Consideration in Contract Law

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Questions and Answers

What does consideration in a contract require?

A benefit to only one party

All contracts require consideration (correct)

Mutual agreement and a form of payment

A legal obligation that is fair

Which case illustrates that an inadequate consideration does not imply involuntary consent?

Shadwell v Shadwell

Stilk v Myrick

Tan Chiw Thoo v Tee Kim Kuay (correct)

Hartley v Posonby

In the context of contractual obligations, what is meant by 'sufficiency' of consideration?

The mutual agreement of terms

The legal validity of the consideration (correct)

The fairness of the exchange

The financial value of the consideration

Which statement about benefits and detriments in contracts is true?

A party can receive a benefit even if obligated to provide a service Signup and view all the answers

How does the concept of 'inadequate consideration' affect a contract's enforceability?

It can indicate that there was no free consent Signup and view all the answers

What is required for a party to be prevented from enforcing their strict rights under a contract?

The party must have relied on a differing statement that changed their position. Signup and view all the answers

What was established in the case of Shadwell v Shadwell regarding marriage as consideration?

Marriage creates a benefit to relatives, making it valid consideration Signup and view all the answers

In the High Trees Case, what was the initial rental agreement before the reduction?

£2500 per year Signup and view all the answers

What distinguishes sufficient consideration from adequate consideration?

Sufficiency relates to legal validity, and adequacy pertains to the value of the exchange Signup and view all the answers

What does estoppel primarily function as in a contractual context?

A method to defend against claims. Signup and view all the answers

In Hartley v Posonby, what element was crucial in establishing that consideration existed?

The essential need for additional labor due to dangerous conditions Signup and view all the answers

What does the statement regarding 'the conduct was so influenced' imply in the context of contractual obligations?

The influenced party only needs to prove some degree of influence. Signup and view all the answers

What distinguishes consideration in a contract generally from the specific case of pre-existing duties?

Pre-existing duties do not provide valid consideration for a new contract. Signup and view all the answers

What legal principle was most relevant in Boustead Trading v Arab-Malaysian Merchant Bank?

One party's reliance on a statement can prevent strict enforcement of rights. Signup and view all the answers

Which factor does NOT have to be proven by a party relying on a differing statement to enforce their rights?

That the statement was made in bad faith. Signup and view all the answers

In the context of recognizing contractual adjustments, which factor is crucial in evaluating their validity?

The adequacy of the consideration involved. Signup and view all the answers

What constitutes a situation where there is no consideration for a contract to exist?

A person performs a public duty without any additional benefit. Signup and view all the answers

In the case of Collins v Godefroy, what was the main reason consideration was determined to be absent?

The witness was merely doing their public duty. Signup and view all the answers

In which situation is consideration present despite a pre-existing public duty?

When the promisee does more than what is required by their duty. Signup and view all the answers

Which case illustrates the principle that pre-existing contractual obligations cannot constitute valid consideration?

Stilk v Myrick Signup and view all the answers

What was the outcome of the case Williams v Roffey Bros & Nicholls (Contractors) Ltd regarding consideration?

Consideration was recognized since additional payment motivated timely completion. Signup and view all the answers

Which of the following scenarios illustrates valid consideration involving a third party?

A friend offers to pay a gardener for work done on their neighbor's property. Signup and view all the answers

What differentiates the case of Glasbrook Bros Ltd v Glamorgan County Council in terms of consideration?

The police were not legally obligated to provide additional patrol. Signup and view all the answers

Which of the following statements accurately reflects the validity versus adequacy of consideration?

Adequacy of consideration is not essential for validity. Signup and view all the answers

Study Notes

Consideration

Consideration is a crucial element in a contract
It's something of value exchanged between parties to create a legally binding agreement
A valuable consideration, in legal terms, 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 the other.

Definition of Consideration

In short: One party gives something, and the other party gives something in return.
This is usually in the form of a promise for a promise, or an act for a promise.
Section 2(d) of the Contracts Act 1950 defines consideration: when at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called consideration for the promise.

Requirements of Consideration

At the desire of the promisor: The act or promise must be done at the request or with the expressed or implied desire of the person to whom the promise is made. If there was no desire, there is no consideration
Promisee or any other person: The consideration may come from either the promisee himself or any third party at the promisor's desire

Types of Consideration

Executed: An act performed at the request of the promisor. (e.g., A completes house repairs at the request of B who promises payment).
Executory: A promise given in return for a promise— a future promise in exchange for a future promise (e.g., A promises to deliver goods next week in exchange for B promising to pay next week)
Past consideration: It is something that has already been completed before the promise was made - not a valid consideration (e.g., A does work for X and later X promises to pay - not valid consideration unless the work was done and the promise was made in the desire of X)
Forbearance to sue: Agreeing not to exercise a legal right. (e.g., A agrees not to sue B for past damages in exchange for B's promise to compensate)

Exceptions to Consideration

Exceptions in Malaysian law: Certain situations do not require consideration, as per the Contracts Act 1950, specifically section 26(a),(b), (c)
s.26(a): Valid if the agreement is in writing and registered.
s.26(b): Valid if the agreement is a promise to compensate for certain things - past actions done at the desire of the promisor.
s.26(c): Valid if the agreement is for the payment of a debt barred by time bar. This means if a debt was discharged due to a period of limitation, and a promise to pay is made in writing, a valid contract may be formed.

Privity of Contract

Only parties to a contract have rights and obligations under that contract. Third parties cannot sue or be sued.

Adequacy of Consideration:

Sufficient, not necessarily adequate: If consideration exists, its amount isn't usually considered by courts. The adequacy of the consideration is not relevant to the formation of a contract.
Exceptions: If the inadequacy of the consideration is egregious or raises questions about the free consent of one of the contracting parties, it can be relevant

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Description

This quiz delves into the concept of consideration, a fundamental element in contract law. Explore how it signifies the value exchanged between parties, its legal definitions, and the conditions that make consideration valid. Test your understanding of this crucial legal principle.