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Consideration

As always the notes follow the outline of the mindmap. The picture below has less detail it’s just to give an overview of the main points. The PDF version (Consideration2) shows all the levels of the mindmap. (Reflected in the notes)

DEFINITION

Classical definition:

Modern approach:

 

GENERAL RULES OF CONSIDERATION

  1. THE RELEVANT TIME:it must be given in exchange for the promise i.e in response to the promise it can’t be given beforehand.

Exceptions:

  1. CONSIDERATION MUST MOVE FROM THE PROMISEE
  1. MUST BE SUFFICIENT BUT NOT ADEQUATE

Tangible returns

 

Intangible Returns: are where for example A agrees to sell book and B promises to be nice in return. Can emotional gifts be consideration?

 

  1. PAST CONSIDERATION IS NO CONSIDERATION

With English law being English law, there are however a number of exceptions to this general rule.

Normally this would be past consideration as the action is done before the promise. However the court held that if it’s clear that the only reason someone would do an act is in expectation of a reward, then even if consideration is past it WILL be valid.

 

  1. PERFORMANCE OF AN EXISTING DUTY THAT YOU OWE UNDER THE LAW

Exceptions to the general rule

    1. where a public duty is exceeded
    2. where a contractual duty is exceeded
    3. where there’s an existing contractual duty owed to a third party
    4. where the rule in Williams v Roffey Bros applies.

 

  1. Existing Duty to Promisor/ contractual duty is exceeded

 

 

  1. WHERE THERE IS AN EXISTING CONTRACTUAL DUTY OWED TO A THIRD PARTY

 

  1. WHERE PUBLIC DUTY IS EXCEEDED

 

 

 

  1. WHERE THE RULE IN WILLIAMS V ROFFEY APPLES

A pre-existing duty to the promisor can be legally sufficient consideration if the promisor derives a practical benefit from the agreement and if the promise isn’t given under economic duress. The test for understanding whether the contract could be legitimately varied is as follows:

  1. A has a contract with B for work and before it’s done A has a reason to believe that B may not be able to complete it
  2. A promises if B finishes on time they will get more money etc and
  3. A obtains in practice a benefit or obviates a disbenefit from giving the promise
  4. There must be no economic duress.

 

Criticism: Roffey wrongfully decided and doesn’t take into account Beer. And reasoned wrongly as it relies on a case that’s not relevant, and extrapolates case to a two person relationship. Basically its wrong!

Problem: Coleman’s comments are obiter and not ratio. So it’s left to us to think about the rightness of Williams and Roffey bros. Easy answer: they deal with different issues. They both cases deal with performance of an existing contractual duty.

 

  1. PART PAYMENT OF DEBT

Basically part payment and something= good consideration

 

Which is why William v Roffey Bro’s is controversial- if you’re owed a debt then getting the money early is of benefit to you, so surely early payment should be good consideration?

 

 

  1. FORBEARANCE TO SUE

 

Cook v Wright (1861) 1 B & S 559

 

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