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1、Topic4-Formation of Contract- Consideration, Estoppel & Privity of Contract(a) ConsiderationWhat is consideration? When is it required?n ConsiderationThe general rule is that a promise must be paid for if it is to be enforceableIdentifying consideration as an issueFirst identify the promise that a p
2、erson is trying to enforceSecond ask what that person gave in return for the promiseThird note the exceptions to this rule (i) deeds; (ii) promissory estoppeln Definition of ConsiderationThe price paid for the promisors price: Dunlop v Selfridge 1915 AC 847 The requirement that a promise must be sup
3、ported by consideration is satisfied by some benefit to the promisor ORsome detriment to the promisee Consideration is different from: Consideration is different from a conditions2-s3 Australian Woollen Mills Pty Ltd v The Commonwealth(1954) 92 CLR 424 (High Court)Consideration is different from mot
4、ive s6 Dunton v Dunton (1892) 18 VLR 114 Rule 1:Consideration must move from the promisee (but it need not move to the promisor)Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd 1915 AC 847Rule 2:Past consideration is not good consideration:*Roscorla v Thomas (1842) 3 QB 234 BLRM pp335-336s11Eastwoo
5、d v Kenyon (1840) 113 ER 482:s13Act or undertaking which is done before the promise is not generally good considerationAct or undertaking which is done independently of the promise - ie not done in response to the promise - is not good considerationPast consideration is generally not good considerat
6、ionRule 3.4: Consideration must be sufficient but need not be adequate: Consideration must be something of value in the eyes of the lawThomas v Thomas (1842) 2 QB 851s9Past consideration may be good consideration in exceptional circumstancess14 Pao On v Lau Yiu Long 1980 AC 614 the Privy CouncilSpec
7、ial situation 1: Performance of a public duty is not good consideration:Collins v Godefroy (1831) 1 B & Ad 950s16If a person is promised payment to do more than his/her public duty, his/her acts may provide considerationEngland v Davidson (1840) 11 Ad & El 856s17Glassbrook Bros v Glamorgan County Co
8、uncil 1925AC 270s18Special situation 2: Performance of an existing contractual duty is not good consideration:Consideration public policys19Where a plaintiff is already contractually bound to the defendant to do something, if he/she is offered more to do the very same thing, there is no consideratio
9、n for the new promise.Stilk v Myrick 1809 2 Camp 317 s20-21Williams v Roffey Bros & Nichols (Contractors) Ltd (1991) 1 QB 1 s23-24Special situation 3:Part payment of an existing debt: promise to pay only part of the debt provides no considerationThe general rule at common law is that a creditor is n
10、ot bound by a promise to accept part payment in full settlement of a debtA promise by debtor to pay only part of the debt provides no considerationPinnels case (1602) 77 ER 237s26-27*Foakes v Beer (1884) 9 App Cas 605 BLRM pp337-340 s28-29Exceptions to the rule in Pinnels case eg payment of a lesser
11、 sum before the due dateExceptions to rule in Pinnels case s251. Paying a smaller sum before the full amount is due - if accepted at the creditors request2. Paying a smaller sum together with something else - additional consideration is good consideration if accepted3. Payment of a lesser sum by a t
12、hird party may be consideration Hirachand Punamchand v Temple 1911 2 KB 330:s3(b) Doctrine of Promissory EstoppelPromissory Estoppeln The strict application of the doctrine of consideration is modified by the doctrine of promissory estoppel. The doctrine of estoppel operates to enforce certain promi
13、ses that have not been supported by valuable consideration. n Doctrine of equity whereby the courts will hold the promisor to its promise even though the promisee has not provide considerationDoctrine of Estoppel:the requirementsn There must be a promise by the promisor to the promiseen The promisee
14、 must have relied on the promisen The promisee will suffer detriment if the promisor is allowed to go back on his promisen It would be unconscionable (unfair) to allow the promisor to break his promise.The Australian position and elements of promissory estoppel:*Waltons Stores v Maher (Interstate) L
15、td (1988) 164 CLR 387 BLRM pp355-366s35-36Promissory Estoppel Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 at 472 Priestley Jn Nature of REPRESENTATION：Representation or promise as to future conduct including future legal relationsn Nature of RELIANCE and DETRIMENT：1.Encouragement of assumption cont
16、ract will come into existence or promise will be performed 2.Actual reliance by promiseen Requirement of UNCONSCIONABILITY：Departure from assumption is unconscionableDoctrine of promissory estoppel may apply in a range of circumstancesn Pre contract eg Walton Stores. Promissory estoppel used to prevent
