Consideration

Question 1

what is consideration?

Answer 1

• Only promises given in exchange for some counterpart deprivation of the promisee’s liberty (consideration) are legally enforceable (Thomas, Great Northern Railway, Tobias)
• Without consideration, the supposed contract is a gift.

Question 2

magnitude of consideration

Answer 2

The magnitude of the differentiation is irrelevant (Westlake, Thomas)

Question 3

how many considerations are there in each contract?

Answer 3

Every contract involves 2 reciprocal considerations (one from each party) (all cases)

Question 4

nominal consideration

Answer 4

Nominal consideration only acts as a formality, causing a gift to be enforceable (Brudner, Benson)

Question 5

detrimental reliance

Answer 5

Detrimental reliance is irrelevant to contract formation insofar as it involves detriment that is the consequence, not the cause, of the promise (Alleghney College, Dalhousie College).

Question 6

committing to a pre-existing duty

Answer 6

Committing to a pre-existing duty isn’t valid consideration (Stilk, Hartley dicta, Smith, Raggow dicta, Gilbert Steel, Davidson dicta, Reif dicta)

Question 7

a promise not to breach one’s legal duty

Answer 7

• A promise not to breach one’s existing legal duty isn’t valid consideration, as there is no right to do so (Smith).
• Exception: A promise to perform a pre-existing duty can constitute consideration if it confers a practical benefit (Williams)
• BUT, Valcke doesn’t like this case

Question 8

a promise to do something you have no legal right to do

Answer 8

A promise not to do something you have no legal right to do cannot constitute consideration (White).

Question 9

a promise not to do something you have the legal right to do

Answer 9

Not doing something you have the legal right to do (forebearance) can constitute valid consideration in certain circumstances (Hamer).

Question 10

White (Executor) v. William Bluett

Answer 10

• Facts: A son promised to stop complaining about his father distributing his wealth unfairly in exchange for the father forgiving a debt on a promissory note.
• Rule: Promising not to bore or annoy someone is not valid consideration because you have no legal right to be annoying in the first place.

Question 11

Hamer v. Sidway

Answer 11

• Facts: An uncle promised his nephew $5,000 if he would refrain from drinking, using tobacco, swearing, and playing cards until the age of 21.
• Rule: Forbearance of a legal right is a valid consideration for a contract.

Question 12

Eleanor Thomas v. Benjamin Thomas

Answer 12

• Facts: A dying husband orally wished for his widow to have his house, and his executors executed an agreement letting her live there provided she paid £1 yearly rent and kept it in good repair.
• Rule: A consideration is something that is of value in the eyes of the law, moving from the plaintiff (even a nominal £1 payment).
• Valcke/Class Note: This is more like a gift due to charitable intentions and subjective motives.

Question 13

Dalhousie College v. Boutlier Estate

Answer 13

• Facts: Boutlier promised $5,000 to a campaign fund but died before paying, and the college sought payment from his estate arguing they incurred liabilities relying on the subscriptions.
• Rule: A promise to pay a subscription to a charity is a “naked promise” and is not enforceable without consideration; mere expenditure of money in reliance is not enough.

Question 14

Great Northern Railway Company v. Witham

Answer 14

• Facts: The defendant sent a tender to supply goods “as ordered”, the plaintiffs placed orders, and eventually the defendant refused to supply any more iron.
• Rule: A tender constitutes a standing offer.
• Valcke/Class Note: While the buyer is not bound to place orders, if they do place an order, a binding contract is created for that specific quantity, and the supplier must deliver.

Question 15

Tobias v. Dick and T Eaton Co.

Answer 15

• Facts: An agreement gave the plaintiff exclusive selling rights for the defendant’s machines, but it gave the defendant no control over the machines or the plaintiff’s dealings.
• Rule: A contract requires mutuality to be legally binding.

Question 16

Wood v. Lucy, Lady Duff-Gordon

Answer 16

• Facts: A fashion creator gave the plaintiff the exclusive right to place her endorsements on designs in return for half of the profits, and she later withheld profits from him.
• Rule: The Court must not just assess the formal wording of a contract, but also the implied intentions; sometimes, consideration (like a promise to use reasonable efforts) can be implied.