consideration
Part 5 - Consideration and Promissory Estoppel
2012/// Filed in: Contract Law (UK)
Below are a few relevant principles and leading cases regarding promissory estoppel:
Central London Property Trust Ltd v High Trees House Ltd: Under the equitable doctrine of promissory estoppel, a contracting party who -without duress- promises not to enforce a contractual right will not be able to enforce that right later if the promisee has been relied upon by the other party. Estoppel allows promises to accept a modified performance of a contract to be binding in the absence of consideration. Lord Denning stated ``a promise intended to be binding, intended to be acted on, and in fact acted on, is binding so far as its terms properly apply".
Combe v Combe: Promissory estoppel is `a shield and not a sword' and cannot be used to create entirely new rights or extend the scope of existing ones, only to prevent the enforcement of rights already held.
Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd: Whereas a contract modification which is supported by consideration will generally have permanent effect (lasting for the duration of the contract), the same is not necessarily true for promissory estoppel (it can be limited to a particular time period and future rights are not destroyed).
Central London Property Trust Ltd v High Trees House Ltd: Under the equitable doctrine of promissory estoppel, a contracting party who -without duress- promises not to enforce a contractual right will not be able to enforce that right later if the promisee has been relied upon by the other party. Estoppel allows promises to accept a modified performance of a contract to be binding in the absence of consideration. Lord Denning stated ``a promise intended to be binding, intended to be acted on, and in fact acted on, is binding so far as its terms properly apply".
Combe v Combe: Promissory estoppel is `a shield and not a sword' and cannot be used to create entirely new rights or extend the scope of existing ones, only to prevent the enforcement of rights already held.
Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd: Whereas a contract modification which is supported by consideration will generally have permanent effect (lasting for the duration of the contract), the same is not necessarily true for promissory estoppel (it can be limited to a particular time period and future rights are not destroyed).
Part 4 - Consideration and Performance of an Existing Duty
2012/// Filed in: Contract Law (UK)
Below are a few relevant principles and leading cases regarding past consideration:
Stilk v Myrick: Performance of an existing contractual duty owned to a promisor is not normally consideration. (Increasing Pact)
Pinnel's Case: A debtor offer to pay a reduced sum back to the lender in full and final settlement will only be sufficient consideration if the lender 1) agrees to accept it without duress, and 2) the debtor provides some extract element that can be treated as consideration (e.g., paying early, paying using a more convenient mode of payment). Without something extra, part payment of an existing debt on or after the date for the payment will never provide consideration for a promise to forgo the balance. (Decreasing pact)
Glassbrook Brothers v Glasmorgan County Council: Where the promisee is under a public duty but does something which goes beyond what is required by the existing obligation (duty), then the promises of payment will be enforceable (i.e., the extra act can amount to consideration).
Williams v Roffey: If one party's promisee to perform an existing contractual duty to deliver good or services owned to a promisor confers an additional practical benefit and no duress is involved, the promisee will be sufficient consideration to make a promise given in return of the ``practical benefit" binding. (Increasing pact)
Re Selectmove Ltd: The Williams v Roffey practical benefit is not sufficient for promises for the part-payment of a debt. (Decreasing pact)
Stilk v Myrick: Performance of an existing contractual duty owned to a promisor is not normally consideration. (Increasing Pact)
Pinnel's Case: A debtor offer to pay a reduced sum back to the lender in full and final settlement will only be sufficient consideration if the lender 1) agrees to accept it without duress, and 2) the debtor provides some extract element that can be treated as consideration (e.g., paying early, paying using a more convenient mode of payment). Without something extra, part payment of an existing debt on or after the date for the payment will never provide consideration for a promise to forgo the balance. (Decreasing pact)
Glassbrook Brothers v Glasmorgan County Council: Where the promisee is under a public duty but does something which goes beyond what is required by the existing obligation (duty), then the promises of payment will be enforceable (i.e., the extra act can amount to consideration).
Williams v Roffey: If one party's promisee to perform an existing contractual duty to deliver good or services owned to a promisor confers an additional practical benefit and no duress is involved, the promisee will be sufficient consideration to make a promise given in return of the ``practical benefit" binding. (Increasing pact)
Re Selectmove Ltd: The Williams v Roffey practical benefit is not sufficient for promises for the part-payment of a debt. (Decreasing pact)
Part 3 - Past Consideration
2012/// Filed in: Contract Law (UK)
Below are a few relevant principles and leading cases regarding past consideration:
Roscorla v Thomas: Consideration must be given in return for the specific promise of the other party (i.e., it can not be past, an unrelated promise not in connection with the specific bargain, or a promise given only when the alleged consideration had been completed is generally unenforceable).
Pao On v Lau You Long: A promise to perform an existing obligation can constitute good consideration in certain cases. The circumstances in which a promise made after the acts can constitute consideration are derived from Lampleight V Braithwait and Re Casey's Patents.
Lampleigh v Braithwait: Past consideration is sufficient when it is provided at the request of the promissor.
Re Casey's Patents: The parties must have understood that the work was to be paid for in some way either by money or some other benefit.
Roscorla v Thomas: Consideration must be given in return for the specific promise of the other party (i.e., it can not be past, an unrelated promise not in connection with the specific bargain, or a promise given only when the alleged consideration had been completed is generally unenforceable).
Pao On v Lau You Long: A promise to perform an existing obligation can constitute good consideration in certain cases. The circumstances in which a promise made after the acts can constitute consideration are derived from Lampleight V Braithwait and Re Casey's Patents.
Lampleigh v Braithwait: Past consideration is sufficient when it is provided at the request of the promissor.
Re Casey's Patents: The parties must have understood that the work was to be paid for in some way either by money or some other benefit.
Part 2 - Consideration and Sufficiency
2012/// Filed in: Contract Law (UK)
Below are the most relevant principles and leading cases regarding consideration and sufficiency:
Dunlop v Selfridge: The claimant must show that he or she has bought the defendant's promises, by doing, giving, or promising something in return for it (i.e., a promise not supported by consideration -a gratuitous promise- is not enforceable in law).
Thomas v Thomas: Consideration must be sufficient but not be adequate. The courts are not generally interested in whether there is a match in value between what is being offered by each contracting party.
White v Bluett: Consideration will not be sufficient if it has not economic value.
Dunlop v Selfridge: The claimant must show that he or she has bought the defendant's promises, by doing, giving, or promising something in return for it (i.e., a promise not supported by consideration -a gratuitous promise- is not enforceable in law).
Thomas v Thomas: Consideration must be sufficient but not be adequate. The courts are not generally interested in whether there is a match in value between what is being offered by each contracting party.
White v Bluett: Consideration will not be sufficient if it has not economic value.
Part 1- Review of Case law on Consideration
2012/// Filed in: Contract Law (UK)
The next series of posts are intended as a summary that includes the most relevant legal principles derived from the English case law dealing with the contractual formative requirement of consideration and promissory estoppel. In particular, the summary is concerned with the concepts of sufficiency, past consideration, consideration in cases involving performance of an existing duty, and the equitable doctrine of promissory estoppel. The full-text transcript of the cases is freely available at http://www.bailii.org.