Currie v Misa
benefit to one party or
burden to the other
what is consideration
Must be a causal nexus between thing
promised and thing
Antons Trante = consideration is valuable that parties intended to be bound
Nundum Pactum
Agt unsupported by consideration is a naked agt
Consideration element 1
Consideration must move from the promisee.
the party who seeks to enforce consideration
either some forbearance or paid a price
Executed contract
Consideration given immediately
and provided during the exchange
Executory contracts
consideration is promise to perform at a future date
consideration element 2
Consideration need not be adequate but sufficient. the law does not inquire into value of transactions
peppercorn rule
consideration element 3
Promise to perform a pre existing
obligation. Promisee is not entitled to additional payment when performing a duty already owed to a promisor. exception = promisee did something practcally different
Stilk v Myrick vs Hartley v Ponsonbdy
you know this
consideration element 4
Consideration must not be retrospective
must be prospective.
Prospective examples
must not predate/be unconnected to duty already owed to promisor. however, if promisor knows that if calling on a benefit, they must pay, that is fine e.g. roadside assitance. consideration not deemed in the past simply because of time delay e.g. warranty of goods
Justice Cooke
Chitty on contracts
the courts are not bound
to apply a strict chronological
test if the consideration of
promise and making of contract
is substantially one
transaction
Consideration variation of contracts
relating to ongoing future obligations general rule
a promise to vary a contract that has become more onerous for promisee to perform will not be enfroceable against promisor unless/until fresh additional consideration is given
Williams v Roffey Bros
Facts: A main contractor, facing penalties for delay, promised a subcontractor additional payment to complete carpentry work on time, as the subcontractor was struggling financially after underpricing the job….
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Judgement: The court held that the subcontractor’s completion of work, which enabled the main contractor to avoid penalties and costs of finding new carpenters, constituted a “practical benefit” and was sufficient consideration for the additional payment
emergency of a new principle - “practical benefit” doctrine, modifying the strict rule of consideration allowing promisor to provide consideration if it means that they secure a benefit that would not occur if consideration was not given. here, would have to find a new contractor, work not completed on time, have to pay late penalty
Thoughts of NZ?
up for debate if variation of contract needs to be supported by fresh consideration where parties properly agree (Gloria Jeans)
gloria jeans
Facts: A franchisor orally promised to vary a 10-year franchise agreement to 5 years to induce the franchisee’s initial payment; later, the franchisee refused to renew, citing the 5-year term.
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Judgement: The court ruled that the variation was binding, noting that for long-term contracts, consideration for a variation may not be strictly required if the parties mutually agree to it voluntarily and without illegitimate pressure….
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Applicable Law: This case suggests that in New Zealand, the role of consideration in varying existing long-term contracts may be less strict than in traditional contract formation, emphasizing mutual assent and the absence of vitiating factors
