Chappell v Nestle
Ratio:
The consideration must be something of value, even if it is an object of trivial value, this can constitute consideration, it just must not be nothing
the consideration needs not be adequate
Facts:
Choclate manufacturers (Nestle) sold Gramaphone records for 1s. 6d. And three wrappers of their 6d. bars of chocolate (wrappers formed part of the price)
It was held that the delivery of the wrappers formed part of the consideration – despite the fact the wrappers were of little value and were thrown away
Pao On v Lau Yiu Yong
Ratio:
There are exceptions to the general rule that past consideration is not good consideration
Past consideration may be good consideration if there was a prior understanding between the parties
For example ‘an act done before the giving of a promise to make a payment can sometimes be consideration for the promise. The act must have been done at the promisor’s request, the parties must have understood that the act was to be remunerated either by payment or conferment of some other benefit’
Facts: C promised F not to sell certain shares for one year, the D later gave the claimants a guarantee that they would indemnify the Cs against any loss if the shares fell in price, Issue whether Ds promise had good consideration - held it did
Opel v Mitras Automative
Importance at [42]
performance of an existing duty, or the promise to perform it, is not, of itself, good consideration (rejecting Lord Denning’s view in Ward v Byham)
Williams v Roffey
ratio:
there is an exception to the general rule that performance of an existing duty, or the promise to perform it, is not, of itself, good consideration
There will be good consideration in such cases of a performance or a promise to perform an existing duty, where the promisee will have conferred a factual benefit onto the promisor (as opposed to simply just a legal benefit)
Facts: B was under contract with X
B subcontracted A as a carpenter
B later promised to make extra payments to A, to ensure he completed the work on time so he wouldn’t be exposed for penalties for delay under his contract with X
Note - not directly overuling stilk v myrick but ‘redifining and limiting it’
Foakes V Beer
Ratio:
confirmed the general common law rule that a creditor is not bound by an undertaking to accept part payment in full satisfaction of a debt
i.e part payment of a debt is not good consideration
This was established by the rule “payment of a lesser sum on the day in satisfaction of a greater sum cannot be satisfaction of then whole” from Pinnel’s case
The judges differentiated between promises to pay more and promises to accept less, the former can be binding if it confers a practical benefit on the promisor but the latter can never be binding
Facts: B obtained a judgement for a sum of X against F
16 months later F asked for time to pay
The parties entered into a written agreement under which B undertook not to take ‘any proceedings whatsoever’ on the judgement
But in consideration for £500 immediate payment by F and on the condition of his paying of specified instalments ‘until the whole of the sum shall have been paid and satisfied
Some 5 years later – B claimed £360 for interest on the judgment debt
Rock Advertising v MWB Business Exchange
The UKSC here overturned the ruling of the CA, but declined to comment on consideration as it was not relevant, case was decided upon other issues
However the CA ruled that in line with the Wiliams v Roffey principle, where an agreement to accept less confers practical benefit to the creditor, this agreement will be enforceable as the practical benefit represents good consideration
As to the authority of this ruling is uncertain as the UKSC declined to comment
In obiter - Lord Sumption (for the majority) declined to overule Foakes v Beer - wanting to leave it for a larger UKSC panel
