Starting Right Corporation


The consideration must not be past. Re McArdle (1951) Ch 669 Majorie McArdle carried out certain improvements and repairs on a bungalow. The bungalow formed part of the estate of her husband’s father who had died living the property to his wife for life and then on trust for Majorie’s husband and his four siblings. After the work had been carried out the brothers and sisters signed a document stating in consideration of you carrying out the repairs we agree that the executors pay you ? 480 from the proceeds of sale. However, the payment was never made.

Held: The promise to make payment came after the consideration had been performed therefore the promise to make payment was not binding. Past consideration is not valid. 2. The consideration must be sufficient but need not be adequate. Lampleigh v Braithwaite [1615] EWHC KB J17 The defendant had killed a man and was due to be hung for murder. He asked the claimant to do everything in his power to obtain a pardon from the King. The claimant went to great efforts and managed to get the pardon requested. The defendant then promised to pay him ? 100 for his efforts but never paid up.

Held:Whilst the promise to make payment came after the performance and was thus past consideration, the consideration was proceeded by a request from the defendant which meant the consideration was valid. The defendant was obliged to pay the claimant ? 100. 3. The consideration must move from the promisee. Tweddle v Atkinson [1861] EWHC QB J57 Queen’s Bench Division A couple were getting married. The father of the bride entered an agreement with the father of the groom that they would each pay the couple a sum of money. The father of the bride died without having paid.

The father of the son also died so was unable to sue on the agreement. The groom made a claim against the executor of the will. Held:The claim failed: The groom was not party to the agreement and the consideration did not move from him. Therefore he was not entitled to enforce the contract. 4. An existing public duty will not amount to valid consideration. Collins v Godefrey (1831) 1 B ;amp; Ad 950 King’s Bench Division The claimant, Collins, had been subpoenaed to attend court as a witness in separate court case involving the defendant, Godefrey. Godefrey had sued his attorney for alpractice and Collins was required by the court to attend as an expert witness. In fact Collins never gave evidence but was required to be on standby for six days in case he was called. After the trial Collins gave Godefrey an invoice to cover his time spent at court and demanded payment by the next day. Without giving him the full day to pay, Collins commenced an action to enforce payment. Held: Collins was under a public duty to attend court due to the subpoena. Where there exists an existing public duty this can not be used as consideration for a new promise.

Godefrey was not required to pay him. 5. An existing contractual duty will not amount to valid consideration. Stilk v Myrick [1809] EWHC KB J58 King’s Bench Division The claimant was a seaman on a voyage from London to the Baltic and back. He was to be paid ? 5 per month. During the voyage two of the 12 crew deserted. The captain promised the remaining crew members that if they worked the ship undermanned as it was back to London he would divide the wages due to the deserters between them. The claimant agreed. The captain never made the extra payment promised.

Held: The claimant was under an existing duty to work the ship back to London and undertook to submit to all the emergencies that entailed. Therefore he had not provided any consideration for the promise for extra money. Consequently he was entitled to nothing. Requirement of contract Consideration: Value given in return for a promise. Consideration must be (1) legally sufficient and (2) bargained for by the party receiving it. ?Legally sufficient consideration may take the form of: (1)promising to do something that the promisee has no prior legal duty to do (e. g. promising to pay money for the promisor’s goods); (2)performing an action that the promisee is not otherwise obligated to undertake (e. g. , painting the promisor’s house); or (3)refraining from exercising a legal right that the promisee is otherwise entitled to exercise (e. g. , dismissing a viable lawsuit against the promisor).

Consideration is bargained for if it is sought by the promisor in exchange for the promisor’s promise and given by the promisee in exchange for the promisor’s promise. ?Courts will generally not inquire into the adequacy of the consideration, as long as the romisor bargained for it. In contract law, consideration refers to any bargained-for exchange. Basically, for a contract to be valid, there must be an exchange of goods and/or services. Because the vast majority of contracts are for sales of some type, consideration usually takes the form of an exchange of money for goods or services. For consideration to be valid (thus making the contract valid, if all the other requirements for the validity of a contract are met), the things exchanged must be of some legal value.

However, a court will generally not inquire into whether or not a particular form of consideration is sufficient. So, if you decide to sell your house for $50, and after the deal is done, realize you’ve made a horrible mistake, you can’t go to court and argue that the sale is invalid, because there was no consideration. The fact that $50 is an absurdly low price for any house is irrelevant, as long as you agreed to the sale freely. The requirement for consideration is why you will sometimes hear of very expensive items being sold for very small amounts of money, such as a house or car being sold for $1.

These transactions are essentially gifts, but the token consideration is there to ensure that the agreement is legally binding, in case the donor tries to back out. By making the agreement legally binding, the donor shows good faith. However, if there is a breach of a promise supported by consideration, the victim of the breach has suffered a loss, especially if they have already performed their end of the agreement, and are now getting nothing in return. Offer and acceptance

An offer is an expression of willingness to contract on certain terms, made with the the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed, the “offeree” [G. H. Tretel, The Law of Contract, 10th edn, p. 8]. The “expression” referred to in the definition may take different forms, such as a letter, newspaper, fax, email and even conduct, as long as it it communicates the basis on which the offeror is prepared to contract. An invitation to treat is not an offer, but an indication of a person’s willingness to negotiate a contract.

In Harvey v Facey, an indication by the owner of property that he or she might be interested in selling at a certain price, for example, has been regarded as an invitation to treat. The courts have tended to take a consistent approach to the identification of invitiations to treat, as compared with offer and acceptance, in common transacions. The display of goods for sale, whether in a shop window or on the shelves of a self-service store, is ordinarily treated as an invitation to treat and not an offer.

The holding of a public auction will also usually be regarded as an invitation to treat. Postal acceptance rule As a rule of convenience, if the offer is accepted by post, the contract comes into existence at the moment that the acceptance was posted. This rule only applies when, impliedly or explicitly, the parties have in contemplation post as a means of acceptance. It excludes contracts involving land, letters incorrectly addressed and instantaneous modes of communication. 0ffer an offer made in response to a previous offer by the other party during negotiations for a final contract.

Making a counter offer automatically rejects the prior offer, and requires an acceptance under the terms of the counter offer or there is no contract. Example: Susan Seller offers to sell her house for $150,000, to be paid in 60 days; Bruce Buyer receives the offer and gives Seller a counter offer of $140,000, payable in 45 days. terminate and discharge of contract (frustraction) Discharge of a valid contract involves the process under which the primary (performance) obligations come to an end.

Discharge by breach will generally give rise to secondary obligations to pay damages. Discharge by performance will not give rise to secondary obligations, as the contract will have been successfully completed. Discharge by frustration does not give rise to secondary obligations but rights to restitution under statute. Discharge of a valid contract should be distinguished from termination of an invalid contract, as with Mistake & Restraint of Trade where the agreement is deemed to be void. In such instances no obligations can be aid to have existed whereas in the case of a valid contract the primary obligations cease but the contract may remain in existence and give rise to the secondary obligations to pay damages. Frustration (link to mistake) – rights to restitution. In other words, where a contract is deemed to be frustrated, both parties are discharged from the contract. If frustrated, but one / both parties have incurred expenditure, or there has been money transferred, does the beneficiary party now have to repay it.