Chapter 11contracts consideration capacity and legalityconsideration

What are the rules governing a valid acceptance? Legal rules of acceptance i Acceptance must be given only by the person to whom the offer is made: An offer can be accepted only by the person or persons to whom it is ma…de and with whom it imports an intention to contract. It cannot be accepted by another person without the consent of the offer.

Chapter 11contracts consideration capacity and legalityconsideration

Privity in English law A promise is enforceable if it is supported by consideration, that is, where consideration has moved from the promisee. For example, in the case of Tweddle v Atkinson[20] John Tweddle promised William Guy that he would pay a sum of money to the child of William Guy, and likewise William Guy promised John Tweddle that he would pay a sum of money to the child of John Tweddle, upon the marriage of the two children to each other.

However, William Guy failed to pay the son of John Tweddle, who then sued his executors for the amount promised. It was held that the son could not enforce the promise made to his father, as he himself had not actually given consideration for it - it was his father who had done so instead.

The son didn't receive any consideration, so he cannot enforce the promise. This particular rule of consideration forms the basis of the doctrine of privity of a contract, that is, only a party to a contract is permitted to sue upon that contract's terms.

Note that the doctrine of privity has been somewhat altered by the Contracts Rights of Third Parties Act Therefore, consideration from the promisee was indulgent of the claim. Although consideration must move from the promisee, it does not necessarily have to move to the promisor.

Chapter 10: Consideration It may be written, or oral, or inferred from the conduct of the parties.

The promisee may provide consideration to a third party, if this is agreed at the time the parties contracted. For example, it is good consideration for person A to pay person C in return for services rendered by person B. If there are joint promisees, then consideration need only to move from one of the promisees.

Pre-existing duties[ edit ] If the promisee provides what he was required by public law to do in any event in return for a promise, promised performance of existing duty is not good consideration. In Collins v Godefrey Godefrey promised to pay Collins for his giving of evidence.

It was held that Collins could not enforce the promise as he was under a statutory duty to give evidence in any event.

In Ward v Byham a mother was under a statutory duty to look after her child. It was held that notwithstanding the statutory duty imposed on the mother, she could enforce the promise since the act of keeping the baby 'happy' provided additional consideration.

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The general rule is that if a creditor promises to discharge a debt in return for a fraction of payment, in paying the agreed fraction, the promisee is not providing consideration for the promise, as this is merely part performance of a contractual duty already owed.

During the voyage, two men deserted. Myrick promised he would increase Stilk's wages if Stilk agreed to honour his contract in light of the desertions. Stilk agreed and on return to port, Myrick refused to pay him the extra wages. It was held that Myrick's fresh promise was not enforceable as the consideration Stilk had provided for it, the performance of a duty he already owed to Myrick under contract, was not good consideration for Myrick's promise to increase his wages.

Hanson v Roydenthe promisee has done, or has promised to do, more than he was obliged to do under his contract.

They sub-contracted carpentry work to Williams. It became apparent that Williams was threatened by financial difficulties and would not be able to complete his work on time. This would have breached a term in the main contract, incurring a penalty.

Williams continued to work on this basis, but soon it became apparent that Roffey Brothers were not going to pay the additional money. He ceased work and sued Roffey Brothers for the extra money, for the eight flats he had completed after the promise of additional payment.

The Court of Appeal held that Roffey Brothers must pay Williams the extra money, as they had enjoyed practical benefits from the promise they had made to Williams. The benefits they received from it include: Having the work completed on time, not having to spend money and time seeking another carpenter and not having to pay the penalty.

In the circumstances, these benefits were sufficient to provide consideration for the promise made to Williams of additional payment. It now seems that the performance of an existing duty may constitute consideration for a new promise, in the circumstances where no duress or fraud are found and where the practical benefits are to the promisor.

The performance of an existing contractual duty owed to the promisor is not good consideration for a fresh promise given by the promisor.

However, performance of an existing contractual duty owed to a third party can be good consideration, see further below. According to the Court of Appeal, it is unlikely that either avoiding a breach of contract with a third party, avoiding the trouble and expense of engaging a third party to carry out work or avoiding a penalty clause in a third party contract will be a "practical benefit".

In Simon Container Machinery Ltd v Emba Machinery ABthe practical benefit was held to be the avoiding of a breach of contract, which was clearly not an extension of the principle. The following, mentioned in Pinnel's Case, [24] and confirmed by Sibree v.

Tripp[31] may amount to fresh consideration: If the promisee offers part payment earlier than full payment was due, and this is of benefit to the creditor; If the promisee offers part payment at a different place than where full payment was due, and this is of benefit to the creditor; or, If the promisee pays the debt in part by another chattel note, however, that part payment by cheque, where full payment was due by another means, is not consideration.

The Court of Appeal, in Re Selectmove Ltd[33] stated that the practical benefit doctrine, arising from Williams v Roffey, [29] cannot be used as an additional exception to the rule.

Chapter 11contracts consideration capacity and legalityconsideration

In that case, it was held that the doctrine only applies where the original promise was a promise to pay extra and not to pay less. In any event, the equitable principle of promissory estoppel may provide the debtor with relief. Arden LJ and Kitchin LJ both endorsed this approach indicating that part payment along with practical benefit could be enough to support a promise to accept less.

The decision has been criticised as extending the practical benefit test beyond its limits.Consideration, Capacity, and Legality (PGS ) Before a court will enforce a contractual promise, it must be convinced that there was some exchange of consideration underlying the bargain-Contracts entered into by persons lacking the capacity to do so may be voidable-Contracts calling for the performance of an illegal act are illegal.

A mutual agreement between two persons with legal capacity, supported by consideration, to An existing contract was replaced by an entirely new contract. This would be defined as a: Microsoft Word - RE_Principles_Chapter webkandii.com Author.

Consideration/ Promise to attend a Social Engagement- No consideration, not valid 6. Illusory Promises- consideration that appears to be valid, however, unknown circumstances can change the contracts outcome. Cases on consideration, contract law.

Chapter Consideration | College Business Law Notes

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Chapter 11contracts consideration capacity and legalityconsideration

such common in commercial activities. consideration legality of object capacity. Consideration: is the exchange of benefits and detriments in a contract. A valid contract must have each party receive a benefit and suffer a detriment. Benefit Detriment Types of detriments Giving up something you have a legal right or title to.

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