L5 contracts CONSIDERAITON.docx

L5 contracts CONSIDERAITON.docx - L5 Consideration General...

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L5- Consideration General - General principle: A person is contractually bound only if consideration was given for it - Consideration = agreed price of a promise, constituting a legal detriment, moving from the promisee, at the request of the promisor, in return for the promisor’s promise, action or forbearance. - One person makes a promise, the other gives consideration away from themselves to promisor by doing something to their detriment. (Ie Payment for promise) - Things that don’t require consideration? (Not contracts)Deed, Gift, Gratuity with a condition Key aspects of the doctrine: - Agreed price of a promise o doesn’t have to be a good price, just an agreed one - This price must constitute legal detriment - Must be at the request of the promisor o Distinction between detriment that is a mere consequence of a promise having been made, and detriment that is the inducement (price of a promise) o Old cases talked about detriment suffered by promise, not concerned about bargain o One person is promisor, the other gives consideration away from themselves to promisor - Induce or in return for promise/act of promisor… Cannot be an accident o No sense that the promise or act given just happens to be what the other party wants to do o Promise must induce/cause the consideration o If not requested by promisor and given as an inducement for the promisor to act – no consideration- May be an action in estoppel ‘Past consideration is no consideration’ - IE; a past transaction (price) cannot support a promise in the present Roscarla v Thomas (1842): - Facts o After P had already purchased horse off D, D later promised horse was good natured o Horse was bad natured, P sued for breach of contract (warranty of horse) - Held o No consideration for warranty that the horse was “sound and free from vice” o Consideration for purchasing the horse was given before the warranty-at contract time - Principle: “a consideration past and executed will support no other promise…” Able to get around past consideration rule- (request, response and promise are same) requirements: 1. The past action was done at the promisor’s request; 2. Both parties understood that the act was ultimately to be paid for; and 3. Payment would have been legally enforceable had it been promised in advance Re Casey’s Patents (1892): - Facts o Promise to give C 1/3 patent rights in respect of work already performed o Promisors later sought to remove C’s patent rights - Argued: agreement was one to reward for past services only. [past consideration rule] - Held o The past services were good consideration for the 1/3 share o C worked expecting he would get paid (based on implied promise that manager would be paid), promise was clarification of what payment was
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o Promise ‘refined’ the value of consideration 3 Situations: - 1- promise to transfer property subject to the occurrence of [an external] event or condition.
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