(i) deeds; (ii) promissory estoppel
Definition of Consideration
The price paid for the promisor’s price: Dunlop v Selfridge [1915] AC 847 The requirement that a promise must be supported by consideration is satisfied by
Australian Woollen Mills (1954)
HELD
no offer - merely announcement of government policy no consideration given in return for the subsidy
purchase of wool was not stipulated by the Government as consideration but was merely a condition precedent that must be fulfilled by the manufacturer before it became eligible for a subsidy
EXAMPLE: In Carlill’s case Mrs Carlill provided consideration by using the smoke balls three times a day for 2 weeks, but her catching the flu was a condition of her entitlement to enforce the promise
Consideration must be sufficient but does not have to be adequate: Thomas v Thomas (1842) 2 QB 851
T expressed verbal wish for his wife to stay in his house after his death. After T’s death executor allowed wife to remain in house because this was the husband’s wish and she agreed to pay £ 1 a year for the house. Executor later refused to sign deed executing this agreement. Wife sues executor. HELD: Payment of £ 1 per year (well below market value) was sufficient consideration to make agreement enforceable. “Consideration must be something of value in the eyes of the law”
Eastwood (1840)
CHITTY
The court rejected the guardian’s argument that the defendant’s promise was binding because he was under a moral obligation to pay it Lord Denman CH said that such an argument would “annihilate the necessity for any consideration at all, inasmuch as the mere fact of giving a promise creates a moral obligation to perform it.” The only possible consideration was past consideration which was not good consideration.
Australian Government announces new subsidy scheme for manufacturers that buy Australian wool & use it for manufacturing garments in Australia. Government abandons scheme. P had purchased wool for which it had not received a subsidy. Government refused to pay subsidy. P claimed £108,871 in breach of contractLeabharlann Consideration
The general rule is that a promise must be paid for if it is to be enforceable Identifying consideration as an issue
First – identify the promise that a person is trying to enforce Second – ask what that person gave in return for the promise Third – note the exceptions to this rule
Eastwood v Kenyon (1840)113 ER 482
The guardian of a young female heir borrowed monies to pay for her education and to maintain her estate. When she became an adult and married, her husband promised the guardian to pay off the loan. P sued on the promise. HELD: Action failed because the guardian had not provided consideration for the promise
Consideration is different from motive: Dunton v Dunton (1892) 18 VLR 114
Mr Dunton agreed to pay his divorced wife a monthly sum provided she conducted herself ‘with sobriety and in a respectable, orderly and virtuous manner.’ Mrs Dunton sued for non-payment. nonHELD: Mrs Dunton could sue on his promise which was supported by consideration - to act in a particular manner (or not to act in a particular manner). She had a right to be disorderly within the limits of public decency. Mr Dutton’s motive – wife not act to discredit his 5 children - irrelevant Minority held: promise was uncertain and illusory
some benefit to the promisor OR some detriment to the promisee
Consideration is different from a condition: Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424
Past consideration is generally not good consideration
Act or undertaking which is done before the promise is not generally good consideration Act or undertaking which is done independently of the promise - ie not done in response to the promise - is not good consideration Past consideration is generally not good consideration
Roscoria v Thomas (1842) 3 QB 234
After the sale of a horse, the purchaser (Roscorla) sought an assurance (ie promise) from the seller that the horse was ‘sound and free from vice’. Thomas gave such a promise. The horse turned out to be ‘very vicious, restive, ungovernable and ferocious.’ HELD: Roscorla suit for breach of contract was unsuccessful. Thomas’s promise was not enforceable because it was not supported by consideration.
Formation of Contract - Consideration, Estoppel & Privity of Contract Lecturer Dr David Chaikin