Consideration flashcards

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Define 'consideration' in contract law.

The legal price of a promise. Lush J in *Currie v Misa* defined it as a benefit to one party or a detriment to the other. It is the essential element of bargain in a contract.

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What is the rule against past consideration?

A promise made after an act has been performed is generally unenforceable as the act is 'past consideration'. The consideration was not given in exchange for the promise. Key case: *Re McArdle*.

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Explain the difference between 'sufficient' and 'adequate' consideration.

'Sufficient' means the consideration must have some value in the eyes of the law (*Thomas v Thomas*). 'Adequate' means it must be of a fair market value. Consideration must be sufficient but need not be adequate (*Chappell v Nestle*).

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What is the rule from *Stilk v Myrick*?

Performing an existing contractual duty owed to the other party is not good consideration for a new promise from that same party for additional payment.

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What is the 'practical benefit' exception from *Williams v Roffey Bros*?

Where a party promises extra payment for an existing contractual duty, and in return obtains a practical benefit (or avoids a disbenefit), this can be good consideration, provided there is no economic duress.

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Consideration must move from?

The **promisee** — third party can benefit but cannot enforce unless privity exception (Contracts (Rights of Third Parties) Act 1999).

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What is the rule from *Pinnel's Case* / *Foakes v Beer*?

Part payment of a debt is **not** good consideration for a promise to accept less — unless fresh consideration is provided (e.g. a chattel, earlier payment, different place).

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What is the three-part test for the 'past consideration' exception from *Pao On v Lau Yiu Long*?

1. The act must have been done at the promisor's request. 2. The parties must have understood the act was to be remunerated. 3. The payment or benefit must have been legally enforceable had it been promised in advance.

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How does *Hartley v Ponsonby* differ from *Stilk v Myrick*?

In *Stilk*, the crew performed their existing duty. In *Hartley*, so many crew had deserted that the remaining voyage was exceptionally dangerous, meaning the sailors went *beyond* their original contractual duty. This was good consideration for a promise of extra pay.

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What did the case of *Re Selectmove* decide?

It confirmed that the 'practical benefit' principle from *Williams v Roffey* does NOT apply to part-payment of debt cases. Such cases are still governed by the rule in *Foakes v Beer*.

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What is promissory estoppel?

An equitable doctrine that can stop a person from going back on a promise which is not supported by consideration. It acts as a shield, not a sword, and applies where it would be inequitable for the promisor to renege on their promise.

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What is 'executed' consideration?

Consideration that has already been performed. It is an act given in exchange for a promise (e.g., returning a lost dog for a promised reward). This is valid consideration.

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What is 'executory' consideration?

Consideration that is yet to be performed. It is a promise given in exchange for another promise (e.g., a promise to deliver goods in one week in exchange for a promise to pay on delivery). This is valid consideration.

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Adequacy vs sufficiency?

Need not be adequate (fair) but must be **sufficient** (legally recognised) — Thomas v Thomas: £1 rent sufficient for life interest.

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Past consideration rule?

Act done before promise cannot be consideration — unless Lampleigh v Braithwaite exception (requested + understood payment expected).