• Home
  • University of Cambridge
  • Contract law
  • Consideration and Promissory Estoppel in Contract Law

Consideration and Promissory Estoppel in Contract Law

Consideration and Promissory Estoppel Fuller - Mere formality requirement? Evidentiary, cautionary or channelling (distinguishing) function, 'price of the promise', a detriment to C, benefit by C, a mix of benefit/detriment Sufficient but not adequate, extremely flexible - Chappel v Nestle - Wrappers to claim music CD, incentive to buy chocolate. 'A peppercorn still good consideration if promisor does not like pepper and will not use corn ... not open to courts to speculate about its value provided not wholly illusory'. Giving up worthless claim is consideration if C does not know worthless, subjective>objective - Pitt v PHH Asset Management - D gave C purported right of pre-emption as long as C bought property in 2 weeks and did not bring injunction against D. 'D was freed from threat of injunction (which would have failed) and had benefit of knowing deal would be done in 2 weeks'. Contrast - Wade v Simeon - D promised to pay C to not pursue him but didn't pay but no consideration as C admitted knowing he had no cause of action so there was no detriment to him in not bringing the action'. Atiyah - Absence of benefit/detriment not fatal (same with practical benefit below). All that is needed is a request which if fulfilled means there is consideration (What is the point? Perhaps it is just 'channelling'). Past Consideration Classical position - Eastwood v Kenyon (1840) - C paid for T's education who D later promises to reimburse. Held, D never asked C to pay and only involved later. Appropriate given no element of bargain + otherwise creates uncertainty, reluctance thrust benefits on unwitting people and then extract promises. Y requests work/act and later promises money - Pao On v Lau Yiu Long [1980] - C owned all shares of X1, D were majority shareholders of X2, C agreed to sell D shares in X1 to X2 at $.2.50 even if real price lower, shares slumped so D argued no consideration to pay $2.50. Held, 'act of not selling shares of X1 for a year done before promise of payment is consideration if requested with mutual understanding of future remuneration. Pre-existing statutory/public duty Go beyond ordinary duty - Glasbrook Bros v Glamorgan [1925] - Coal mine owner promised to pay local police to protect his property, the promise to pay was enforceable despite performing public duty because owner's was a 'special service' beyond usual duty. Contrast Reading Festival where extra police were a 'special service' but were not requested by organisers. Perhaps Denning approach preferable given uncertainty Child maintenance - Ward v Byham [1956] - Statute stated burden on mother but father promised to pay maintenance if child kept happy. The 'make happy' clause was the consideration as additional to statute's requirement. Denning attacked pre-existing duty rule 'Despite legal duty to care for child performance of duty is good consideration as father is benefitting ... perhaps preferable due to uncertainty of defining legal duty. Pre-existing contractual duty to a third party is consideration