Comparative Contract Law Part II: The law of contract (Continued)

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Transcript of Comparative Contract Law Part II: The law of contract (Continued)

Comparative Contract Law Part II: The law of contract (Continued)
Comparative Law LLM KiLAW fall 2013 Dr Myra Williamson consideration Roadmap-Contract Law Offer Acceptance Intention to create legal relations Consideration Capacity Other aspects: Consent Void and voidable contracts Performance of contract Breach and remedies Consideration: an overview
Unless a contract is made by deed,consideration is a universalrequirement of contracts in thecommon law A bare promise (nudum pactum inLatin) is not legally binding A promise without consideration is agift terms to know #1 deed Deed What is it?
A signed (and sometimes sealed) instrument in writing thatgives legal rights It is like a contract but it is enforceable without consideration A deed is a document that says This is a deed It is usually executed in front of witnesses (this is calledbeing in solemn form) Some type of transactions MUST be done by deed For example conveyances (buying and selling real estate), mortagages, leases For present purposes it is important to simply note that a deed is enforcebale without consideration TermS to kNow #2: consideration
Consideration: what is it? some right, interest, profit or benefitaccruing to one party, or some forbearance,detriment, loss or responsibility given,suffered or undertaken by the other. Currie v Misa (1875) Consideration means any benefit to thepromisor or detriment to the promisee Consideration Each party to the contract must receivesomething of value To put it simply: consideration is the price forwhich the promise of the other is bought Eg. I promise to give you my watch. You dont give meanything in return. If I break my promise and decide notto give you my watch, you cant go to court to make megive it to you. There would be no legally-bindingcontract because you didnt give me consideration formy promise Civil law? Although consideration is a key requirement of a contractin the common law countries, there is no exact equivalent The closest equivalent in the civil law is the requirement ofcause I will distribute a reading which shows some differencesbetween consideration and cause Please consider how the Kuwaiti law compares with boththe common law and the other civil law jurisdictions in thereading General rules of consideration
a)It must be real/genuine b)It need not be adequate c)It must be legal d)It must move from the promisee e)It must be possible f)It must not be past a) Consideration must be reaL
General principles The court will not enforce vague or sham promises or promises in which there is no benefit at all There must be some real benefit OR real detriment Many cases are authority for this proposition we will look at just two cases : White v Bluett (1853) Shadwell v Shadwell (1860) a) consideration must be real continued
White v Bluett (1853) Facts: Mr Bluett had lent his son money. Mr B died. The executor (Mr White) sued the son asking him to pay the money back to the estate Son argued that father had told him he need not pay back the money if he would stop complaining about how he was going to distribute the money in his will The consideration = the promise to stop complaining Held: The promise to cease complaining that he was not as well-treated as his brother was not sufficient (ie. Not good enough) consideration not complaining was not a tangible (or real) benefit so there was no contract a) consideration must be real contd
Shadwell v Shadwell (1860) Facts: Uncle promised to pay nephew 150 a year if he married Ellen Nicholl The nephew married Ellen Nicholl Some payments were made uncle died Nephew sued executor of uncles estate for the rest Held: by marrying, the nephew had incurred responsibilities and had changed his position; the uncle had obtained benefit in seeing his nephew marry The consideration was real nephew won b) Considerations Doesnt need to be adequate
adequate = fair or a good price; enough Parties are free to make whatever types of contracts they like They can name the price for their goods whatever price they like The rule is: The price does not need to be fair or adequate but it must have some value in the eyes of the law A person cannot complain to the court simply because they have paid too much ie. If they made a bad bargain The court applies the rule caveat emptor which means let the buyer beware This rule means that the court is not going to interfere if a person pays too much or too little the parties have to look out for their own interests when entering into contracts b) Consideration need not be adequate contd
Cases which are authority for theproposition that consideration neednot be adequate: Bainbridge v Firmstone (1838) Chappell & Co Ltd v Nestle Co Ltd (1960) * b) Doesnt need to be adequate contd
Bainbridge v Firmstone (1838) The facts: Bainbridge allowed Firmstone to weigh twoboilers owned by Bainbridge on the conditionthat they were returned in the same condition F took them apart and returned them withoutputting them back together Held: there was consideration there is a detriment to the plaintiff in parting with thepossession of the boilers even for so short a time Plaintiff (B) was successful b) Consideration need not be adequate contd
Chappell & Co Ltd v Nestle Co Ltd (1960) Facts: Nestle was giving away records to people whobought 3 chocolate bars and sent in the wrappers withan extra 1s 6d (ie1 shilling and 6 pennies). Thechocolate bars cost 6 pennies each Copyright Act stated that 6.25% to be paid on theordinary selling price of the records Chappell & Co owed the copyright to the music (Rocking Shoes by the King Brothers) Chappell & Co Ltd v Nestle Co Ltd (1960)
Chappell sued Nestle for failing to pay the correct amount ofroyalties (ie commission on sales of the records) The case turned on whether the chocolate wrappers werepart of the consideration for the sale of the records Held: Majority of the House of Lords held that the chocolatewrappers were part of the consideration; Nestle had to payChappell & Co much more in royalties This statement: the wrappers will help you to get smash hitrecordingsmeant Nestle saw the wrappers asconsideration It didnt matter that the wrappers were worthless to Nestle* * Extract from on of the judgments: It is said that when received the wrappers are of no value to Nestl's. This I would have thought irrelevant. A contracting party can stipulate for what consideration he chooses. A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn. As the whole object of selling the record, if it was a sale, was to increase the sales of chocolate, it seems to me wrong-not to treat the stipulated evidence of such sales as part of the consideration. For these reasons I would allow the appeal.- per Lord Somervells judgment Road map Where are we at now? Consideration:
a)It must be real/genuine b)It need not be adequate c)It must be legal d)It must move from the promisee e)It must be possible f)It must not be past c) Consideration must be legal
The consideration must be legal this is obvious Example: If A agrees with B to break into Cs house and stealsomething for B, provided that B pays A the sum of $10. There is an agreement but it is not a contract because thereis no consideration. The purported consideration involves something illegal(breaking into a house) so that is not valid considerationand therefore the contract would be void. Authority: Pearce v Brooks (1866) Foster v Driscoll (1929) *Eg. if A agrees with B to break into Cs house and steal if B pays A $10. There is an agreement but it is not a contract because there is no consideration. The purported consideration involves something illegal (breaking into a house) so that is no consideration and the contract would be void (discussed later). c) Consideration must be legal cont
Pearce v Brooks (1866) Facts: The owner of a brougham (a closed four-wheeledcarriage with an open drivers seat in front) hired it out to aprostitute for use by her knowing it would be used in herbusiness She failed to keep up the payments; Plaintiff sued theprostitute Held: Since the pl. knew that the brougham would be usedfor an illegal purpose, there was no consideration. Thecontract was void. Consideration must be legal. Pearce v Brooks (1866) - vocabulary
A brougham: Prostitute: Void:void means that the contract has nolegal effect agreements of this kind do notconfer any legal rights on the parties (seeBarker at p.103) c) Consideration must be legal cont
Foster v Driscoll (1929) Facts: A contract was entered into for the shipment ofwhiskey from England to the US during the period ofprohibition (when alcohol was not allowed). Held: the English Court of Appeal would not enforcethe contract because the consideration involveddoing something that was against the law of the othercountry (ie importing whiskey) Consideration here = the whiskey Whiskey was not legal in the US which is where it washeading Contract was void d) Consideration must move from the promisee
The consideration must move from the promisee (the person to whom the promise was made) It is not enough that consideration has been given it must have been given by the promisee So, if a third party provides the consideration that would not be good enough Privity of contract and consideration are separate (Barker Law Made Simple is a bit misleading on this point) d) Consideration must move from the promisee cont
Authority: Tweedle v Atkinson (1861) Facts: a contract was made between the fathers of a married couple. Each father was supposed to pay a sum of money to the husband. One of the fathers died. The husband sued the executor (Atkinson) of the estate. Held: Tweedle (the husband) could not succeed because no consideration had been given by him There was consideration but it had not come from the promisee As far as Tweedle