Consideration Case Briefs
Case name Facts
Pao On v. Lau  Plaintiffs owned shares in Shing On,
Yiu Long whose principal asset was building
under construction.
 Defendants were majority
shareholders in Fu Chip Investment
which wished to acquire building.
 Plaintiffs agreed with Fu Chip
Company to sell shares in Shing On
to Fu Chip in return for shares in Fu
Chip.
 To avoid depressing market shares in
Fu Chip, defendants requested that
plaintiffs retain 60 percent of their
shares until 30 April 1974, and
defendants agreed that they would
protect plaintiffs against any loss from
fall in value of those shares.
 Subsidiary agreement entered by
which defendants agreed to buy and
plaintiffs agreed to sell 60 percent of
the shares on or before 30 April 1974
at$2.50 a share.
 Plaintiffs would only enter into
agreement without indemnity as they
would lose benefit of any possible rise
in market price of that 60 percent
holding.
 Defendants signed indemnity in
consideration of plaintiffs having
agreed to sell shares in Shing On.
Shadwell v.  Plaintiff received letter from uncle
Shadwell saying that he understood of his
intended marriage to fiancée and will
Issue Held
 Whether plaintiffs  Consideration was the plaintiffs’ promise not to sell 60
provided any percent of their Fu Chip shares for one year.
consideration for the  An act done before the giving of a promise to make a
indemnity (past payment or to confer some other benefit can
consideration a good sometimes be consideration for the promise.
consideration?)  Act must have been done at promisors’ request
(Promise given to Fu Chip under the main agreement
not to sell the shares for a year was at the first
defendant’s request);
 parties must have understood the act was to be
remunerated by a payment or the conferment of some
other benefit (parties understood at that time of the
main agreement that the restriction on selling must be
compensated for by the benefit of a guarantee against
a drop in price) ;
 and payment, or conferment of benefit, must have
been legally enforceable (agreed cancellation of the
subsidiary agreement left both parties, as they knew,
the plaintiffs unprotected in a respect in which at the
time of the main agreement all were agreed they
should be protected)
 Mere existence of prior request is not sufficient to
convert past consideration into sufficient consideration
in law to support a promise. Three conditions
o There must be prior request by promisor
o Promised remuneration or other return is
simply one of the construction of the words of
the contract in the circumstances of making it.
o Expressed consideration includes a reference
to a promise to be performed in the future.
o No duress.
 Whether there plaintiff  Promise was legally binding since it was supported y
could use marriage as good consideration
a sufficient  Consideration should be loss to plaintiff or benefit
 promise to assist.
 Uncle claims that he will pay 150
yearly during his life and until annual
income derived from profession of
Chancery barrister amount to 600
guineas
Williams v.  Wife deserted husband and later the
Williams parties signed an agreement where
the husband pay the wife 1.10 for their
joint lives so long as wife led a ‘chaste
life’
 Wife promised to use sum to support
and maintain herself and promised not
to pledge husband’s credit and to
indemnify him against any debts she
incurred
 Wife later claimed arrears of this
maintenance
Williams v.  Defendant building contractors had
Roffey Bros entered into a contract to refurbish a
block of twenty-seven flats
 Subcontracted the carpentry work to
plaintiff carpenter for a price of 20,000
pounds.
 When plaintiff had completed the
carpentry work on the roof and only
nine of the flats, and carried out only
preliminary work on the others,
plaintiff found that he was in financial
difficulties, despite the fact that he
consideration (e.g. derived from uncle. Sense of embarrassment from
contract with third party potentially receiving payments while in marriage=
to enforce a contract) loss, marriage to woman = gain.
 Consideration should be deemed as benefit gained by
uncle. Marriage is an object of interest to near relative
= uncle’s gain
 Promissary estoppel: plaintiff relied on uncle’s annuity
to get married, unfair for uncle to pull out.
Dissenting
 Not at uncle’s request, no personal benefit gained.
 It is a letter of kindness with no legal obligation.
 Whether promise (wife)  Wife’s promise constituted a good consideration
has done more than  Wife’s promise did constitute good consideration
what she was legally since she could return at any time and therefore only
obliged to do. suspended her right to be maintained by her husband.
 It was in benefit to husband and detriment to wife as
she might have sought and received public
assistance/ pledged husband’s credit with tradesmen
– he has safeguarded to protect himself from all this
worry trouble and expense.
 Whether promise to  Though the plaintiff was doing no more than he was
pay was unenforceable already legally obliged to do, since the defendants
since Williams was had obtained a benefit in making this promise, the
already under promise was enforceable against them in the absence
contractual obligation of duress or fraud.
to do so  Since defendants accept that by promising to pay a
bonus secured benefits, thus in this case the promise
was not given as a result of fraud or duress.
 There was good consideration as consideration may
be a detriment to promise or benefit to promisor
without the promise suffering any detriment. In
present case, since promisor gains benefit (TCH:
certainty that the work will be completed – “sigh of
 had already received 16,200 relief”), without any detriment to promise (was what he
 The difficulties were in part due to his was supposed to do anyway), consideration has
failure to do the work properly and moved from promise.
that he had underestimated the work.  Since plaintiff has got into financial difficulties as a
 The defendants were liable under result of the unreasonable price initially given by the
under a penalty clause in the main defendants, the factual benefit from conferring a
contract if the flats were not bonus in this case was that the work could be
completed on time completed without the need to employ another
subcontractor.  practical benefits. All these still
 They were aware of the plaintiff’s
suffice as good consideration even though plaintiff did
difficulties and that the subcontract
not undertake to do any work additional to what he
had been under-priced. Defendnats had originally undertaken to do.
agreed to pa the plaintiff an extra
10,300 at the rate of 575 pound on
completion of each flat.
 Plaintiff completed eight further flats
and defendants make one further
payment of 1,500.
 Plaintiff stopped work and sued
defendants on their promise, which
the defendants claimed was
unenforceable because it was not
supported by any consideration.
Foakes v. Beer  Julia Beer obtained High Court  Whether Foakes  Dr. Foakes had not provided consideration for Julia
judgment against Dr. Foakes for 2090. provided consideration Beer’s promise
 It was agreed in writing in December for Julia Beer’s promise  Dr. Foakes had not provided consideration for Julia
1876 that if Dr. Foakes paid 500 was sufficient. Beer’s promise as he was already legally bound to
immediately and 150 on two pay for the judgment interest as well.
occasions on each year until whole
sum has been paid, Julia Beer
promised he would not take any
proceedings on said judgment (she
mistakenly omitted judgment interest).
 Dr. Foakes paid judgment debt in
accordance with agreement, but Beer
brought action claiming interest on
debt.

Re Selectmove  A company owed Inland Revenue  Whether a promise to  No agreement by Revenue to accept the company’s
 considerable sums in income tax and pay existing debt was a proposal since the official in question did not have he
national insurance contributions had good consideration authority to bind the Revenue therefore (arguments
made a proposal at a meeting with the because it amounted to regarding consideration and promissory estoppel
collector of taxes that in future it a practical benefit to were obiter)
should pay the tax as it fell due and Revenue  When a creditor and a debtor who are at arm’s length
repay arrears in installments. reach agreement on the payment of the debt by
 Collector stated that he would have to instalments to accommodate the debtor, the creditor
seek the approval of superiors and will see a practical benefit to himself in so doing
would advise company if proposal (having at least a portion of the money).
was unacceptable.  In the absence of authority, there would be much to
be said for the enforceability of such a contract.
 Company heard nothing, but the
 Cannot extend principle in Williams’ case to any
Revenue later demanded payment of
circumstances governed by the principles in Foakes v.
the arrears in full and eventually
Beer.
presented a petition for winding up.
 Company argued that the petition
should be dismissed on the ground
that the proposal of Jully 1991 had
been accepted by the Revenue , or
that Revenue was estopped from
relying on this debt as being due.
 Judge ordered compulsory winding-up
on basis that there was no such
agreement, and no consideration to
support it.

Carlill v. Carbolic  The defendants, who made and sold a  Whether plaintiff had  The performance of the act constituted the
Smoke Ball Co. preparation called “The Carbolic provided any form of consideration to support the defendant’s promise; it
Smoke Ball”, issued an advertisement consideration (in a was a detriment to the plaintiff to have to use the
which said that a 100 pound reward unilateral contract) smoke ball in accordance with these directions
will be paid by the company to any (getting glu) and it was a benefit to the defendants
person who contracts flu after having since the plaintiff’s use of the smoke ball would
used the ball daily for 2 weeks indirectly improve sales  benefit to defendants
according to the printed directions  Therefore there was a binding contract.
supplied with the ball, and that a 1000
pound deposit is with the company
bank to show their sincerity of the
matter.
 On the faith of this advertisement, the
 plaintiff bought one of the balls at a
chemist’s and used it as directed from
20 November 1891 to 17 January
1892, when she contracted flu
 She sought payment of the 100
pounds which the defendants refused.
 The decision at first instance was that
the plaintiff was entitled to recover
since the advertisement was intended
to attract custom and was supported
by the deposit with the Company’s
bank.  Company should not have
been surprised by it.

Baird Textile  The claimant had been one of the
Holdings Ltd v. principal suppliers for the defendant
Marks and retailer for thirty years.
Spencer plc  In October 1999, the defendant
cancelled the arrangement from the
end of that season.
 Claimant sought damages on the
basis that the arrangement could only
be terminated on reasonable notice of
three years.
 Whether there was an  Argument based on implied contract failed because
intention to create legal there was no intention to create legal relations and
relations alleged contract not sufficiently certain in its terms
 Agreement was made in good faith and there was no
contract as the good long-term commercial
relationship was not one which they ever seek to
express in terms of long-term contract obligation.

Central London  Plaintiffs let out a block of flats in
Property Trust v. Londo to defendants for a term of 99
High Tree years at a rent of 2,500 a year.
House Ltd  In 1940, owing to wartime conditions
and bombing in London, only a few of
the flats were actually let to tenants,
and defendants would not be ale to
pay the rent under main lease.
 Following discussion, plaintiffs agreed
to reduce the rent from 2500 pounds
to 1250 pounds.
 By beginning of 1945, all the flats
were let, but defendants continued to
pay the reduced rent. In September
 Was the promise  Plaintiffs knew that their promise would be acted upon
enforceable? and it has, it was enforceable despite the absence of
consideration while the conditions giving rise to it
continued to exist, but since they ceased to do so in
1945, plaintifs were entitled to claim the full rent.
 All obiter on promissory estoppel.
 The promise ground rent should be reduced to 1250 a
year as a temporary expedient while the block of flats
wwas not fully, or substantially fully let.
 Conditions prevailing at the time when reduction in
rent was made, had completely passed away by early
1945.
 Promise was understood by all parties only to apply
under conditions prevailing at the time when it was
 1945, the plaintiffs wrote to the
defendants claiming rent at the rate of
2500 pounds a year and brought an
action claiming full rent for last two
quarters
Walton Stores v.  Walton s negotiated Maher
Maher landowners that Maher would
demolish a building on the land,
construct a new one in accordance
with Walton’s specifications and then
lease the building to Waltons as retail
premises
 Maher did not wish to start until it was
clear that there were no problems with
the lease which Waltons was to take.
 Maher signed its part of the lease and
forwarded it to Waltons’ solictors to
‘go slow’.
 Waltons knew that 40 percent of the
work had been completed when it
informed Maher that it would proceed.
 Maher sought to argue that Waltons
was estopped from going back on its
implied promise to complete the lease
contract.
Gay Choon Ing
v. Low Sze Tie  Gay (the defendant) and Loh (the
Terence Peter plaintiff) shared a close friendship.
 Loh was the managing director and a
shareholder of ASP based in Nairobi,
Kenya
 He invited Gay to join him at ASP,
where he worked at from 1981 to
2004 and eventualy became a director
(without shares)
 In addition to his employment at ASP,
Gay was also a shareholder in his
family company (the Company), which
made and did not extend further than that. When flats
became fully let, reduction ceased to apply.
 If this case was one of estoppel, estooppel would
cease when the conditions to which the
representation applied came to an end.
 Could promissory  Waltons knew Maher was exposed to a detriment in
estoppel create a carrying out the demolition and building work in
cause of action reliance on the representation and since it was
unconsciousnable to adopt a course of inaction
encouraging that detriment, Waltons was estopped
from denying that it was bound.
 The majority appeared to confirm that promissory
estoppel could create a cause of action, and that this
could be reconciled with the doctrine of consideration
on the ground that the object of the promissory
estoppel doctrine was not to enforce promises but to
avoid detriment to the promise resulting from
unconsciounable departure by the promisor from the
terms of his promise.
 It was not necessary to establish a pre-existing
relationship between the parties before estoppel could
be relied upon.
 Whether there was a  There was indeed a valid compromise agreement,
valid compromise evidenced by the POA and the Waiver Letter
greement between the  There was valid consideration - Gay had signed the
parties by virtue of the Waiver Letter at the request of Loh. That the
POA and the Waiver agreement was with ASP was immaterial because
Letter Loh had requested it.
 Was there a valid
compromise
(conditions of a
compromise being a)
an identifiable
agreement that was
 owned and operated a hotel in Little complete and certain,
India and b) there had to be
 In 1993 the Company had plans to valid consideration and
redevelop the hotel, of which Gay had c) an intention to
undertaken to raise $2.5 million in create legal relations)
return for increased share capital
 Gay alleged that it was a loan, but Loh
claimed it was meants as an
investment
 In any case, Gay issued shares to Loh
and entered into a Trust Deed, dated
3 Jan 1994
 From 1995 to 2003, Loh continued to
render assistance to Gay in the form
of guidance
 In 2003, Loh enquired about dividends
paid out by the Company and learnt
that these had not been paid
 Relations began to sour in 2003 when
Gay indicated his wish to leave ASP
and requested for his severance
package
 A terse communication between Gay
and Loh ensued
 On 15 October 2004, Loh sent an
email to Gay indicating his hope to
find an amicable solution to the
dispute
 Subsequently on 25 October 2004,
Gay's Kenyan lawyers wrote to Loh
seeking payment of Gay's terminal
dues
 On 27 October 2004, Gay and Loh
entered into a Points of Agreement
clarifying the status of the Trust Deed
 On the same day, a waiver letter was
sent by Loh (on behalf on ASP) to
Gay, waiving any claims that ASP and
Gay would have on each other