Session 4 all cases

Question 1

Why does English contract law require consideration for a promise to be enforceable?

Answer 1

Consideration acts as a filter to distinguish legally binding promises from mere social or moral promises. The law requires an exchange of value to show that both parties intended legal consequences. This promotes certainty and limits judicial intervention, even if the result may sometimes appear unfair.

Question 2

A promise is supported by something of very small or trivial economic value. Is this sufficient consideration?

Answer 2

Yes. Consideration must be sufficient but not adequate. Courts do not assess fairness or market value. As long as something of legal value is given, even if trivial, consideration exists.

Question 3

Someone performs an act before a promise to pay is made. Can that act count as consideration for the later promise?

Answer 3

Generally no, because past consideration is not valid. However, it can be valid if the act was done at the promisor’s request, both parties understood that payment would be made, and the promise would have been binding if made in advance.

Question 4

A party promises to do something they are already legally required to do. Does this normally amount to consideration?

Answer 4

Normally no. Performing an existing legal duty does not provide fresh consideration because the promisor receives nothing new. This protects against extortion and preserves genuine exchange.

Question 5

When can performance of an existing contractual duty count as valid consideration?

Answer 5

When the promisor gains a practical benefit, such as avoiding delay or penalties, and the promise is not obtained through economic duress. This applies mainly to contracts for services or work.

Question 6

A debtor pays part of an undisputed debt and the creditor agrees to accept it in full settlement. Is the remainder discharged?

Answer 6

Usually no. Part payment of a debt is not good consideration for waiving the balance. The creditor may still sue for the remainder.

Question 7

Does the practical benefit approach allow courts to bypass the rule on part payment of debt?

Answer 7

No. The practical benefit doctrine does not apply to part payment of debts. Despite uncertainty in some cases, the traditional rule remains binding.

Question 8

What problem does promissory estoppel aim to address?

Answer 8

It prevents a party from enforcing strict legal rights where they have led another to rely on a promise and it would be inequitable to go back on it. It allows equity to soften strict contract law.

Question 9

What conditions must be met for promissory estoppel to apply?

Answer 9

There must be a clear and unambiguous promise, an existing legal relationship, reliance or change of position, and it must be inequitable to withdraw the promise.

Question 10

Can promissory estoppel be used to create a cause of action?

Answer 10

No. Promissory estoppel is a defence, not a cause of action. It prevents enforcement of rights but cannot be used to sue independently.

Question 11

How does bad faith affect promissory estoppel?

Answer 11

If the promise was obtained through pressure or sharp practice, estoppel will not apply. Equity does not assist a party acting inequitably.

Question 12

Does promissory estoppel permanently remove legal rights?

Answer 12

Usually no. It normally suspends rights rather than extinguishing them. Rights may revive once the circumstances change, unless it would be inequitable.

Question 13

What is the core rule of privity of contract?

Answer 13

Only parties to a contract can enforce it or be bound by it. Third parties cannot sue or have obligations imposed on them, even if the contract was intended to benefit them.

Question 14

Why did common law restrict enforcement to contracting parties?

Answer 14

To promote certainty, respect autonomy, and align rights with consideration. It prevents courts from imposing rights or duties on non-parties.

Question 15

How could third parties benefit under common law despite privity?

Answer 15

Through limited exceptions such as agency, assignment, trust of a promise, collateral contracts, or tort liability. These were narrow and often artificial.

Question 16

When can a promisee recover damages for third-party loss?

Answer 16

Generally only for their own loss. Exceptions exist in family or consumer contexts or where the third party has no other remedy, but commercial cases are treated strictly.

Question 17

What is the main effect of the Contracts (Rights of Third Parties) Act 1999?

Answer 17

It allows a third party to enforce a contract term if the contract expressly allows it or if the term confers a benefit on them and no contrary intention appears.

Question 18

What limits apply to enforcement under the 1999 Act?

Answer 18

The third party must be clearly identified, and the Act does not apply where the contract excludes it or to certain categories like employment contracts.