Considerations

Topic Case Key Principle Ref

Past Consideration Roscorla v Thomas - Past consideration is not good consideration

Re McArdle [1951] CA - Mother carried out improvement works in house Subsequently all children

(adult) promise to pay her some money when the house was eventually sold to

recompense her

- Held The mother had not provided consideration in exchange for the

childrenrsquos promise because the improvements had been completed before the

promise was made -gt Promise not enforceable

NC24 P124

- Pao O (P) own a company Shing On Its major asset is a building under

construction

- Lau Yiu Long (D) own an Investment Company Fu Chip want to buy Prsquos

building

- 21973 P agreed to sell his share in return of Drsquos company share To avoid

depressing the price of Drsquos company D requested P to retain 60 of Drsquos

company share until 3041974 amp D would protect P from any loss from fall of

value

- Subsidiary agreement (SA) D agreed to buy back Prsquos shares on or before

3041974 at $25share P realize that agreement make them lose of benefit if - Value of shares fell and P claimed the money in accordance with the

indemnity

- Held There are good considerations for the indemnity 1) Prsquos promise not to

sell 60 of Drsquos shares for 1 year 2) Although this promise had been made

before the indemnity was given it had been made at the request of D on the

understanding that P were to be protected against risk of fall of price of share

Therefore the indemnity was not independent of the original promise (A Sufficient consideration Thomas v Thomas [1615] QB - Consideration must be sufficient but it need not be adequate

- A man (testator) wished her wife to have their house during her lifetime and

while she remained his widow (P) or ₤100 instead However no such

provision in his will The executors of the will wish to comply with the

testatorrsquos intention made an agreement that P would pay ₤1 yearly towards

the ground rent and keep the house ldquoin good and tenantable repairrdquo P moved

in but Drsquos executors refused to convey the house and ejected her The issue

was whether any consideration for the executorsrsquo promise

P117

a) Performance of a

Public DutyCollins v Godefroy [1831] - Godefroy was plaintiff of a case and agreed to pay the witness Collins in

order to give evidence Eventually Godefroy donrsquot pay for it

- Held A promise to do something which you are already bound to do

under the general law is not good consideration

NC27

Glasbrook Bros Ltd v Glamorgan County Council

[1925] HL

- Police was requested by colliery owner stationed police continuously at his

mine during industrial action by the miners

- Held Police went beyond the duty imposed upon them which provide

consideration for colliery ownerrsquos promise to pay them A promise to do

more than you are already bound to do under general law is good

NC27

b) Performance of a Duty

owned to the PromisorStilk v Myrick [1809] -P a seaman signed up for a voyage During the voyage 2 seaman deserted

Master of ship agreed to divide their pay between the remaining members of the

crew On their return the master refused to pay

- Held P had not consideration for masterrsquos promise There is insufficiency

of consideration where the promisee merely undertakes to fulful the

conditions of an existing contract with the promisor

NC27

Hartley v Ponsonby [1857] - P a seaman signed with the master of ship for voyage (England -gt Australia)

17 out of 36 desserted (degree of danger increase) D promise to pay P₤40 if

he helped to sail the ship to Bombay

- Held Prsquos original contract was terminated because it was dangerous to

sail the ship with 19 seamen Where P are legally entitled to refuse to

perform the original contract then a promise to do something that you

are bound to do under that contract is good consideration

NC29

Williams v Roffey Bros and Nicholls (Contractors) Ltd

[1991] CA

- D (contractor) responsible for refurbishing a block of flat They sub-

contracted the carpentry work to P P ran to financial difficulties and was risk

of incompletion of works In main contract D had to pay LD if canrsquot finish the

work on time D agreed to pay additional money to P if they complete the work

on time

- Held P entitled the additional money D received practice benefit because the

work was completed on time and did not have to engage another sub-

contractor If promisee obtains a benefit or avoids a detriment from the

performance of a promise that is good consideration even if the promisor

NC29 P137

c) Performance on an Existing

Duty to a 3rd PartyWilliams v Williams [1957] CA P128

Shadwell v Shadwell [1860] Court of Common Bench P129

WJ Alan v El Nasr Export amp Import Co [1972] CA P158

Promissory Estoppel Central London Property Trust Ltd v High Trees House

Ltd [1947] KB (High Tree Case)

- When a makes a promise to B which is intended to be binding and to be acted

upon and is in fact acted upon then a is bound by the promise even where B

has provided no consideration for it

NC32 P151

Exception Pao On v Lau Yiu Long (1979) Privy Council NC2530

P124

Topic Case Key Principle Ref

Promissory Estoppel Combe v Combe [1951] CA - Wife (P) divorce w her husband (D) D agreed to pay ₤100yr as

maintenance payment So the wife did not apply to the court for maintenance

payments D eventually did not pay P anything P sued

- Held Wife could not enforce the promise since there is consideration

Promissory estoppel can only be used as a defence not a cause of action

NC33

Tool Metal Manufacturing Co Ltd v Tungsten Electric

Co Ltd [1955] HL

- TMMC (appellants A) licensed respondent (R) to trade metal alloy A entitled

to have compensate if R use more than certain amount each month

- In 1939 outbreak of WWII A agreed to suspend compensation (have

understand new agreement will be negotiated after end of war)

- 1944 negotiation broke down

- 1945 claim compensation under original agreement

- 1947 CA Insufficient notice Appeal fail

- 1955 HL Reasonable notice now being given A was entitled to the payments

under 1937 licence agreement

- A promise to suspend payments operates until the creditor gives

reasonable notice of their intention to resume their strict legal rights

NC34 P163

Hughes v Metropolitan Railway Co [1877] HL - 101874 landlord gave his tenant 6 monthsrsquo notice to repair the property

- 111874 landlord started negotiations to buy the remainder of the lese from

tenant

- 121874 negotiation broke down

- End of 6-month period land forteited by the landlord since no repair carried

out by tenant

- Held Landlord was not entitled to do so Tenant had failed to carry out the

repairs because the landlord had started negotiations to buy the remainder of

the lease A promise not to insist on exact performance may be effective as

NC138 P153

Threat from Promisee D amp C Builders v Rees [1966] CA - P small firm own ₤482 for works for D D offer ₤300 or nothing for the

full debt P reluctantly accepted since they were close to bankruptcy

- Held Ps promise is not estopped (ie may claim the balance) because they

did not voluntarily make the promiseaccept the lesser sum Promise must

have been given full consent not extracted by threats from the promisee

NC36 P162

Emmanuel Ayodeji Ajayi v RT Briscoe [1964] JCPC NC35 P157

Economic Duress CTN Cash and Carry Limited v Gallagher [1994] CA - P bought cigarettes from D who delivered them by mistake to wrong address

from where they were stolen D invoiced P for the cigarettes and threatened to

cut off Ps credit facilities if they did not pay P paid the invoice and then

brought an action to recover the money on the grounds that it had been paid

under economic duress

- Held P could not recover the money Commercial parties are free to

withdraw credit facilities without that amounting to economic duress

NC120 P642

Part payment Pinnel v Cole [1602] - Cole (C) owned Pinnel (P) ₤85 which was due on 11111900 P requested

C to paid ₤511 on 1101600 in full satisfaction of debt

- Held A promise to do more than you are already bound to go under the

original contract (Different mode of payment such as pay earlier) is good

consideration

NC28

Part payment Foakes v Beer [1884] HL - Part payment is insufficient consideration P143 NC30

Other Consideration Cases

Topic Case Key Principle Ref

Note

P58 J Poole ldquoCasebook on Contractrdquo 5th ed Blackstone Press Pg 58

LK58 Laurence Koffman ldquoThe Law of Contractrdquo 4th ed Tolley Pg58

NC58 Anne Ruff ldquoNutcases ndash Contract Lawrdquo 3rd ed Sweet amp Maxwell P58