he could not as he had provided no consideration for the promise.

Question 6

Explain consideration need not be adequate?

Answer 6

• doctrine of freedom of contract means that courts will not interfere with bargain freely recahed by parties, even though it might seem immaterial, if the agreement was freely reached then parties will be bound to promise.

Question 7

Explain consideration must be sufficient?

Answer 7

• consideration must have value in the eyes of the law - doesn’t matter if value is small, all that matters is that it is worth something.
• if thing of value can be identified, then there is sufficient of consideration.

Question 8

What is the general idea of variation of contract?

Answer 8

• circumstances may change during life of contract (i.e., scope of work required may change), to respond, parties may wish to vary their contract.
• For variation of contract to be binding, same essential components of a valid contract is required: agreement, consideration and intention to create legal relations