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CONTRACT LAW

CONSIDERARTION

INTRO
Benefit and detriment test
Examine what constitutes a valuable,
valid consideration
Detriment to promisee/ benefit to
promissor
If both parties do not furnish
consideration, contract is said to lack
consideration no contract

definition

Consideration is detriment or benefit


Both parties must furnish consideration to other party
a 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 other

consideration need not be adequate


Although need to furnish
consideration, no requirement to that
bargain be balanced one
- Bainbridge v Firmstone

Consideration need not be benefit


to promissor
Can be consideration where promisee
suffers detriment at promissors request
but gives no particular benefit to promissor
Jones v Padavatton daughter giving up
her job would be consideration for the
mother providing an allowance even
though it did not benefit the mother
Consideration can be given by promisee
without benefit where contracts made for
the benfit of 3rd party

Executory AND Executed


Consideration
Executory 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 contracts

past consideration
MUST NOT BE PAST
Past consideration is NO consideration (ROSCORLA
V THOMAS) promise made after sales
Lawyers 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 consideration
Must 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
exceptions
Where past consideration was
provided at promissors request and
it was understood that payment
would be made
Lampleigh v Brathwait
Bill 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 adequate
Means court will not question adequacy of
consideration, so as long as theres some
Does not matter if its not much or not what promise
would usually be considered to be worth
Reason 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 courts
Thomas v Thomas - 1 amounts to consideration
Chappell 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 value
Despite this rule, looking at Chappell
v Nestle, economic value may be
negligible
There must be some physical value
rather than just an emotional
/sentimental one
White v Bluett sons promise not
sufficient consideration to make his
fathers promise binding no
economic value

Consideration can be a promise not


to sue
Alliance 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
rescind
One 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 order

maxims

Past consideration is no consideration


Consideration must move from the promisee
Consideration does not need to move to the promisor
Consideration for that promise must be given in
return for the promise
Consideration need not be adequate
Valuable 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