1. Chapter 14.1 Consideration

2. Consideration is either: • some detriment to the promisee, that the promisee may give value; or • some benefit to the promisor, that the promisor may receive value.

3. That the promisee suffer a detriment Nephew, I will give you $1000 if you do not smoke for a year. Agreed Uncle !

4. That the promisee suffer a detriment Nephew, I will give you $1000 if you do not smoke for a year. Agreed Uncle ! The nephew promises in return to give up something he is legally entitled to do (suffers a detriment). The uncle promises to pay the nephew $1000.

5. That the promisee suffer a detriment Nephew, I will give you $1000 if you do not smoke for a year Agreed Uncle ! The nephew promises in return to give up something he is legally entitled to do (suffers a detriment). The uncle promises to pay the nephew $1000. The uncle’s promise, supported by consideration, is enforceable.

6. The Categories of Consideration

7. Executory consideration

8. Agreed I will give you $5000 for your car. The promise to pay the $5000 is executory consideration, this is, it still has to be done.

9. Executed consideration

10. LOST A SMALL DOG $100 Reward

11. LOST A SMALL DOG $100 Reward Acceptance of this offer is by finding and returning the dog. Acceptance, provided there is the specified consideration, which is thus executed.

12. Past Consideration

13. Where a promise is made in return for an act that has already been performed, or for benefit that has already been received, the consideration for the promise is said to be past and will not support the promise. I.e. the promise in return for past consideration is unenforceable. Hunt v Bate (1568) 73 ER 605 Re McArdle [1951] 1 All ER 905 BUT

14. Where the act was performed, or the benefit conferred at the request of the promisor, in circumstances that suggested that some payment would be made, then the promise is enforceable since the consideration in that case is not regarded as being past. Sidenhamv. Worlington (1585) 78 ER 905 Casey v. Inland Revenue Commissioner [1959] NZLR 1052

15. What will amount to consideration?

16. There are two propositions: Consideration need not be adequate. Consideration must be real.

17. Adequacy of Consideration

18. The court will not upset a bargain merely because the exchange of values is unequal. Thomas v Thomas (1842) 114 ER 330

19. Illusory Consideration

20. Three situations where the alleged consideration may be illusory:

21. 1.The consideration is performance of a legal duty. 2. The consideration is the performance of an existing contractual duty owed to the promisor. 3. The consideration is the performance of an existing contractual duty owed to a third party.

22. The consideration is performance of a legal duty. The performance of a duty already required of the promisee by law will not support a promise – the consideration is illusory. Collins v. Godefroy (1831) 109 ER 1040 BUT

23. If, at the promisor’s request the promisee does more than the law requires, this will be good consideration. Glasbrook Bros v. Glamorgan County Council [1925] 1 AC 270

24. The consideration is the performance of an existing contractual duty owed to the promisor. Where the act is one that the promisee was contractually bound to perform for the promisee, it cannot amount to consideration for a fresh promise unless some additional act is performed at the request of the promisor. Stilkv. Myrick (1809) 2 Camp 217 Hartley v. Ponsonby (1857) 119 ER 1471 HOWEVER

25. Williams v. Roffey Bros [1990] 1 All ER 512 • If A is contractually bound to perform service or supply goods to B, and • it appears that A cannot perform the obligation in time, and • B promises A an additional payment or other benefit if A promises to perform the obligation on time, and • as a result B obtains a practical benefit or avoids a disbenefit, then • the promise of extra payment will be enforceable, provided • A exerted no improper pressure amounting to economic duress.

26. 3. The consideration is the performance of an existing contractual duty owed to a third party. • If A promises to deliver goods to B or to B’s order, and • B sells the goods, and • tells A to deliver the goods to C, then • if A requires C to promise to, say, unload within a specified time frame, then • C’s promise is enforceable. Scotson v. Pegg (1861) 158 ER 121

27. Variation of existing contractual rights

28. Waiver and forbearance While variations in a contract require consideration, a mere waiver or forbearance, such as an extension of time, may be enforceable without fresh consideration. Rickards (Chas.) Ltdv.Oppenheim [1950] 1 All ER 420

29. Satisfaction of debt by payment of a lesser sum • A debt can only be discharged • bypayment of the debt in full, or • the substitution, at the creditor’s request, of some other benefit, with or without payment of a lesser sum, the intention being to discharg the debt. Pinnel’s Case (1602) 5 Co Rep 117a; 77 ER 237 Foakes v Beer (1884) 9 App Cas 605

30. In New Zealand Section 92 Judicature Act 1908 A written receipt from the creditor, marked in full satisfaction of the entire debt, will bar further action by the creditor.