Define what does or does not to amount to a good consideration in law
There are some of different rules in consideration. How to define what does or does not to amount to a good consideration in law? In traditionally the performance of an existing duty should not be constituted a consideration. Which means that there are two parties and they have already in the contractual relationship.
If the promisor promises to promisee something extra things when the contract is existing such as promise to pay more money, and the promisee merely finishes the job. In this case, as an orthodox views the promise to pay more is not considered as a good consideration because the promisee is merely performs an existing duty. However some of the performance of exiting duty is considered as a good consideration. So what is the right way to see the performance of existing duty? Let’s discuss it with the example of the cases.
2.0 Constitutes of Consideration
The Frederick Pollock defined the consideration as “an act of forbearance of one party, or promise thereof which is the price for which the promise of the other is bought and the promise thus given for values is enforceable."The constitute of consideration are as follows:
2.1Consideration must be moved from the promise.
A promise is enforced when it is supported by good consideration for example if A promise B ‘if you wash my car, I will pay you RM10.’ So in this case, the consideration have to be moved from B that whether he/she accept the offer or not.
In the case of Lampleigh v Braithwait (1615) 80 ER 255, Common Bench
The court said that “the defendant made a offer to the plaintiff and when the plaintiff had performed as the request, the contract was binding."
2.2Consideration must be sufficient but need not to be adequate.
To be good consideration, it must have some value, even though it is very small value. Which mean that when the parties exchange the value, so exchanging the value, it has to be sufficient but need not to be adequate.
In the case of Midland Bank v Green (1981) AC 513, HL
The court said that “the wife took free of option against the purchaser of a legal estate for money or money’s worth. The ￡500 was valuable consideration, even though it was manifestly inadequate."
2.3Consideration must be forbearance and compromise
In the case of Williams v Roffey Bros(1990) 1 All ER 512, CA
Court of appeal said that" is defendant doubted whether plaintiff would perform his contractual obligation, then a further promise by plaintiff to perform that contract might be consideration for defendant’s offer of extra money so long as the offer was not obtained by plaintiff’s fraud or economic duress. There may have been no legal benefit to defendant but the secured the practical benefit of getting the work completed in time without the trouble of hiring a new subcontractor and risking plaintiff’s bankruptcy if they sought to recover the costs and penalties"
2.4In British law the past consideration is a not good consideration however, in Malaysia the past is a good consideration.
The past consideration is promise is made after the promise has done the performance. The past consideration is no good consideration. This rule is followed the idea of consider must be moved from promise.
In the case of See the case of Roscorla v Thomas (1842) 114 ER 496 QB
The court said “he had no case: the only consideration he had given was past by the time the promise was made, and the contract was merely that defendant would deliver the horse on request."
3.0 The performance of an existing duty should not be constitute consideration
When an individual is bring out a duty which they are legally obliged to perform, it can be called as the performance of an existing duty. The performing an existing duty which is already bound to the other party to perform is not good consideration.
In the case of Stilk v Myrick (1809) 170 ER 1168,KB
The court said that “they did not perform more than their existing duty because the occasional desertions were among the normal danger of the sea and they could not demand any extra payment." In this case there were no changes in any circumstances. The court made the judgment based on any changes on previous contract. The court said that even though the number of seamen was reduced, the amount of work for the remaining member was not very different. So the seamen who were in the ship did an existing duty only no extra. Therefore there was no consideration.
In the case of, Collins v Godefroy (1831)109 ER 1040, KB
The court said that since the subpoena imposed a legal duty on plaintiff to appear at court, so there was no circumstance which can support consideration .The plaintiff did on his existing duty only. The court made the judgments based on the performance on social duty. Therefore his perform was not a good consideration.
In the case of Ward v Byham(1956) 2 ALL ER 318, CA
The court appeal said that no matter the dependant has paid her or not as a mother of the son plaintiff has a duty to take care of the son. The court made the judgment based on the performance of domestic duty. The performance of domestic duty should not be a good consideration. Therefore there was no consideration.
The existing duty is judged based on the social duty, domestic duty or any duties under previous contract. Therefore the performance of an existing duty should not be a good consideration
4.0 The performance of an existing duty should be constitute consideration
To define the performance of an existing duty is good or no good consideration is difficult. There are some cases which were judged that is a good consideration. Compare with the cases which were mentioned above.
In the case of Harley v Ponsonby (1857)119 ER 1471, QB
The court said that “this promise should be enforceable because the crews were so much reduced, so it was dangerous to sail on. And the captain would have had no right to demand for it. The original contract had come to an end, and the seamen were free to make a new contract on whatever terms might be agreed." The court made the judgment based on the changes in some circumstances. There were some changes on the number of crew and seamen. When the captain made the promise, there were only half of the crews and semen were left. So if the captain wants them to soil the ship back to England the ratio of work was double. So changes in the ratio of work, there was new offer. Therefore there was no performance of an existing duty.
Also in the case of Glasbrook Bros v Glamorgan County Council (1925) AC 270
The court said “that the police undoubtedly have a general duty to do what they think necessary to keep the peace and prevent crime, and no one can be made to pay extra for that. But when individuals desire special service which although not within the obligations of police can most effectively be rendered by them, the police authorities may “lend" the services of constables for that purpose in consideration of payment. If the inspector believed in good faith that the garrison at the colliery was unnecessary and agreed to provide it only to meet AA;s request, they were entitled to treat that as a special duty and charge for it."
The court also made the judgment based on the changes in circumstance. Even if the police men have the general duty for prevent the crimes, in this case the individual asked the special service more than the police men’s duty. Therefore the police men did the work more than their general existing duties so there was a consideration.
In the concluded the orthodox view for performing an existing duty is right because the performing of an existing duty cannot be considered as good consideration. However if there are the particular facts which can be shown that the promisee has performed something extra –something more than existing duty than the original promise, it may able to be argued.
The promise might provide something extra than original contract it still under performing an existing duty. However the performing an existing duty can take place if the parties revoke the original contract and create a new contract.
6.0 INTRODUCTION Q2
The law is a system of regulation. Every country has their own laws and all of them are unique to that country. The law is very important because it is keeping the society to be run. If there are no laws, it would be very chaos in this society. Especially in the business law is very important because it leads the business as how to deal with all the different situations.
In business there are many types of law, however, the contract law is the basic in business. Let’s discuss about what is the general principle of contract and remedies of breach of contract.
7.0 The general principles in the formation of a contract
According to the English-English dictionary a contract can be defined as a legally binding exchange of promises or agreement between parties that the law will enforce. The rules about contract formation were developed in the 19th century. In the law, there are some important requirements for formation of a contract. What are those important requirements for the contract? There are offer and acceptance, an intention to create legal relationship and the consideration.
An offer is an expression of willingness to be bound by certain term of a contract. An offer must be a clear, determined and direct approach to another party.
If an offeror (person who makes an offer) makes an offer to one offeree (person who was asked to accept an offer), it is called bilateral offer, if the offeror makes an offer to group of people who are more than two is called unilateral offer. The most of the offers are bilateral offer. It is made to a specific individual. However some offers also can be unilateral offers. The unilateral offers are unusual made as advertisements. It is one sided promise because it is made without the offeror knowing who the offeree is.
In the case of Carlill v Carbolic Smoke Ball Co.(1893) 1 QB 256
The court judged that the advertisement in this case was an offer, a unilateral contract had bound when the plaintiff had performed.
There are some differences between an offer and the invitations to treat. If there is any proposal for someone to do something is an offer, but if there is just asking a question is an invitation to treat. I f someone proposes you as I would like to sell this chocolate RM 3.00, it is an offer however if someone asks you as would you like to buy this chocolate form me RM3.00? is invitation to treat.
In the case of Fisher v Bell 2 ALL ER 731 DC
Judgment noted that even though the knife was displayed in a window it was an invitation to treat rather than an offer. Therefore the defendant was not guilty.
An offer continually exists until it is accepted except it is revoked, rejected or expired. So if the offeror does not want to make an offer, has to revoke before the acceptance takes place. However the revocation must be communicated to the offeree, even though not necessarily by the offeror.
Acceptance is a final and unqualified expression of assent to the terms of an offer. An acceptance is taken the place as oral or written and it must be communicated to the overall for the contract to be executed. There are two types of acceptance an agreement and a contract. The contract requires agreement on the terms, consideration and an intention by both parties to be legally bound to each perform their respective promises. But an agreement may not need to be intended to be legally bound on the both parties.
In the case of Felthouse v Bindley (1862) EWHC CP J 35
The court judged that the plaintiff did not have the ownership of horse because there was no acceptance of the contract. Acceptance must be communicated clearly between the both parties and cannot be imposed due to silence of one of the parties. Although the the defendant expressed interest in completing the sale there was no communication of that intention.
7.3 Intention to Create Legal Relationship
The both parties must intend the agreement to be legally bound. Which means that, when two parties make an agreement, both parties must agree with own will without any forces. However, finding out what the parties are thinking is very difficult. So the court finds this intention for applying an objective test and judge the situation by what was said or done between both parties.
By the law the agreement is divided into two groups, social and domestic agreement and commercial contract.
The social and domestic agreement is very hard to presume that there is no intention to create legal relations. This presumption is easy to be displaced.
In the case of Merritt v Merritt (1970) 1 WLR 1211
The trial judge said the agreement was bound as a contract. However when the defendant appealed, the Court of Appeal said that even though there was a consideration in plaintiff’s promise, it was not a contract. Therefore appeal allowed.
The commercial contract is a strong presumption for intention to be presented. It has possible to be displaced however it is very hard to do so.
In the other case of Rose & Frank v Crompton(1925) AC 445,HL
The court of Appeal said that in this case there was no contract. The House of Loads said there is a strong presumption that commercial agreements are intended to be legally binding. However the wording of the agreement is clear to show that it was not so intended. Therefore the agreement was separate contract enforceable legally on their own rights.
The consideration is an exchanging the value to value. The exchanging the money for goods or services is commonly used. The consideration can be executor or executed. The consideration must be sufficient but need not to be adequate. Which mean that when the parties exchange the value must be sufficient but need not to be equal.
See the case of Chappell v Nestle (1959) 2 ALL ER 701, HL
The court of Appeal said that there was no consideration. However, the House of Load said that there was a part of consideration. The wrappers formed part of the consideration for the sale of the record. .
8.0 The breach of contract
By free online dictionary the breach of contract can be defined ‘the failing to perform any term of a contract, written or oral, without a legitimate legal excuse.’ Breach of contract may be either actual or anticipatory. The actual breach happens when one of the parties refuses the bargain on due date or performs incompletely.
In the case of Poussard v Spiers and Bettini v Gye.
The court said that the defendant’s refusal was justified and the defendant had not liable in damages because the plaintiff could not fulfill the condition of contract.
The anticipatory breach happens when one of the parties announces that he/she intend not to perform the bargain
In the case of Hochster v La Tour
The court said that plaintiff can find other job before the agreement was rescinded because the plaintiff had repudiated clearly in advance.