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2 Available at http://www.inbrief.co.uk/contract-law/consideration-in-contract.htm
accessed 28 April 2015
3 Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] UKHL 1, [1915] AC
847
1
Charlie as a full settlement. 6Beryl and her family also will not
able to bring their case to the court as there is only family
arrangement, the court had really no place to interfere.
However, if consideration is consider, Amy may have bound by her
promise. Firstly, Amy offer to give David 1,000, with the condition that he
obtains a second- class degree. Is there any consideration between them?
There are some rules of consideration that we have to comply with it, in
order to make the consideration to be valid. In the problem between Amy
and David, we will concern in the first rule, consideration need not
benefit the promisor. Therefore, consideration will exist too if promise
suffers some detriment at the promisors request. For example, in Jones v
Padavatton7, daughters giving up her job would be consideration for the
mother providing allowance, even this did not directly benefit the mother.
According to this, there is no consideration between Amy and
David, because he suffer no loss from Amys promise, as David,
who is exceptionally intelligent, does only little work, but
manages to obtain a first class degree. Besides, this is a
responsibility for David to get a good result as a student and as a
son. Thus, Amy is not bound by her promise to pay the 1,000 to
David as Amy did not get any benefit and David did not suffer any
loss from Amys promise.
6 Chaterine Elliott & Frances Quinn, Contract Law ( Longman 8 th edn, London
2011)
7 Jones v Padavatton [1969] 1 WLR 328
3
Besides, we would like to know that whether Amy is bound to pay Beryl
300 for all the errands she has run for her in the past. As stated above, in
order to make the consideration valid, there are some requirements. We
would now discuss about the rule that is, consideration must not be
past. Consideration have to be given in return for the promise or act of
the other party. Something done, given or promised for another reason will
not be valid consideration for promise. If one party has completed
performance before the other offered the consideration, this is unlikely
that the performance which was done in return for that consideration. This
is demonstrated in Roscorla v Thomas.8 Defendant sold the claimant a
horse. The defendant told claimant that the animal was sound good and
free from any vice, after the sale have completed. Although this is far from
the truth, the court held that, defendants promise was unenforceable. As
it was made after the sale, the consideration was past, for it had not been
given in return for the promise. Thus, Amy was not bound by her
promise to Beryl as there is a past consideration, Beryl have
completed her performance to become errands before Amy
promise to pay her the 300. So her performance as an errands
does not done in return for Amys consideration.
Yet, there are exceptions to the rule of the past consideration is no
consideration. Firstly, where the past consideration was provided at
the promisors request, and it was understood that the payment
would be made in return.9 This can be traced back to Lampleigh v
Brathwait.10 The defendant had been convicted of killing a man, and has
asked claimant to obtain a pardon for him from the king. He later refused
to pay claimant the money which he promised when claimant getting his
pardon. The court upheld claimants claim as claimant had obtain pardon
at defendants own request, and this request carried with it the unspoken
understanding that the service would be paid for. In Amys case, if
Beryls performance was not requested by Amy, but she done it
by voluntary, with the expected some payment for all this effort,
then Amy would not be bound her promise and Beryl will not
entitled to get the 300.
Moreover, Amy also agrees that, although Charlie owes her 1,000,
she will accept 500 instead. Charlie pays Amy 500. However, there
were special rules apply to contractual duties debt, that is, where
someone owes another money and cannot pay the full amount, they will
sometimes offer to pay a smaller sum on the condition that the creditor
promises to accept this reduce sum as a full amount for the debt. In
essence, agrees not to sue the debtor for the full amount. Even if this
agreement is made, it will only be bound if the debtor have provides some
consideration for it by adding some extra element. The leading case is
Pinnels Case11, where Pinnel sued for Cole for the full settlement, which
Cole on a bond. The debt had be due on 11 November. Cole argue that
9 Chaterine Elliott & Frances Quinn, Contract Law ( Pearson 8th edn, London
2011)
10 Lampleigh v Braithwaite [1615] EWHC KB J17
11 Pinnel's Case 1602 5 Rep, 117 Court of Common Pleas
5
12
forgo the balance. Through this two cases, we can said that Amy does
not need to bound by her promise to receive a reduce sum from
Charlie as a full settlement. She can claim for the full settlement
from Charlie as Charlie gave nothing other than the 500. He did
not provide any extra element like pay the reduce sum earlier
than the date in satisfaction, or pay the 500 in a more
convenient place. As well as Charlie did not provide any benefit
to Amy or detriment to himself, there is no consideration have
been concluded.
However, there is a principle that will prevent Amy from claiming
back the arrears of 500 from Charlie which is known as the doctrine of
promissory estoppel14. This are the way of making some kinds of
promises binding even where there is no consideration. Shortly, a person
may be said to be prevented or estopped from going back on a promise,
representation or assumption. In this sense estoppel is a mechanism for
enforcing consistency and is about the very limited circumstances when
changing ones mind is legally unacceptable15. This was applied later by
Denning J (Lord Denning) in Central London Property Trust Ltd v High
Trees House Ltd16. Claimant had leased a block to defendant, who
planned to rent out the individual flats. Unfortunately, Second World War
had just broken out and as a result it was slump in rent. Claimant
14 Promissory estoppel is a somewhat newer doctrine than waiver, and could be
said to be a development of it. It is derived from equity
15 Ibid
16 Central London Property Trust v High Trees House [1947] KB 130 High Court
7
therefore agreed that defendant could pay a reduce sum of the rent
stipulated in the lease. By 1945, the flats were full to let, claimant sought
the full ground rent for the last two quarter of 1945 and stated that the
agreement was ever intended to last until the war was over, or the flats
was fully let, which was the sooner. The court accepted claimants
argument, held that the full rent was payable for the two quarters in
question and from the on. Denning J interpreted the modification as only
intended to apply while world war time conditions prevailed and so upheld
the receivers claim.17 However, if the balance of the rent during the war
years had be claimed, the action would not have succeeded based on the
equitable principle laid down in Hughes v Metropolitan Railway Co18
which the courts held that, the landlords conduct was an implied promise
to the tenants that he would not enforce the forfeiture at the end of the
notice period, and in not doing the repairs, the tenants had been relying
on this promise.19
According to this case, Amy will not able to claim back the
balance of the debt from Charlie if the promissory estoppel have
been applied. The reason is Amy have promise Charlie that she
17 Roger Halson, Contract law ( Longman 2nd edn London 2013)
18 Hughes v Metropolitan Railway (1876-77) LR 2 App Cas 439 House of Lords In
this case, a landlord gave a tenant a six month-notice to carry out repairs. The
lease will be forfeited if he fail to do so. The landlord and tenant then entered
into negotiations for the tenant to purchase the freehold of the property. The
tenant had not carried out the repairs as they believed they would be purchasing
the freehold and the repairs required by the landlord were not essential to his
use of the property. At the last minute negotiations broke down and the Landlord
claimed that the lease was forfeited as the tenant had not done the repairs.
19 Available http://www.e-lawresources.co.uk/Hughes-v-Metropolitan-Railway.php
accessed 25 April 2015.
8
would not sue later for the full amount from him. Thus, even
though Charlie did not provide any consideration to Amy, Amy
still unable to claim back the arrears of 500 as the promissory
estoppel have avoid her to go back to her promise.
However, although there is no need a legal contract in order to
apply the promissory estoppel, there are some requirement for Charlie to
fulfill in order to apply it. One of it is promissory estoppel often arise
where promisee in reliance, in the sense, it must have influence
their conduct. In High Trees as stated above, the lessees continued to
rent out the flats, rather than for example, trying to sell their leasehold
interest to someone else. Charlie will be able to apply the
promissory estoppel as he have pay the 500 to Amy after she
have agreed to receive the 500 as the full settlement. Hence,
Amy will not be able to claim back the 500 as she have to bound
by her promise for not to sue for the arrears from Charlie.
Here comes another question that would it make a difference if
Beryl paid Amy the 500? There is a regulations that, when a creditor
who accepts the part payment from a third party other than the
debtor, but in full settlement of the debtors liability, it was held
that the creditor will not be able to sue for the outstanding
amount later. This can be proven in the Hiranchand Punamchand v
Temple.20 An army officer owed money to a moneylender, and his father
sent a draft for a smaller amount, saying it was in full settlement of the
debt. The money lender have cashed the draft. However, he was then try
to sue the son for the arrears. The court have rejected this claim,
considering that by accepting the draft, the claimant had agreed to the
terms on which it was offered, and made an implied promise not to sue for
the rest of the money. Although this promise was made to the father
rather than the son who have no provide consideration, the court stated
that allowing the claimant to succeed would be a fraud on the father and
thus an abuse of the process of the court. Hence, Amy will not able to
claim the rest of the money which is owed by Charlie if Beryl are
the one who pay the reduced sum of the debt to Amy as Beryl will
be consider as the third party. The consideration will be exist
between Amy and Beryl although Charlie is the debtor.
As a conclusion, Amy will be able to withdraw her promise with Beryl and
Beryls family as their promise will be only consider as a family
arrangement. While if consideration is consider, there may be a different
result. Firstly, Amy will not need to be bound by her promise to give 1000
to David as David did not suffer any detriment or loss upon Amys
promise. Next, Amy also does not bound by her promise to Beryl as what
Beryl did is only a past consideration which does not gave in return for
Amys promise to give her 300 . Amy will only bound to give Beryl 300 if
she have requested Beryl to do so and there is understood that the
payment would be made in return. Furthermore, Charlie will have to give
back the arrears of the debt to Amy. This is because he did not provide
any extra element or pay the smaller sum in a more convenient place or
earlier than the due date which is amount to fresh consideration. He also
10
did not provide any benefit to Amy. This can be said that there is no
consideration have been provide by Charlie in return for Amys promise
not to claim back the full amount of the debt. Although the promissory
estoppel which stop someone from going back to their promise may,
made Amy bound by her promise even there is no consideration between
them, but only if Charlie have fulfilled the element which required to apply
promissory estoppel.
Bibliography
Books
11
Elliot, Catherine, and Frances Quinn. Contract Law. 8th ed. [Essex]:
Website
Table of cases
Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] UKHL 1,
[1915] AC 847
12
High Court
Hughes v Metropolitan Railway (1876-77) LR 2 App Cas 439 House
of Lords
13