(Notes) Contract - Consideration and Intention

(Notes) Contract - Consideration and Intention - CONTRACT...

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CONTRACT – CONSIDERATION AND INTENTION Consideration (Pg 85) Consideration, as defined by Sir Frederick Pollock in Dunlop v Selfridge (1915 ) – an act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable. The state of mind of the parties, especially the one performing the act is critical. Executory Consideration Executory consideration refers to consideration, which is yet to be performed. - Promised obligations which are intended to be performed in future. Executed Consideration Executed consideration refers to consideration, which has been performed. In other words, it involves an act or forbearance, which has been fulfilled. Past Consideration Past Consideration refers to an act performed prior to and to that extent, independent of the promises being exchanged. General rule: Past consideration is not sufficient and hence is no consideration. Roscorla v Thomas (1842) – The court held that the promise was made after the transaction had already been concluded and therefore past consideration. In Pao On v Lau Yiu Long (1980) – “an act before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise. The act must have been done at the promisor’s request, the parties must have understood that the act was to be remunerated further by a payment or the conferment of some other benefit, and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance.” (Exceptions for Past Consideration) Exceptions (Past consideration becomes executed & thus good consideration): - Act done at promisor’s request - Parties understood act is to be remunerated Have to satisfy ALL 3 - Contract must otherwise be enforceable Two Main Rules on Consideration 1. Must move from promisee but need not move to promisor. Tweedle v Atkinson (1861) – the court held that Tweedle could not enforce the contract between the two fathers because he is not a party, and secondly, no consideration flowed from him. 2. Need not be adequate but must be sufficient . Chappell & Co Ltd v Nestle Co Ltd (1960) – held that the consideration included the wrappers even though they were of no value to Nestle. Sufficient Goods, Services, Money and Property Any gds, svcs or property with some value in the eyes of the law is clearly sufficient/valuable consideration, thus good consideration.
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