O’Sullivan & Hilliard’s The Law of Contract (9th edn)
5. Consideration and estoppel
-consideration is required for a contract to be binding, Definition: Either some right,
interest, profit or benefit accruing to the one party or some forbearance, detriment, loss
or responsibility given, suffered or undertaken by the offer (currie v misa). In simpler
terms: it is the price of the promise.
-In a unilateral contract consideration comes in the form of performance (or part
performance) of the specified act
-E.g supermarket, consideration of money given to supermarket, and
consideration by way of the goods from the supermarket
-Privity of contract: only the parties to a contract that have provided consideration can
enforce it/have the rights from it.
What counts as consideration?
-Combe v combe (1951), divorce proceedings, husband promises to pay wife £100 per
annum but asks for nothing in return, relying on this the wife does not apply for
maintenance from the courts and when the husband does not pay she attempts to sue
him. Court dismissed her case saying: ‘I cannot find ... any request by the husband,
express or implied, that the wife should so forebear ... Her forbearance was not intended
by him, nor was it done at his request. It was therefore no consideration.’ The husband
did not ask or intend for her to do so in return and therefore no consideration was
involved.
-White v bluett 1853, promise to stop complaining in return for cash and this was
considered insufficient as consideration. Hamer v sidway 1891, Promise to refrain from
drinking alcohol until 21 in return for cash, decision was that yes this is good
consideration because there was a legal entitlement to drink that he gave up, giving up
your right to do something is good consideration
-Consideration may be executory (a promise to do something) or executed (an
act/performance) such as: Unilateral contracts, carlill v carbolic smoke ball co/ barry v
davies.
-DIfferent treatment of conditional gifts: If someone is promised £100 for promising to
clean the windows then the promise of cleaning the windows would be considered
consideration. However offering someone £100 if they are unlucky enough to break their
leg would not count as consideration because breaking your leg is not consideration for
the promise to pay because the offeror doesn't want you to break your leg, it is instead a
conditional gift
-Deeds are legally enforceable gifts, such as wills
Must ‘move from the promisee’ (Tweddle v Atkinson)
-A person to whom a promise was made can enforce that promise only if they have
themselves provided the consideration for it, the promise cannot be enforced if the
consideration moved from a third party
-But does not need to move to the promisor, a promisor can make a promise to the
promisee for them to do something for someone else. A offer B £100 to promise A he will
, clean Cs windows, this is fine because B has provided something in return (the promise)
even though it benefits a third party. In contrast you cannot ask the third party to do
something, A offers B £100 if C cleans As windows, B provides no consideration and so
is not part of a contract unless B promised to procure C to do it.
-Pitts v jones (2007) A promisee need not consciously/subjectively realise he was
providing consideration, it can be judge that objectively this was the effect of what the
promisee did
The rights of third parties act 1999
-The contracts (rights of third parties) act 1999 grants rights of action to a third party who
is not a party to the contract and reforms the earlier rule that consideration must move
from the promisee. Goes against privity (defined at beginning)
-The act does not grant a right of action to someone who is a party to the contract but
has not provided consideration, therefore cases that apply here only arise where there is
more than one promisee but only one gave consideration. Coulls v Bagot’s Executor and
Trustee Ltd(1967), in this case obiter it was said that the wife of the man who gave
consideration could be seen as having a basic right as a joint promisee, but ratio they
ruled against her
-The act does not make the third party a party to the contract but they are treated as if
they are in some ways, and does not remove the rule that obligations can generally not
be imposed on third parties
-There are three tests that must be satisfied in order for the third party to have the right
to enforce the contract:
-First component: C(the third party) must establish that A and B intended him to
be able to enforce the contract, for example if C is given the power to enforce the
term of the contract, or trying to show they intended to allow C to do so (if the
term ‘purports to confer a benefit’ Chudley v Clydesdale Bank plc(2019)) Some
have argued that its not enough for the general contract to benefit the third party,
but the specific term must confer a benefit to the third party directly.
-Nisshin Shipping Co Ltd v Cleaves & Co Ltd(2003) if the contract is neutral on
whether C can enforce the term then the presumption in test 1 is not rebutted,
however Harlequin Property (SVG) Ltd and another v Wilkins Kennedy (a
firm)(2015) the contract can explicitly state that C has no right to enforce any
term of the contract.
-Second component: Chudley v Clydesdale Bank plc(2019) C must be expressly
identified in the contract by name or as a member of a class or answering a
specific description, in the mentioned case this was because the designation
‘client account’ designated the party
-Third component: C’s right to enforcement is subject to other relevant terms of
the contract, e.g saying B and C must bring any contractual claim within 2 years
binds both B and C
-If these are met then C has a provisional right to enforce the term in question,
and is entitled to any remedy that would have been available had he been a party
to the contract.
5. Consideration and estoppel
-consideration is required for a contract to be binding, Definition: Either some right,
interest, profit or benefit accruing to the one party or some forbearance, detriment, loss
or responsibility given, suffered or undertaken by the offer (currie v misa). In simpler
terms: it is the price of the promise.
-In a unilateral contract consideration comes in the form of performance (or part
performance) of the specified act
-E.g supermarket, consideration of money given to supermarket, and
consideration by way of the goods from the supermarket
-Privity of contract: only the parties to a contract that have provided consideration can
enforce it/have the rights from it.
What counts as consideration?
-Combe v combe (1951), divorce proceedings, husband promises to pay wife £100 per
annum but asks for nothing in return, relying on this the wife does not apply for
maintenance from the courts and when the husband does not pay she attempts to sue
him. Court dismissed her case saying: ‘I cannot find ... any request by the husband,
express or implied, that the wife should so forebear ... Her forbearance was not intended
by him, nor was it done at his request. It was therefore no consideration.’ The husband
did not ask or intend for her to do so in return and therefore no consideration was
involved.
-White v bluett 1853, promise to stop complaining in return for cash and this was
considered insufficient as consideration. Hamer v sidway 1891, Promise to refrain from
drinking alcohol until 21 in return for cash, decision was that yes this is good
consideration because there was a legal entitlement to drink that he gave up, giving up
your right to do something is good consideration
-Consideration may be executory (a promise to do something) or executed (an
act/performance) such as: Unilateral contracts, carlill v carbolic smoke ball co/ barry v
davies.
-DIfferent treatment of conditional gifts: If someone is promised £100 for promising to
clean the windows then the promise of cleaning the windows would be considered
consideration. However offering someone £100 if they are unlucky enough to break their
leg would not count as consideration because breaking your leg is not consideration for
the promise to pay because the offeror doesn't want you to break your leg, it is instead a
conditional gift
-Deeds are legally enforceable gifts, such as wills
Must ‘move from the promisee’ (Tweddle v Atkinson)
-A person to whom a promise was made can enforce that promise only if they have
themselves provided the consideration for it, the promise cannot be enforced if the
consideration moved from a third party
-But does not need to move to the promisor, a promisor can make a promise to the
promisee for them to do something for someone else. A offer B £100 to promise A he will
, clean Cs windows, this is fine because B has provided something in return (the promise)
even though it benefits a third party. In contrast you cannot ask the third party to do
something, A offers B £100 if C cleans As windows, B provides no consideration and so
is not part of a contract unless B promised to procure C to do it.
-Pitts v jones (2007) A promisee need not consciously/subjectively realise he was
providing consideration, it can be judge that objectively this was the effect of what the
promisee did
The rights of third parties act 1999
-The contracts (rights of third parties) act 1999 grants rights of action to a third party who
is not a party to the contract and reforms the earlier rule that consideration must move
from the promisee. Goes against privity (defined at beginning)
-The act does not grant a right of action to someone who is a party to the contract but
has not provided consideration, therefore cases that apply here only arise where there is
more than one promisee but only one gave consideration. Coulls v Bagot’s Executor and
Trustee Ltd(1967), in this case obiter it was said that the wife of the man who gave
consideration could be seen as having a basic right as a joint promisee, but ratio they
ruled against her
-The act does not make the third party a party to the contract but they are treated as if
they are in some ways, and does not remove the rule that obligations can generally not
be imposed on third parties
-There are three tests that must be satisfied in order for the third party to have the right
to enforce the contract:
-First component: C(the third party) must establish that A and B intended him to
be able to enforce the contract, for example if C is given the power to enforce the
term of the contract, or trying to show they intended to allow C to do so (if the
term ‘purports to confer a benefit’ Chudley v Clydesdale Bank plc(2019)) Some
have argued that its not enough for the general contract to benefit the third party,
but the specific term must confer a benefit to the third party directly.
-Nisshin Shipping Co Ltd v Cleaves & Co Ltd(2003) if the contract is neutral on
whether C can enforce the term then the presumption in test 1 is not rebutted,
however Harlequin Property (SVG) Ltd and another v Wilkins Kennedy (a
firm)(2015) the contract can explicitly state that C has no right to enforce any
term of the contract.
-Second component: Chudley v Clydesdale Bank plc(2019) C must be expressly
identified in the contract by name or as a member of a class or answering a
specific description, in the mentioned case this was because the designation
‘client account’ designated the party
-Third component: C’s right to enforcement is subject to other relevant terms of
the contract, e.g saying B and C must bring any contractual claim within 2 years
binds both B and C
-If these are met then C has a provisional right to enforce the term in question,
and is entitled to any remedy that would have been available had he been a party
to the contract.
