commercial document that relies on this is a bank gurantee.Consideration cannot be insufficient1)If someone is already under a public duty to perform what he has agreed to do in the contract, consideration would be insufficient as was held in Collins v Godfroy (1831).(If someone has to give evidence in court, that would suffice as a public duty. Don’t have to pay)7
BIZLAW CHEAT SHEET-However, if the person is doing more than is expected, then there would be consideration as shown by the case of Glasbrook Brothers v Glamorgan Country Council. Person is not obliged to do more than is required of him. 2)If what is demanded is already part of performance of an existing contractualobligation, there would be no fresh consideration or further consideration as the party will not be doing anything extra as was held in Stilk v Myricks (1809). Page 41-However, if what they are doing is already more than what is contractually obliged, there would be fresh consideration (Hartley v Ponsoby (1857))-Variation of Contract3)When a contracting party promises to do the same thing as he is contractually obliged to do, but to a new party, there will be sufficient consideration as was held in Pan On v Lau Yiu Long (1980)since extra liability is conferred on the party performing the contract. Intention to Create Legal Relations (page 42)The final element that must be present for there to be a valid contract is that the parties to the contract must intend to create legal relations. Determine whether Domestic Situation or Commercial AgreementsDomestic situations (pg42)typically assume no intention to create legal relations.This was held in De Cruz Andrea Heidi v Guangzhou Yuzhitang Health Products Co Ltd (2003).-However, Merritt v Merritt (1970)provides that if it was envisaged from the beginning that should something go wrong, parties to the agreement would seek legal redress, then there would be an intention to create legal relations. Inthis case, the parties were not on good terms and hence had intentions to create legal relations.Commercial Agreementsassume that parties have an intention to create legal relations as held in Edwards v Skyway Ltd (1964). -However, it is possible that even in commercial situations, sometimes the parties may not intend to create legal relations: eg. cases where the agreement expressly states that it is only “binding in honour only”, there will beno intention to create legal relations as provided in Kleinwot Benson Ltd v Malaysia Mining Corpn Bhd (1989). When parties enter into an agreement which is stated to be “subject to contract” or which is described as a “memorandum of understanding”, it is possible that the intention to create legalrelations maybe absent. Writing (page 43)It is not true that contract must be in writing and signed. Provided that all essential elements of contract are present, the contract will be valid. Some must be in writingsuch as conveyance of estate under section 53 of law of property act.