This chapter discusses consideration and promissory estoppel. Consideration, a universal requisite of contracts not made by deed, reflects a variety of policies and serves a number of functions. First, enforceability may depend on the content of the promise or the circumstances in which it was made. Second, consideration has been said to identify which promises the parties intend to be legally enforceable. Third, consideration is sometimes seen as a requirement which ensures that a promisor has deliberately decided to contract and prevents parties accidentally binding themselves on impulse. Promissory estoppel is one strand in a broader equitable principle whereby parties to a transaction who have conducted their dealings in reliance on an underlying assumption as to a present, past, or future state of affairs, or on a promise or representation by words or conduct, will not be allowed to go back on that assumption, promise, or representation when it would be unfair or unjust to do so.
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4. Consideration And Promissory Estoppel
Jack Beatson, Andrew Burrows, and John Cartwright
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4. Consideration
M P Furmston
This chapter first discusses the function and definition of the doctrine of consideration, a unique feature of the Common Law, and then examines the technical rules that judges have evolved for the application of their doctrine of consideration. Consideration is classified into two categories, executory and executed. The classification reflects the two different ways in which the plaintiff may buy the defendant’s promise. Consideration is called executory when the defendant’s promise is made in return for a counter-promise from the plaintiff, and executed when it is made in return for the performance of an act.
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2. Contract I: essential features of a contract
Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses the essential features of a contract. Offer and acceptance are the first stages in establishing an agreement that may form a legally binding contract. An offer may be accepted at any point until it is terminated. Acceptance can only be made by the offeree or their agent. Consideration is the bargain element of a contract and may be referred to as the ‘price of a promise’. The parties must intend for an agreement to establish legal relations to create an enforceable contract. Presumptions exist in relation to social/domestic agreements and business/commercial agreements.
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4. Consideration and estoppel
Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter explains the nature of consideration with the aid of examples and discusses two basic definitions of consideration (consideration as a legal benefit or burden and as the price of a promise) as well as the past consideration rule. It addresses whether performance of an existing duty can count as a legal benefit or burden to form consideration for a promise. It considers existing public duties, existing duties owed to a third party and existing duties owed to the promisor. The chapter examines the related rules concerning part payment of a debt and the extent to which promises not supported by consideration can be enforced using promissory estoppel.
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7. Consideration and promissory estoppel
This chapter analyses the issue of consideration in contract law. Contracts are generally binding only if supported by consideration. Consideration can be viewed as ‘the price tag on the promise’: a party must provide something in exchange for the promise in order to be able to enforce that promise. That ‘something’ is called ‘consideration’, and might itself be a promise. The requirement of consideration is demanded by the common law. But, in some situations, equity will allow a promisee to enforce a promise, despite a lack of consideration, through the doctrine of promissory estoppel. Where the promisor makes a clear promise, intended to be binding, intended to be acted upon, and in fact acted upon, the courts will not allow the promisor to act inconsistently with that promise if to do so would be unconscionable.
Chapter
4. Consideration and estoppel
Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter explains the nature of consideration with the aid of examples and discusses two basic definitions of consideration (consideration as a legal benefit or burden and as the price of a promise) as well as the past consideration rule. It addresses whether performance of an existing duty can count as a legal benefit or burden to form consideration for a promise. It considers existing public duties, existing duties owed to a third party and existing duties owed to the promisor. The chapter examines the related rules concerning part payment of a debt and the extent to which promises not supported by consideration can be enforced using promissory estoppel.
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Chappell & Co. Ltd v Nestlé Co. Ltd [1960] AC 87
Essential Cases: Contract Law provides a bridge between course textbooks and key case judgments. This case document summarizes the facts and decision in Chappell & Co. Ltd v Nestlé Co. Ltd [1960] AC 87. The document also includes supporting commentary from author Nicola Jackson.
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Chappell & Co. Ltd v Nestlé Co. Ltd [1960] AC 87
Essential Cases: Contract Law provides a bridge between course textbooks and key case judgments. This case document summarizes the facts and decision in Chappell & Co. Ltd v Nestlé Co. Ltd [1960] AC 87. The document also includes supporting commentary from author Nicola Jackson.
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5. Consideration and Promissory Estoppel
This chapter evaluates the other requirement for an agreement to be legally enforceable: consideration. In its simplest form, consideration is often described as being something of value that is given (or promised) by each party in exchange for the other party’s promise or performance. Disputes concerning consideration usually begin by one party claiming that the other is in breach of their contract. The other party then argues that no consideration had been given in return for what they promised to do, and therefore the agreement is not enforceable. In a case concerning consideration, courts will typically focus on the obligations to be enforced, and then work out if something of value was given (or promised) in return for the performance of those obligations. Sometimes, a strict application of the consideration requirement is a barrier to reflecting the parties’ intentions. For that reason, the courts have developed a more relaxed approach in certain circumstances. There is also a limited exception to the requirement for consideration, which is known as promissory estoppel.
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6. The formation of the contract
This chapter examines the legal requirements relating to the formation of a contract. It discusses the five essential elements of a contract, namely offer, acceptance (offer and acceptance are collectively referred to as ‘agreement’), certainty, consideration, and the intention to create legal relations. It analyses these individual requirements in detail and considers the courts’ approach in determining whether an enforceable contract is present or not. This chapter also explains the principles of different types of contracts, namely the distinction between bilateral and unilateral contracts, and how the normal rules of contractual formation are modified in the cases involving unilateral contracts.
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5. Consideration and estoppel
Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter explores and defends the consideration requirement in the enforceability of contractual obligations, both when the contract is formed and if it is varied, refuting some of the criticisms calling for the requirement of consideration to be reformed or abolished in English law. It defines consideration as the ‘price of the promise’ and clarifies that an act or promise must have been requested by the promisor to count as consideration. It explores issues such as past consideration, performance of an existing contractual duty, and part payment of a debt, for which latter issue the common law rule is ameliorated by the equitable doctrine of promissory estoppel.
Book
Robert Merkin KC and Séverine Saintier
Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas on the law curriculum. This book has been guiding students through contract law for many years. It places the law of contract clearly within its wider context, including the growing distinction between commercial and consumer contracting, before proceeding to provide detailed yet accessible treatment of all the key areas encountered when studying contract law. Part 1 considers formation, looking in detail at agreement, certainty and agreement mistakes, the enforceability of promises and the intention to be legally bound. Part 2 looks at content, interpretation, exemption clauses and unfair terms, performance, and breach. Part 3 considers the enforcement of contractual obligations, including remedies, detailed treatment of damages for breach of contract, privity and third party rights, and discharge by frustration. Part 4 looks at methods of policing the making of a contract, such as non-agreement mistakes which render the contract void, misrepresentation, duress, undue influence, unconscionable bargains, and illegality. The book also includes references to relevant EU consumer legislation and introduces students to the various attempts (international and European) to produce a harmonized set of contract principles.
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7. Privity of contract and third party rights
Robert Merkin KC, Séverine Saintier, and Jill Poole
Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas of the law curriculum. According to the doctrine of privity of contract, only the parties to the contract are bound by, or can enforce, the obligations under the contract. A person who is not a party to a contract does not have any rights under that contract and is not subject to any of its obligations (or burdens). This chapter considers the rules of contract law, and related rules, that are applicable to contracts which stipulate third party rights. It considers the relevant provisions of the Contracts (Rights of Third Parties) Act 1999, the scope of the legislative reform, the test for third party enforceability and how the doctrine of privity of contract is related to the consideration requirement. It also looks at means of circumventing the privity doctrine such as assignment, and exceptions to the privity doctrine such as agency principles as employed in The Eurymedon. The chapter then examines remedies available to the promisee which have the effect of enforcing any promise in favour of a third party beneficiary or enabling substantial damages to be recovered to cover the third party’s loss. Finally, the means by which contractual burdens may bind third parties are examined.
Book
Robert Merkin QC and Séverine Saintier
Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas on the law curriculum. This book has been guiding students through contract law for many years. It places the law of contract clearly within its wider context, including the growing distinction between commercial and consumer contracting, before proceeding to provide detailed yet accessible treatment of all the key areas encountered when studying contract law. Part 1 considers formation, looking in detail at agreement, certainty and agreement mistakes, the enforceability of promises and the intention to be legally bound. Part 2 looks at content, interpretation, exemption clauses and unfair terms, performance, and breach. Part 3 considers the enforcement of contractual obligations including remedies, detailed treatment of damages for breach of contract, privity and third party rights, and discharge by frustration. Part 4 looks at methods of policing the making of a contract, such as non-agreement mistakes which render the contract void, misrepresentation, duress, undue influence, unconscionable bargains, and illegality. The book also includes references to relevant EU consumer legislation and introduces students to the various attempts (international and European) to produce a harmonized set of contract principles.
Chapter
7. Privity of contract and third party rights
Robert Merkin, Séverine Saintier, and Jill Poole
Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas on the law curriculum. According to the doctrine of privity of contract, only the parties to the contract are bound by, or can enforce, the obligations under the contract. A person who is not a party to a contract does not have any rights under that contract and is not subject to any of its obligations (or burdens). This chapter considers the rules of contract law, and related rules, that are applicable to contracts which stipulate third party rights. It considers the relevant provisions of the Contracts (Rights of Third Parties) Act 1999, the scope of the legislative reform, the test for third party enforceability and how the doctrine of privity of contract is related to the consideration requirement. It also looks at means of circumventing the privity doctrine such as assignment, and exceptions to the privity doctrine such as agency principles as employed in The Eurymedon. The chapter then examines remedies available to the promisee which have the effect of enforcing any promise in favour of a third party beneficiary or enabling substantial damages to be recovered to cover the third party’s loss. Finally, the means by which contractual burdens may bind third parties are examined.
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8. Enforcing Promises
Celebrated for their conceptual clarity, titles in the Clarendon Law Series offer concise, accessible overviews of major fields of law and legal thought. This chapter examines a range of Equity's incursions into the Common Law of contract. Because of these interventions, the landscape of contract law is broader and more varied than it might otherwise have been. The chapter discusses five different Equitable strategies that give the flavour of Equity's various forms of interference. These are overriding the need to comply with formalities; avoiding privity requirements; re-examining consideration; implying terms; and Equity's ability to anticipate or secure the Common Law outcome.
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6. Establishing the Contract: Consideration, Intention to Create Legal Relations, and Certainty Of Terms
This chapter is a continuation of the previous one, and further discusses the essential features of a legally binding, or valid, contract. It puts particular importance on the meaning of ‘consideration’, which is what makes a promise or agreement a ‘bargain’ and, therefore, enforceable. The courts are not bound to, and will not, consider a ‘bare promise’. Parties to a contract must intend it to be legally binding, and not just be social or domestic agreement, and such contracts must contain certain terms that identify the rights and obligations of both parties. Without an understanding of these crucial elements, agreements may be concluded but they will not create an enforceable contract. Also, although a contract is enforceable by those parties to it, this right can be extended to third parties if the contract has been made for the benefit of these parties.
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Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130
Essential Cases: Contract Law provides a bridge between course textbooks and key case judgments. This case document summarizes the facts and decision in Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130. The document also includes supporting commentary from author Nicola Jackson.
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Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24
Essential Cases: Contract Law provides a bridge between course textbooks and key case judgments. This case document summarizes the facts and decision in Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24. The document also includes supporting commentary from author Nicola Jackson.
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Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1
Essential Cases: Contract Law provides a bridge between course textbooks and key case judgments. This case document summarizes the facts and decision in Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1. The document also includes supporting commentary from author Nicola Jackson.
