Contract - Consideration

Even there there is valid offer and unconditional acceptance, as well as an intention to create legal relations, a contract won't be enforceable unless it is supported by consideration (or made 'under seal', which is less commonly discussed in FE1s).

1. What is consideration?

Something of tangible value that is given or foregone in exchange for a promise.
The promisee must generally suffer some sort of loss or detriment.
This concept is somewhat nebulous, but being able to give examples of valid or invalid consideration is really important. 

Dunlop Pneumatic Tyre v Selfridge

Consideration is "An act or forbearance by 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"

Bolton v Madden

Mutual agreements can be consideration - Executory Agreements. "Executory Agreements - by which the P agrees to do something on the terms that D has agreed to do something else, may be enforced if what the P has agreed to do is either to the benefit of D or prejudice to P." This is important - 2 parties promising to each other can be consideration. Don't assume an agreement isn't valid because no money has changed hands.

2. Consideration must move from the Promisee

Promisee may not enforce a promise unless you yourself have personally provided consideration.

Tweddle v Atkinson	P's father and future father-in-law agreed they would both give money to the plaintiff once he married. FIL died, and as plaintiff himself had not provided any consideration he was not entitled to stake his claim
McCoubray v Thompson	Owner of land agreed to donate land to D, on the condition D pay P a sum of money. Donor having died, P was unable to sue - having not provided consideration on which to support the contact.

3. Consideration need NOT move to the promisor

While Promisee must herself have provided consideration, the promisor himself need not have received it. It is instead feasible for a third party, or nobody, to benefit from consideration.

Hamer v Sidway	Uncle (D) offered Hamer a reward from vices while in university. Deemed enforceable as nephew had foregone these 'vices', despite his uncle not actually benefitting.
Jones v Padvatton	At request of mother, woman gave up her job in the US to study in England - consideration valid.

4. Consideration must have some tangible value, though it may be minimal.

O'Neill v Murphy	Prayers for soul = not tangible
Chappell v Nestle	Candy wrappers were sufficient consideration, even if negligible in value
O'Keeffe v Ryanair	Plaintiff participated in publicity = surrendered anonymity and privacy, which amounted to valid consideration.

5. Past Consideration is not valid consideration (usually)

Consideration cannot be used to support a contract where it was given or acquired before the promise was made - you cannot rely on a benefit already given as consideration for a subsequent promise.

Roscarla v Thomas	Warranty that a hose was 'sound and free from vice' made AFTER sale (consideration past) could not be relied on.
Morgan v Rainsford	Improvements to a property which had already been made before a contract was made = consideration past.
Provincial Bank of Ireland v O'Donnell	Money previously loaned wasn't valid consideration for later agreement.
Pao On v Laou Yiu Long	The rule that 'past consideration is not good consideration' is subject to the exception if:  There was an act carried out at the promisor's request There was an understanding, implied or otherwise, that the promisee would be rewarded for act The promise to pay, if had had been promised in advance of consideration, would have been enforceable.
Lampleigh v Braithwait	Implied understanding or 'Assumpsit' that a fee would be paid. Where a past benefit was conferred at the beneficiaries request, and where a reward would reasonably be expected, the promisor was bound by his promise.

6. Pre-existing duties

In theory, where a person is already supposed to do something under contract, an agreement to pay more money to do the same thing without alteration is not supported by consideration. Courts are increasingly flexible in this regard, though. 

Collins v Godefrey	Perfomance of an act which is a statutory (in this case, attending court) or pre-exsiting contractual requirement deemed not valid consideration.
Stilk v Myrick	Sailors demanded extra wages midway through a voyage - although their employer conceded,  he was entitled to renege as the work they did was a pre-existing duty.
Williams v Roffey Brothers	Exception to this rule - this is an important case. Court held despite P being obliged to finish work under contract, there was a real risk of D's being subject to a contractual penalty clause for delays that might arise. Held that D had 'gained a benefit or obviated prejudice' by this further promise which amounts to consideration. Note: economic duress or fraud requirement. look up Re Selectmove - does not extend to part payment of debts

Further exception arises where one contracting party promises a third party the first contract will be carried out - extending liability. A has promised B he will buy B's car A promises C he will pay B for the car if C pays A's insurnace  = C now has right to sue A, and A has provided consideration in the form of extending laibility to C.- an act or forbearance. Shadwell v Shadwell Barrister engaged to marry woman, Uncle promised money if he did marry. Uncle's promise enforceable has he had taken on an obligation to a person other than his bride.

7. Part-payment of a debt

In general, part payment of a debt is not good consideration for an agreement to forego the remainder of the debt unless something new is given in consideration of the agreement.

Foakes v Beer	Agreement that debtor could pay a portion of debt and the rest in installments (with no mention of interest) was not enforceable.
Pinnel's Case	Important exception Although Court accepted "payment of a lesser sum on the day in satisfaction of a greater cannot be any satisfaction for the whole, "A change in time or mode of payment, or the addition by the debtor of a tomtit or canary or the like will constitute [fresh] consideration." = the fact that payment had been made before deadline = fresh consideration.
Hirachand v Temple	Creditor agreed to accept part payment from debtors' father was binding agreement to satisfy entire debt, as a third party had paid the debt - otherwise this would really be a fraud on the father.

When part-payment of a debt is made, the issue of estoppel arises - Will the debtor be able to raise promissory estoppel as a defence to later claims for the full amount?  Equity exists to remedy inequity.

D&C Builders v Reese

P was threatened that if he did not accept part payment of lesser amount in full satisfaction of a debt, they would get nothing. D had however lied about their financial situation and used P's dire financial situation to extract a promise - equity would not permit estoppel as a defence from P seeking full payment later on.