Contract Law Consideration Quiz

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Questions and Answers

What is the main function of consideration in a contract?

To ensure both parties understand their obligations

To establish the duration of the contract

To provide a basis for the enforcement of promises (correct)

To serve as a method for conflict resolution

Which of the following best describes the concept of reciprocity as it relates to consideration?

It requires a monetary exchange between parties

One party receives a benefit while the other suffers a loss

Contracts are only enforceable if both parties act simultaneously

Both parties give and receive something of value (correct)

In the context of contracts, what type of promise is established in an executory agreement?

A promise to perform an action in the future (correct)

A promise with no specified timeframe

A verbal agreement without consideration

A promise that has already been fulfilled

What distinguishes executed contracts from executory contracts?

Executed contracts have all promises already fulfilled Signup and view all the answers

According to Lush J's definition, which of the following can constitute valuable consideration?

A right or profit received by one party and a loss or responsibility undertaken by the other Signup and view all the answers

What is required for consideration to be valid?

It must move from the promisee. Signup and view all the answers

Which of the following statements is true regarding past consideration?

Past consideration is not valid consideration. Signup and view all the answers

Which element must consideration have?

It must be of economic value. Signup and view all the answers

In the case of Tanner v Tanner, what did the court decide regarding consideration?

Consideration was valid even without benefiting the promisor. Signup and view all the answers

What best describes a unilateral contract mentioned in the context?

An agreement where only one party makes a promise. Signup and view all the answers

What happens if consideration does not move from the promisee?

The contract is void. Signup and view all the answers

Which of the following is not a characteristic of valid consideration?

Consideration must benefit the promisor. Signup and view all the answers

In contract law, what is a general rule regarding consideration?

Consideration must be exchanged for the other party's consideration. Signup and view all the answers

What constitutes valid consideration in a promise not to sue?

The promise where no detriment is suffered. Signup and view all the answers

Why is performing an existing legal duty not considered valid consideration?

Because existing obligations do not impose a detriment. Signup and view all the answers

In the case Collins v Godferoy, what was the court's stance on the plaintiff's obligation?

Providing evidence did not constitute consideration for payment. Signup and view all the answers

What did the court rule in Glassbrook Brothers Ltd v Glamorgan City Council regarding police duties?

Providing extra services beyond the normal duties constitutes valid consideration. Signup and view all the answers

Which situation would provide valid consideration in a legal agreement?

An individual taking actions beyond their legal duty. Signup and view all the answers

Which of the following scenarios describes a public duty that does not constitute consideration?

A police officer arresting a suspect as per protocol. Signup and view all the answers

What must occur for a promise based on an existing duty to be considered valid?

The individual must suffer some form of detriment. Signup and view all the answers

What defines a situation in which consideration is valid due to excess performance beyond duty?

When the performance is not legally required. Signup and view all the answers

What is considered a requirement for consideration to be valid?

It should have some economic value Signup and view all the answers

In the case of Chappel v Nestle, why did the court find that the chocolate bar wrappers constituted consideration?

They increased sales, providing value Signup and view all the answers

What was the court's reasoning in White v Bluett regarding the son's promise?

It was too vague to be valid consideration Signup and view all the answers

In Thomas v Thomas, why was the plaintiff's claim about following her husband's wishes rejected?

The court deemed there were no economic benefits Signup and view all the answers

What can be considered a valid form of consideration in a contract as demonstrated in Hammer v Sidaway?

A promise not to enforce a legal claim Signup and view all the answers

What was the outcome of the case Alliance Bank Ltd v Broom concerning consideration?

No consideration was given by either party Signup and view all the answers

What does Trietel's suggestion about consideration imply?

Consideration should have at least economic value Signup and view all the answers

Which case highlighted the insufficiency of vague promises as consideration?

White v Bluett Signup and view all the answers

What was the distinguishing factor in the case concerning the coal miners and police compared to Glassbrook?

The police services in this case were self-induced. Signup and view all the answers

In Ward v Byham, what was the basis for the court's ruling regarding the father's promise to pay?

The mother's efforts exceeded her legal duties. Signup and view all the answers

What was the outcome of the case Stilk v Myrick regarding the claims for extra payment?

The court found no new consideration was given. Signup and view all the answers

In Hartley v Ponsonby, what led the court to decide that there was consideration for the promise of extra payment?

The voyage was deemed dangerous, and sailors went beyond their original duties. Signup and view all the answers

Which statement is true regarding the enforceability of promises to pay for existing duties?

They are not considered valid unless new consideration is provided. Signup and view all the answers

How did the court justify the mother's right to seek enforcement of the father's promise in Ward v Byham?

There was no legal obligation on her part to maintain happiness. Signup and view all the answers

What factor differentiated Hartley v Ponsonby from Stilk v Myrick?

The remaining sailors undertook greater risks than their original contracts required. Signup and view all the answers

What legal principle did the court apply when ruling in favor of the remaining sailors in Hartley v Ponsonby?

Risk and additional obligation can represent new consideration. Signup and view all the answers

Under what condition can part-payment of a debt be accepted according to Pinnel’s case?

The payment is made in a more convenient location Signup and view all the answers

What was the key ruling in Selectmove Ltd regarding the reliance on Williams v Roffey?

Selectmove was denied the consideration claim. Signup and view all the answers

Which case supports the idea that a creditor who receives part-payment from a third party cannot sue for the remaining amount?

Hiramchand Punamchand v Temple Signup and view all the answers

What is an example of a situation where disputed claims apply?

The debtor has paid part of the amount and disputes the remaining debt. Signup and view all the answers

In Shadwell v Shadwell, what was considered valid consideration in the case?

The financial burden of marrying the fiancée was deemed a detriment. Signup and view all the answers

In Scotson v Pegg, what was considered to be beneficial to the defendant?

The delivery of coal Signup and view all the answers

What does Promissory Estoppel not support in relation to part-payment of a debt?

It allows a debtor to renegotiate existing contracts. Signup and view all the answers

What is true about unliquidated claims in relation to part-payment?

Part-payment can discharge the uncertainty of the debt. Signup and view all the answers

Study Notes

Consideration in Contracts

A contract is only legally enforceable if there is an intention to create legal relations (ITCLR) and consideration.
Consideration is the badge of enforceability in a contract.
The classic idea of consideration is based on reciprocity.
Consideration involves an exchange of promises between two parties.
Each party is both a promisor and a promisee.

Types of Consideration

Executory: A promise to do something in the future. This normally happens after the contract has been formed. Example: Contracting for a sale of good to be delivered.
Executed: A promise for doing something that has already been done. This normally happens before or at the time the contract is formed. Example: Returning a lost dog as advertised.

Rules of Consideration

Must move from the promisee: Consideration must originate with the person who is receiving the promise. However, it does not have to be given to the promisor.
Can be a promise not to sue: Forbearance to sue is valid consideration if a good faith argument exists.
Must be of economic value: Consideration must have some value in the eyes of the law. This doesn't require it to be equivalent, but it must have some economic value.
Past consideration is not good consideration: If an act is performed before a promise is made, that act is not valid consideration for the promise. However, there are exceptions—for example, if the act was done at the promisor's request and it was reasonably contemplated that payment would be made later for that action.

Exceptions to Past Consideration Rule

Lampleigh v Braithwaite: An act done at the promisor's request, where it is understood that payment will be made is valid consideration. The act must be done at the request of the promisor.
Re Casey Patents: The act must be reasonably contemplated that payment will be made at some point.

Sufficiency vs. Adequacy

Sufficiency: Consideration must have value in the eyes of the law. The court will not examine if the consideration is adequate.
Adequacy: The value need not be equivalent. The courts are not interested in whether the exchange is fair.

Existing Public Duty

Merely carrying out a public duty is not valid consideration. Example: a police officer carrying out their duties.
If the duty is exceeded, then it is good consideration.

Existing Contractual Duty

Performing an existing contractual duty to someone is not usually valid consideration.
Exceptions occur if something extra is given or if there is a practical benefit.
Examples of exceeding a duty: Stilk v Myrick, Hartley v Ponsonby, Williams v Roffey Bros

Contractual Duty to Supply Goods or Services

Williams v Roffey Bros: If an existing contractual duty is performed and confers a practical benefit on the other party, that can be valid consideration.

Practical Benefit

Courts look at practical benefits such as avoiding penalties, preventing trouble, or changing working arrangements.

Contractual Duty to Pay Debts

Pinnel's case: Part payment of a debt is generally not valid consideration for the full amount.
Exceptions: If the part payment is made at an earlier date or at a more convenient time or if the debtor provides something else. Foakes v Beer, Re Selectmove

Disputed Claims

If there's a dispute about the debt and the amount owed, part payment of the debt could be consideration for the promise not to sue.
Unliquidated claims: if the value is uncertain, part payment can be valid consideration.
Composition agreements: a debtor who cannot pay may offer a percentage of their claim to creditors.

Existing Contractual Duty to a Third Party

Performing a duty owed to a third party can be consideration.
Examples: Scotson v Pegg, Shadwell v Shadwell

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Description

Test your understanding of the function of consideration in contracts and the concept of reciprocity related to it. This quiz covers essential principles that govern contractual agreements.