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Does Collateral Contract Require Consideration?

Info: 2649 words (11 pages) Law Essay
Published: 8th Aug 2019

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Jurisdiction(s): UK Law

“A collateral contract does not require any form of consideration.”

REQUIRED: Discuss whether you agree with this statement. Refer to relevant case law.

[10 marks] Word limit = 750

“A collateral contract does not require any form of consideration.”

I disagree with this statement. Consideration plays an important role in collateral contracts. The contract law says that “there is no contract if there is no consideration” [1] .

The person who wishes to enforce the contract must show that they provided consideration; it is not enough to show that someone else provided consideration. To support my view point here in I am quoting a case that says consideration of both parties is must to form a contract.

Price v Easton (1833) 4B & Ad 433 [2]

Easton made a contract with X that in return for X doing work for him; Easton would pay price £19. X did the work but Easton did not pay, so price sued. Later it was held that price’s claim must fail, as he had not provided consideration.

Consideration can be present or it can be a future one, but a past consideration is not enough to create a valid contract.

Eastwood v Kenyon (1840) 11 Ad. & E. 438, 113 E.R. 482 (Q.B) [3]

The case involved someone who as executor of a deceased estate had taken on himself the task of looking after the deceased’s daughter until she became an adult. In doing so he had spent a lot of money and even had to borrow money from one Blackburn, secured by a promissory note. The daughter, when she came of age and subsequently promised to repay Plaintiff the amount of the note, and indeed paid one year’s interest on the note to Blackburn. She then got married to the defendant, who promised to reimburse the plaintiff. But the defendant did not made any payments and so the plaintiff sued on his promise. It was that the promise to reimburse was a purely moral obligation. It was not supported by consideration. This was because it was not part of an exchange. What he had done in the past could not constitute part of an exchange. This idea is reflected in one of the rules of consideration the rule, says that past consideration is no consideration.

Consideration can be anything of value promised to another when making a contract. It can take the form of money, physical objects, services, promised actions, abstinence from a future action and much more. Normally the courts do not inquire whether the deal between two parties was monetarily fair – merely that each party passed some legal obligation or duty to the other party. The court will only check the presence of consideration, not adequacy of the consideration. The values between considerations passed by each party to a contract need not be comparable.

Chappell and Co Ltd v Nestlé [1960] AC 87 House of Lords [4]

To promote chocolate sales, Nestle advertised it would supply a record to anyone who sent it money and three chocolate wrappers. The issue was whether the wrappers formed part of the consideration for the sale of the record. It was held that the provision of wrappers was more than a mere ‘condition’ precedent; they were part of the consideration- this was clear from the offer which stated that the wrappers would help you to get smash hit recordings. The court concluded that ‘a contracting party can stipulate for what consideration he chooses. A peppercorn does not cease to be good consideration if it is established that the promise does not like pepper and will throw away the corn’. Thus a “consideration can be anything stipulated by the promisor”

From all the above cases we can conclude that “to form a valid contract, consideration is an essential factor”. The contracts that formed without adequate consideration will not have any legal values in the eyes of law. In conclusion,

There is no contract if there is no consideration.

Past consideration is no consideration.

Consideration can be anything that has a value in the eyes of law.

Question 2

“Finders are keepers.”

REQUIRED: Discuss whether you agree with this statement. Explain the law with regard to finding of property and refer to case law.

[15 marks] Word limit = 750

“Finders are Keepers” this saying is true, but not in all cases. Hence I partially agree with this statement. An individual who finds lost property does not acquire absolute ownership of the property. In order to obtain title to, or rights in, the lost property, the finder must intentionally take possession and control over it [5] . The finder of a lost property has the right to the possession of the article as against the whole world, provided that the true owner of the lost property cannot be found. But before the finder can acquire any title to the property it must be lost and not merely over looked or mislaid and also it must be out of the power of the finder to restore the lost property to its owner [6] . For an example if a lady drops her purse in the street, the man who picks it up and makes no effort to restore it to her, but converts it to his own uses, is just as guilty of theft as if he had picked her pocket in the first instance. This is the general rule with regard to possession of lost property. But in different scenarios this rule might change slightly.

Treasure troves

In the case of treasure trove the rule is different. Treasure trove is a treasure i.e. buried down the earth; it may include coins, gold etc. If a person is getting any hidden treasures then it should be considered as “treasure trove “and not as mislaid property. The rule with regard to finding of treasure trove is that never the less how founds it, the treasure trove always belong to the queen. For example, A box gold coins were found buried under the earth and this treasure belongs to the royal crown and the person who found this treasure has to hand over this treasure to the queen and he will be rewarded for this.

Stolen goods

In the case of stolen goods the law changes again, when the goods are stolen and found later, the owner had the legal right of ownership over the goods. When stolen goods are found the court can order to return the goods and or the court can order a compensation payment for the value of the article to the original owner. If the stolen goods was brought by someone paying a certain price still the goods will not belong to him as he is not the legal owner. The ownership of the stolen goods still remains with the original owner. The persons who found the stolen goods have a legal obligation to inform the owner and have hand over the goods to the original owner.

So if a person finds a lost property it doesn’t mean that he can just keep the goods with him. He should follow the law related to possession of good and also the law in relation to lost property. First he should make sure that the property he found was lost and not merely mislaid. If it’s a mislaid property then the founder does not have any legal right to keep the good with him. If it’s a lost property then first he has to get the possession of the goods. It depends on the facts and circumstance from where he got the property. To keep the lost property he has to ensure that the true owner of the lost property cannot be found.

Question 3

John was playing golf with three friends at his local golf course in a weekend golf competition. John hit a drive and proceeded along the fairway towards the green. John waited in the tree line to the side of the fairway whilst his friend Peter hit his golf ball. Peter’s accuracy was not good and Peter’s golf ball struck John on the head. John suffered injuries to his eye. Peter called out “watch out John” rather than the usual “fore” which is required as a warning.

John wants to bring legal proceedings against Peter and against the Golf Club.

The Club argues that it is not liable as there was an exclusion clause on the back of the scorecard that was handed to Allan (one of the other players in the group of four). The exclusion clause was written in small writing. The exclusion clause read as follows:

“The Club is not liable for any injury, death or any harm whatsoever suffered by participants in the competition.”

REQUIRED: Will John be successful if he brings legal proceedings against Peter and/or the Club. In your answer refer to relevant sections of the Civil Liability Act 2003 (Qld) and to any relevant case law. Refer also to the validity of the exclusion clause

[25 marks] Word limit = 1000

In my opinion John will not be successful if he brings legal proceedings against Peter and/or the club. The law of tort says that the Golfers and others who are injured inside the golf clubs can sue for damages if they can prove that the injuries or damages was caused by the negligence of another. Then yes he can bring legal proceedings against the other person. Theoretically it’s right but in the practical sense courts says that hitting an errant golf shot does not constitute civil negligence, because it’s normal that occasional bad shot is an inherent part of the game [7] .This can be illustrated with the help of a case;

Baker V Thibodeaux, 477 so. 2d 245 (Ls. App 4th cir. 1985) [8]

Baker was a part of a foursome and was playing golf on the Timberlance golf course and Thibdaux was another player playing in a separate foursome immediately next to Baker’s foursome. Baker was walking towards the ball to hit, by that time Thibdaux had hit a shot and the ball was flying towards Baker; as soon as Thibdaux saw Baker he shouted “Fore”. By the time Baker planed to move the ball bounced and hit him. Baker brought legal proceedings against Thibdaux and the Timberlance golf course. It was held that Thibdaux cannot be sued for negligent because,

an occasional bad shot is an inherent part of the game,

as soon as Thibdaux saw Baker he shouted “Fore” which is a caution of warining,

Thibdaux acted as a reasonable golfer under circumstances.

Further the court was held that the golf club was not negligent as

The premises were reasonably safe for their intended use,

The risk of being hit by a golf ball is an ordinary risk and

The club was justified in relying upon all of its golfers to give warnings commensurate, with the differing duties owed to companion and non-companion

The above case clearly states that the assumption of risk is a complete defence to an action for damages because of negligence. All the golfers has to assumes the risk that other golfers may fail to warn of the shot or fail to wait until the group ahead is past the intended landing area. So every golfer has to take a self precaution while they are in the golf ground.

If we consider another case, i.e.

Pollard v Trude [2008] QCA 421 [9]

Here the Plaintiff and the defendant were playing golf in a competition. In between the play the plaintiff moved forward to locate the ball that he had lost in the trees in between the fairway. The defendant did not see the plaintiff; he believed that the plaintiff was behind the trees. So he hit the ball and the ball got ricocheted off a tree branch and hit the plaintiff’s eye. After hitting the ball he saw the plaintiff and then he shouted “watch out Errol”. Hence the plaintiff brought cases against the defendant for breach of duty and negligence. It was held that,

there was no breach of duty,

The plaintiff was waiting for the defendant to take his shot and thus a pre-shot warning was not required,

The defendant had shouted “watch out Errol” which can be considered as a warning and hence the plaintiff cannot be sued.

From the above cases it’s clear that John cannot claim legal proceedings against peter or the golf club. John as a golf player should have taken some precautions against the situations. As it is his responsibility. The acts of Peter cannot be treated as negligent because he did not saw john standing down the lane. When he saw John he shouted “watch out john” which is a warning. Negligence is the act that a person knows before, but had not taken. Here both Peter and the club cannot be treated as guilty.


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