Consideration (Rules)

Consideration is the concept of legal value in connection with contracts. Rules of Consideration 1. Consideration must move from promisee Dunlop Pneumatic Tyre Company v Selfridge & Company Ltd

Special Considerations Moral consideration not sufficient Eastwood v Kenyon

Peformance of existing duties is not sufficient consideration Still v Myrick Does not apply when promise is to do more than originally contracted to do Promisory estoppel may prevent promisor reneging on subsequent promise

Forbearance to sue Settlements between parties likely to be upheld: Wigan v Edwards

2. Consideration must be sufficient

* May be valid although no monetary equivalent Chappell & Co v Nestle

3. Consideration must not be past Consideration will be regarded as past if it has already flowed from promisee to promisor Roscorla v Thomas

Performance of public duties Performance of an act required by law is not sufficent Glasbook Brothers v Glamorgan County Council

Part Payment of Debt Rule in Pinnels Case:If an amount of money is owing by a debtor to a creditor, and those parties enter into a subsequent agreement that the creditor will accept a lesser amount in full satisfaction of the amount owing, the later agreement will generally not be binding. There are some exceptions: see lecture notes

Flow chart of the legal rules for the application of Promissory Estoppel

Did one party make a clear promise? yes Did the promisee reasonably rely on the promise? yes Did the promisor intend that the weaker party would rely on the promise? yes Would it be grossly unfair if the promisor was allowed to break its promise? yes Will the promisee suffer a loss if the promise is not enforced? yes

No

No

No

No

No

The promisor cannot avoid its obligations Promissory estoppel applies

The promisor can avoid its obligations Promissory estoppel does not apply 2