Contract 2 - consideration

Question 1

What is consideration and its 2 types?

Answer 1

An exchange between the parties

2. Executed: at start of contract, consideration has already been performed 🗡️😇
3. Executory: parties make promises to each other to perform something in the future 🗡️🔮

Question 2

What 7 rules/principles are there on consideration?

Answer 2

1. Must not be past 🕰️
2. Must move from promise 🤝
3. Must be have sufficient value 💷
4. Need not be adequate 🪙
   ——But beware——
5. A pre-existing public duty 👮
6. A pre-existing contractual obligation owed to promisor 📄
7. A pre-existing contractual obligation owed to a 3rd party 🥸📄

Question 3

What is the rule of ‘consideration must not be past’ and what is the exception?

Answer 3

If act was before promise, can’t be exchange for that promise

Exception: where some prior act was provided by promisee at promisor’s request & always understood they’d be paid:
- promisor requested act 🗣️🧑‍🌾
- Parties understood there would be benefit 💷🧑‍🌾
- Benefit would be legally enforceable had it been promised in advance 🧑‍🌾🧑‍⚖️

Question 4

What is the principle of a ‘pre-existing contractual obligation owed to promisor’ in relation to consideration?

Answer 4

General Rule: when party promises additional payment for existing contractual obligations, not good consideration

Exception: factual consideration - nothing new promised but party still getting something out of reshaped deal

Question 5

What are the requirements for factual consideration?

Answer 5

1. Entered into contract 📄
2. B doubts that A will complete obligations. 😬
3. B promises A extra payment so A performs on time. 💷⏱️
4. B obtains in practice a benefit, or obviates a disbenefit. 🎁
5. No economic duress or fraud. 🤨

Question 6

What is a ‘pre-existing contractual obligation to a third party’?

Answer 6

Performance will be sufficient consideration but party offering to do this is risking double liability

Question 7

Is a debtor promising to pay part of a debt in return for release of remainder of liability good consideration?

Answer 7

No
Exceptions:
- introducing new element into payment;
- payment of a lesser sum by a 3rd party;
- practical benefit argument

Question 8

What is promissory estoppel?

Answer 8

Protecting a party’s reliance on a non-bargain promise, commonly used for debts
- shield, not a sword 🛡️
- Clear, unequivocal promise that strict legal rights won’t be fully enforceable 🔍🤝⛓️
- Change of position in reliance on the promise (need not show detriment) 🥳
- Inequitable to allow promisor to go back on the promise ⚖️