CONTRACT LAW

CONTRACT LAWCONSIDERARTION

INTROBenefit and detriment testExamine what constitutes a valuable, valid considerationDetriment to promisee/ benefit to promissorIf both parties do not furnish consideration, contract is said to lack consideration no contractPROMISEE - makes promise to promisorCLAIMANT PROMISEEDEFENDANT PROMISOR 3definitionConsideration is detriment or benefitBoth parties must furnish consideration to other partya reason for the enforcement of promises the justice of the case

In Currie v Misa, Lush J:

A valuable consideration in the sense of law may consist either in some right, interest, profit or benefit occurring to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the otherconsideration need not be adequateAlthough need to furnish consideration, no requirement to that bargain be balanced one- Bainbridge v FirmstoneConsideration need not be benefit to promissorCan be consideration where promisee suffers detriment at promissors request but gives no particular benefit to promissorJones v Padavatton daughter giving up her job would be consideration for the mother providing an allowance even though it did not benefit the motherConsideration can be given by promisee without benefit where contracts made for the benfit of 3rd partyExecutory AND Executed ConsiderationExecutory consideration

something is to be done in the future and contract has been formed

When contracting parties make promise to each other because they are promising something for future after contract made bilateral contracts

Executed consideration

At time of formation, consideration has already been performed

Usually occurs in unilateral contractspast considerationMUST NOT BE PAST Past consideration is NO consideration (ROSCORLA V THOMAS) promise made after salesLawyers find this confusing as the emphasis is not really about the time that consideration was given but more about whether consideration was given in exchange for the other partys considerationMust be given in return for the promise/act Whether or not consideration is past or not is a question of fact and wording of agreement will not necessarily be conclusive - Re McArdle

Past consideration exceptionsWhere past consideration was provided at promissors request and it was understood that payment would be made Lampleigh v BrathwaitBill of exchange s27 of the Bill Exchange Act 1882 - antecedent debt may be consideration for receipt of bill of exchange

Consideration must be sufficient but need not be adequateMeans court will not question adequacy of consideration, so as long as theres someDoes not matter if its not much or not what promise would usually be considered to be worthReason for this rule is due to the old idea of freedom of contract the parties themselves should be allowed to make the bargains that suit them, without interference from the courtsThomas v Thomas - 1 amounts to considerationChappell v Nestle HoL held that wrappers did form a part of consideration and the fact that they were no real worth to Nestle was irrelevant

Consideration must be of economic valueDespite this rule, looking at Chappell v Nestle, economic value may be negligible There must be some physical value rather than just an emotional /sentimental oneWhite v Bluett sons promise not sufficient consideration to make his fathers promise binding no economic valueConsideration can be a promise not to sueAlliance Bank Ltd v Broom consideration is the banks promise not to sue for a while , giving Broom a security Must have been some intention to actually bring proceedings (Miles v New Zealand Alford) no evidence buyers ever really intended to bring proceedings to rescindOne partys promise not to enforce existing claim can only provide consideration if the promise given in return actually induced by the promise no to enforce the claim Combe v Combe wife gave consideration by not exercising her right to sue for maintenance ordermaximsPast consideration is no consideration Consideration must move from the promiseeConsideration does not need to move to the promisorConsideration for that promise must be given in return for the promiseConsideration need not be adequateValuable consideration in the sense of law, may consist of some right, interest, profit or benefit occurring to one party or some forbearance, detriment, loss or responsibility given , suffered or undertaken by the other