Podcast
Questions and Answers
Which element is NOT typically required for the formation of a legally binding contract?
Which element is NOT typically required for the formation of a legally binding contract?
- An agreement, demonstrated through offer and acceptance.
- Intention to create legal relations, indicating a serious commitment.
- Consideration, involving an exchange of value.
- A pre-existing friendship between the parties. (correct)
In contract law, what does 'consideration' primarily represent?
In contract law, what does 'consideration' primarily represent?
- The legal document outlining the terms of the agreement.
- The value exchanged between parties, which can be a benefit or detriment. (correct)
- The emotional feelings one party has for another.
- The moral obligation to fulfill a promise.
Why is Billy's promise to give Gwendoline £5,000 on her birthday typically not a binding contract, while his promise to pay her £50 if she cleans his windows is?
Why is Billy's promise to give Gwendoline £5,000 on her birthday typically not a binding contract, while his promise to pay her £50 if she cleans his windows is?
- Promises must involve large sums of money to be enforceable.
- Gifts are always revocable, regardless of any conditions attached.
- One promise lacks consideration, while the other includes an exchange of value. (correct)
- Promises must be written to be legally binding.
Which of the following best describes the principle that 'consideration must be sufficient but need not be adequate'?
Which of the following best describes the principle that 'consideration must be sufficient but need not be adequate'?
What is the primary legal issue in the Chappell & Co Ltd v The Nestle Co Ltd case regarding the chocolate bar wrappers?
What is the primary legal issue in the Chappell & Co Ltd v The Nestle Co Ltd case regarding the chocolate bar wrappers?
According to the concept of reciprocity in contract law, what role does it play in consideration?
According to the concept of reciprocity in contract law, what role does it play in consideration?
In the context of consideration, what does 'volition' refer to regarding contract formation?
In the context of consideration, what does 'volition' refer to regarding contract formation?
Why would a court consider only the 'sufficiency' and not the 'adequacy' of consideration in a contractual agreement?
Why would a court consider only the 'sufficiency' and not the 'adequacy' of consideration in a contractual agreement?
Flashcards
Consideration
Consideration
Something of value exchanged between parties in a contract.
Binding Promise
Binding Promise
A promise that can be enforced by law, often supported by consideration.
Sufficiency vs. Adequacy
Sufficiency vs. Adequacy
Consideration must be sufficient but need not be equivalent in value.
Past Consideration
Past Consideration
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Existing Duty
Existing Duty
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Consideration Moving from Promise
Consideration Moving from Promise
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Chappell & Co Ltd v Nestle
Chappell & Co Ltd v Nestle
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Reciprocity in Consideration
Reciprocity in Consideration
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Study Notes
Contract Formation: Consideration
- Consideration is the price paid for a promise, a necessary element for a contract to be legally binding.
- It involves exchange and/or benefit. A promise is only enforceable is something of value is given in return.
- Consideration can be a right, interest, profit, benefit, forbearance, detriment, loss, or responsibility.
- The exchange of promises for value is essential to establish the mutual understanding and enforceability of the agreement. This principle has deep historical roots going back to Dyer's Case.
- Consideration must be sufficient (legally good), but not necessarily equal in value. The court does not intervene between the parties if the amount is not equal.
- Currie v Misa and Dunlop Pneumatic Tyre provide legal definitions of consideration, emphasizing acts or forbearances as "the price for which the promise of the other is bought."
- Sufficiency/Adequacy: Consideration needs to be sufficient between the parties. Its objective adequacy is not important—even a seemingly trivial consideration can be accepted as a form of mutual agreement.
- Example: In Thomas v Thomas (1842), a promise of a rent payment of £1 per year was valid consideration.
- Example: In Chappell & Co v Nestle, the wrappers from Nestle chocolate bars were considered part of the consideration.
Key Principles of Consideration
- Sufficiency and Adequacy: Consideration must be sufficient (have value, albeit minimal) but need not be adequate (equal in monetary value to the benefit). The parties' agreement on the value is key.
- Past Consideration: Past actions cannot be consideration for a current promise. The consideration must be contemporaneous with the promise.
- Existing Duty: Performing an existing contractual duty owed to the promisor generally isn't good consideration.
- Consideration Must Move From the Promisee: The person receiving the promise must offer something in value (consideration) in return for the promise.
Examples illustrating the concepts
- A promise of £5,000 is binding if something is received; a promise of £50 for cleaning windows is potentially enforceable; the consideration exists when doing the cleaning.
- Nestle's use of chocolate wrappers as part of the payment for records highlighted the subjective nature of consideration. The value was from the commercial and practical aspects.
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Description
Explore the principle of 'consideration' in contract law, the price paid for a promise. It encompasses exchange, benefit, right, or detriment. Consideration must be legally sufficient, but not equal in value between the parties.
