Question 1 Consideration PDF

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Question 1 Consideration

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- There are 4 elements to form a valid contract, offer, acceptance, consideration and intention to create legal relation as stated in Butler v Ex Cello Corp. The issue in problem seems to concern the element consideration. Consideration is defined in Dunlop v Selfridge, where an act of forbearance of one party is the price for which the promise is bought. Consideration is also defined in Currie v Misa, a valuable consideration may consist either in some right, interest, profit or benefit accruing to one party or some forbearance, detriment loss or responsibility given, suffered or undertaken by another. The issues could be potentially between Brad v Fred, Brad v Liam and Brad v Harold.

First issue between Brad and Fred - Brad agrees to supply his next-door neighbour, Fred, with some timber for building a shed in his garden. Since Fred has been such a good neighbour, Brad states that he will reduce the agreed price of the timber from £600 to the special rate of £400. Fred, thrilled at the special rate, promises that he will fix Brad’s garden fence which has been in need of repair for some time. Brad delivers the timber. Fred, however, has a particularly busy period at work and doesn’t find time to do the repairs. Brad is extremely upset by this and demands that he does so. The offer was made and acceptance was communicated with a promise of repairing the fence. This shows the consideration was sufficient need not be adequate as seen in Thomas v Thomas and Chapell v Nestle. (explain the case facts). Therefore, there was sufficient consideration. However, Fred could possibly argue that it is a past consideration as seen in Roscorla v Thomas (explain the case facts). However, it is told that Fred delivered the timber after the acceptance and promise which means the promise was made before the sale thus Roscorla would not apply. Fred is liable to build the fence.

Second Issue between Brad and Liam. Brad contracts with Liam, a bricklayer, to work on one of his construction projects. Liam is renowned for his fast, yet precise, bricklaying skills and so Brad agrees to pay Liam £30 per hour, which is above the average rate for such work. A few days after starting work, Liam is approached by a rival company to work for them at a rate of £50 per hour. Liam informs Brad of this offer and says that if he doesn’t match the price he will unfortunately have to resign. Since Brad is running behind schedule on this project and fears incurring a penalty, he agrees to the wage increase and, thanks to Liam’s fast bricklaying, the work is finished on schedule. However, Brad regrets agreeing to increase Liam’s hourly rate and refuses to pay more than the £30, as originally agreed. The offer was made and acceptance was communicated. The consideration was given as well. However, the problem arises when Liam asked to increase the wage after the initial offer as he got another offer at a rate of £50 per hour. It is important to note the initial offer creates an existing contractual duty. In Stilk v Myrick (explain the case facts), 2 sailors left so it was not huge difference from agree terms thus the captain need not pay the promised extra price. Liam could argue using Hartley v Ponsonby, ( explain the case facts), half crew left the ship so the situation and terms agree was different. On the facts, Liam only did the job that was agreed earlier and nothing more, therefore, Brad would not need to pay the extra amount as the initial offer stays and promissory estoppel cannot be used by Liam as it is only a shield not a sword as seen in Combe v Combe.

Third issue Brad and Harold. Brad has a longstanding business relationship with Harold, a supplier of paint. The recession has created financial problems for Harold’s paint business and he is having difficulty paying Brad the £1,000 he owes him. Since Harold has often given discounts to Brad over the years, Brad decides to return the favour by accepting £600 in full payment of the monies owed. However, the recession begins to hit Brad too. He now wants to claim the further £400. The offer was made and acceptance was communicated. This comes under existing contractual duty to pay debts. In Pinnel’s case, the general rule was laid down that part payment of debt is no satisfaction to full sum.(explain case). In Foakes v Beer, explain the case facts. Therefore, Brad could claim the further 400 as part payment of debt is not satisfied.

However, Harold could try to raise promissory estoppel as seen in the case of Central London Property Trust v High Trees House, (explain case facts). However, there are several conditions to be fulfilled.

1. There must be pre existing contractual relationship (Michael Jackson v durham fancy goods)

2. There must be clear and unequivocal promise not to enforce (hughes v metropolitan railway)

3. The promise must have acted in reliance on the promise ( alan v el nasr)

4. future rights must not be destroyed (tool metal manufacturing v tungsten electric)

5. it is a shield not a sword (combe v combe)

6. promissory estoppel must not be stopped by legislation (evans v Amicus Healthcare

7. He who comes to equity must come with clean hands ( D&C builders v Rees)

(Every condition describe on the facts of question briefly and say it is satisfied or not)

all the conditions highly likely to be satisfied but condition no.3 is not clear as it could be satisfied or could not be. Therefore, up to courts to decide on this matter.

Harold highly likely to raise promissory estoppel and the court would allow it as it is similar to the case of Central London Property.

In conclusion, Brad could claim against Fred and get him to build the fence. Next Brad would not be liable to pay the extra money promised after the initial agreement with Liam as seen in Stilk v Myrick. Lastly, Brad could claim the 400 if the court follows Foakes v Beer and does

not allow the promissory estoppel. However, if the promissory estoppel is successfully raised then Brad would not be able to claim the 400 from Harold....