Contracts Law: Consideration Principles

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Questions and Answers

Under Section 26(a), what is the requirement regarding the form of an agreement?

It can be either written or verbal, as long as it is registered.

It must be expressed in writing. (correct)

It can be verbal, provided there is natural love and affection.

It can be implied through actions.

What is a necessary criterion for an agreement to be valid based on 'natural love and affection' under Section 26(a)?

The agreement must be witnessed by a third party.

The parties must have a formal business relationship.

There must be a genuine emotional bond between the parties. (correct)

The agreement must involve a significant financial transaction.

According to the information, what was the primary issue that invalidated the agreement in the Re Tan Soh Sim case?

There was a lack of close relationship between the two parties.

The agreement was not registered.

There was a lack of proof of natural love and affection between the parties. (correct)

The agreement was not written down.

According to the provided material, what is a key characteristic of a 'close relationship' as defined under Section 26(a)?

It usually involves spouses, parent-child, or siblings. Signup and view all the answers

Under Section 26(b), what condition validates a promise to compensate?

The act was done voluntarily, or completed something promisor was legally bound to do. Signup and view all the answers

What constitutes a voluntary act under Section 26(b)?

An act done without the promisor's request. Signup and view all the answers

According to the provided information, what is the legal status of a promise to pay a debt that is barred by limitation laws?

It is a valid contract. Signup and view all the answers

What happens if there's a contract that needs to be registered by law but is not?

The contract is considered invalid. Signup and view all the answers

According to Section 29 of the Contracts Act 1950, which scenario renders an agreement invalid?

An agreement that prevents a person from exercising their right to seek legal redress. Signup and view all the answers

Which type of consideration involves an act performed before a promise is made?

Past consideration Signup and view all the answers

Which of the following best defines 'executed consideration'?

An act performed in exchange for a promise. Signup and view all the answers

In the context of contract law, what is 'executory consideration'?

A promise made in return for a future action or promise. Signup and view all the answers

Under common law, why is past consideration generally considered invalid?

Because the action was not done in response to the promise. Signup and view all the answers

What is the key factor that distinguishes whether consideration is deemed ‘past’ rather than ‘executed’ or ‘executory’?

The timing of performance and promise. Signup and view all the answers

In what specific scenario is past consideration considered valid under contract law?

When the act was performed at the promisor's request. Signup and view all the answers

According to the definition of consideration provided in Currie v Misa, which of the following best describes a valid form of consideration?

A right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other. Signup and view all the answers

In the Lampleigh v Braithwait case, what was the key factor that made the past consideration valid?

The action was performed at the request of the promisor. Signup and view all the answers

Based on Section 2(d) of the Contracts Act 1950, what is required for an act or abstinence to be considered valid consideration?

The act or abstinence must be at the desire of the promisor. Signup and view all the answers

What is the key principle illustrated by the case of Kepong Prospecting Ltd v Schmidt regarding who can provide consideration?

Consideration can be valid even if it comes from someone other than the promisee. Signup and view all the answers

In the context of contract law, what does 'forbearance to sue' refer to?

The agreement to not pursue a legal right or claim. Signup and view all the answers

If a person performs an action without any request from the promisor, does this constitute valid consideration?

No, because the action was not done at the promisor's desire. Signup and view all the answers

In Kepong Prospecting Ltd v Schmidt, why was Schmidt unable to sue despite providing consideration?

Schmidt was not a party to the original contract. Signup and view all the answers

What is the main relevance of the Contracts (Rights of Third Parties) Act 1999 in relation to the discussed cases and concepts?

It allows third parties benefiting from a contract to sue despite not being a party to the original contract. Signup and view all the answers

Which of the following scenarios demonstrates a valid 'act or abstinence' that constitutes consideration?

Agreeing not to pursue a lawsuit in exchange for a settlement. Signup and view all the answers

According to Section 64 of the CA 1950, what options does a promisee have regarding the performance of a promise owed to them?

They can waive, partially cancel the promise, extend the performance time, or accept something else. Signup and view all the answers

In the case of Kerpa Singh v Bariam Singh, what was the key factor that led the court to decide in favour of the debtor?

The creditor cashed the cheque sent by the debtor's son, indicating acceptance. Signup and view all the answers

How does the legal position in Malaysia differ from common law with regards to part payment?

Malaysian law allows a smaller payment to satisfy a larger debt without 'something extra,' unlike common law. Signup and view all the answers

What is the main purpose of promissory estoppel?

To act as a 'shield' against the unfair enforcement of strict legal rights. Signup and view all the answers

In the context of contract law, what generally constitutes valid consideration when a party is performing a pre-existing public duty?

Performance that exceeds the scope of the pre-existing public duty Signup and view all the answers

Which of the following is a key principle established by the High Trees case regarding promissory estoppel?

A binding promise is enforceable if the other party has reliably acted upon it. Signup and view all the answers

How is promissory estoppel primarily applied in Malaysia, based on the case of Boustead Trading v Arab-Malaysian Merchant Bank?

To prevent unfair enforcement of legal rights when the other party has acted on a promise. Signup and view all the answers

According to the case of Collins v Godefroy, why was the agreement to pay Collins for attending court deemed invalid?

Collins was already legally obligated to attend court. Signup and view all the answers

In Glasbrook Bros Ltd v Glamorgan County Council, what was the key factor that made the police's promise to provide extra protection enforceable?

The police were providing a service outside their normal duty. Signup and view all the answers

What was the key principle in the case of Hughes v Metropolitan Railway Co in relation to legal rights?

Negotiations can lead to the suspension of strict legal rights. Signup and view all the answers

According to Section 64, which action by the promisee allows for the discharge of the promise?

When the promisee agrees to waive, partially cancel, or accept something other than the original promise. Signup and view all the answers

What is the general rule regarding the performance of an existing contractual duty as it relates to consideration?

Performing an existing contractual duty does not constitute consideration. Signup and view all the answers

In the case of Stilk v Myrick, why was the captain’s promise of extra wages to the remaining crew deemed unenforceable?

The sailors were already contractually obliged to complete the voyage. Signup and view all the answers

What is the exception regarding an existing contractual duty, that would make a new promise enforceable?

If a party does more than what their contract requires. Signup and view all the answers

How can performance of a duty owed to a third party constitute valid consideration?

When the performance also benefits the promisor. Signup and view all the answers

In Shadwell v Shadwell, what was the court's reasoning concerning the uncle’s promise to pay his nephew an annual sum after he married his fiancée?

The marriage could benefit the uncle, therefore valid consideration was provided. Signup and view all the answers

In the case of JM Wotherspoon & Co Ltd v Henry Agency House, what was the primary reason the court deemed the defendant's promise to pay invalid?

The plaintiff's act of supplying goods was not considered voluntary, as it was based on the defendant's suggestion. Signup and view all the answers

According to Section 26(b), under what circumstances can a promise to compensate for a past act be considered valid without requiring a new consideration?

When the act was done at the promisor’s desire and was voluntary, or if it was a legal obligation of the promisor. Signup and view all the answers

What is the key difference between Section 2(d) and Section 26(b) concerning past acts as consideration?

Section 2(d) necessitates the act be done at the promisor's desire, whereas Section 26(b) allows for voluntariness or a legal obligation, but not a request, to validate the promise. Signup and view all the answers

In the context of Section 26(b), if a person is legally obligated to perform a particular action, and later someone promises to pay them for having done that action, is that promise to compensate legally valid?

Yes, such a promise is valid under Section 26(b). Signup and view all the answers

Under what condition does Clause (c) of Section 26 allow for the enforcement of a promise to pay a debt, which would otherwise be time-barred?

If the promise is in writing and signed by the debtor. Signup and view all the answers

According to the legal principles outlined, if an act was done at the promisor's desire, what is the legal consequence in relation to consideration?

It establishes valid consideration under Section 2(d), forming a valid contract. Signup and view all the answers

In the absence of the requirements under Section 26(b) and (c), what would generally be required for an agreement to be enforceable?

The act must be done at the promisor's desire, as per Section 2(d). Signup and view all the answers

How does the court assess the validity of a promise to pay for a past act related to section 26(b)?

By determining if the act was voluntary or the promisor’s legal obligation. Signup and view all the answers

Study Notes

Consideration Notes

Definition (Currie v Misa 1875): "A valuable consideration in the sense of the law 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."
Section 2(d), Contracts Act 1950: "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."

Four Elements of Consideration

At the Desire of the Promisor: The act or abstinence must be at the desire of the promisor. If not initiated or desired by the promisor, it does not constitute consideration.
Promisee or Any Other Person: Consideration does not have to originate from the promisee alone; it can also originate from a third party.
Done or Abstained From Doing (Act or Abstinence): Consideration can involve performing an act or abstaining from an action.
Forbearance to Sue: Agreeing not to pursue a legal action (e.g., a lawsuit) can be valid consideration.

Has Done, Does, or Promises to Do (Past, Present, Future Consideration)

Past Consideration: An act done before the promise is made.
Executed Consideration: An act performed in return for a promise.
Executory Consideration: A promise made in return for a promise to act in the future.

Types of Consideration

Executed Consideration: One party performs an act in exchange for a promise (e.g., Carlill v Carbolic Smoke Ball Co).
Executory Consideration: Both parties exchange promises for future performance (e.g., a buyer promising to pay for goods a seller promises to deliver).
Past Consideration: Acts done prior to a promise being made. Not a valid consideration. Usually invalid unless specifically requested by the promisor, as in Lampleigh v Braithwait.

Exception to Past Consideration (Malaysia)

Past consideration can be valid if the act was performed at the promisor's request.

Agreements without Consideration

Section 26, Contracts Act 1950: An agreement without consideration is void, unless it is in writing and registered, or is a promise to compensate for a completed act, or a promise to pay a debt barred by limitation.

Promissory Estoppel

Promissory estoppel prevents a party from enforcing their strict legal rights if they've made a promise where the other party has relied upon it. This does not create a contract but ensures fairness in upholding promises.

Pre-Existing Public Duty

Performing an existing public duty does not constitute valid consideration.

Pre-Existing Contractual Duty

Performing an existing contractual duty does not constitute valid consideration unless the party exceeds their contractual obligations.

Pre-Existing Contractual Duty to a Third Party

Performing an existing duty owed to a third party can be valid consideration if it benefits the promisor.

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Description

This quiz covers the essential principles of consideration in contract law, including definitions and elements as specified in key legal cases and statutes. Test your understanding of Currie v Misa and the Contracts Act of 1950, focusing on how consideration is defined and its implications in legal agreements.