Consideration Notes

CF - Consideration Tuesday, 6 July 2010 12:42 p.m. To be enforceable, a contract requires consideration from both parties. Uncertain definitions of consideration: * Benefit or detriment (Currie v Misa ) * Legal or factual * On request (express or implied) (Chas S Luney v State Bank of South Australia (1994) HC Christchurch) * 'Invented'? Valuable consideration in the eyes of the law: * Compromise or forbearance (Currie v Misa) * Intangible consideration (Ward v Byham [1956]) * Pre-existing duty owed to other party if practical benefit conferred (the same for more) (Williams v Roffey Bros) * A pre-existing duty owed to a third party (case?) * Nominal consideration (Melmery Investments Ltd v McGarry) Not valuable consideration - Motive - Illusory (Biotechnology Australia v Pace) - Conditional gifts (Nelson District Law Society v Minister for Courts) - Bad faith - Policy (Rothmans v Attorney General) (slavery) - Part performance (less for the same) (Foakes v Beer) - No 'practical benefit' (Roffey Bros) - Pre-existing duty owed in law - Past consideration (Chas S Luney v State Bank of South Australia) Promises that are bargained for are prima facie enforceable. The name given to the exchange element in a bargain is consideration. "Contracts under seal" are a minority of contracts that do not require consideration - e.g. deeds "Simple contracts" - most contracts require consideration Exception: Contracts Enforcement Act 1956, s2 Contracts involving the sale/disposition of an interest in land must be in writing Requires both consideration and correct form. The nature of consideration Separates a simple contract from a bare promise (nudum pactum - Carlill), which must be made under seal to be enforceable. Currie v Misa (1875) LR 10 Ex 153 at 162, "A valuable consideration, in the sense of the law, may consist either of some right, interest, profit or benefit accruing to the one party [promisor] , or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other [promisee]." Detriment: e.g. Carlill inhaling smoke. Rothmans v AG "Consideration may be described as the price paid by the plaintiff for the defendant's promise, or alternatively the conferring of a benefit on the defendant by the plaintiff in return for the defendant's promise." - Robertson J Nexus Chas S Luney v State Bank of South Australia (1994) HC Christchurch "The party seeking to enforce the contract must show he or she has provided something of value to or at the request of the other party and in return for the latter's promise." Must be positively in response/connected to the first promise. Conditional gift promises (CM 109?) e.g. "you can have my bicycle, provided you come and get it" Is collection of the bicycle a condition to the gift, or an onerous task (detrimental to promisee/beneficial to promisor) tha t will count as consideration? Depends on how onerous the condition (task) is, very fact dependent. Nelson District Law Society v Minister for Courts, HC Well, 14 August 2003 Department for Courts made space in courthouse for the Nelson District Law Society's library. "Grace and favour" relationship. When the courthouse needed an expansion, the department agreed to find temporary accommodation elsewhere for the library, if the society agreed to vacate immediately. The society tried to stay. True nature of promise = gift promise, no consideration for the society's agreement to vacate immediately. The relocation is a condition to the further continuance of the gift promise. Moving out wouldn't have made the promise enforceable. Why require consideration for enforceable promises? 11th and 12th centuries, enforceability based on two principles ? Breaking a promise = sin Contract Page 15

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