According to the law, performance of an existing duty is cannot constitute a consideration. Now seems that the performance of an existing duty may constitute consideration for a new promise, in the circumstances where no duress or fraud is found and where the practical benefits are to the promisor. The performance of an existing contractual duty owed to the promisor is not good consideration for a fresh promise given by the promisor. However, performance of an existing contractual duty owed to a third party can be good consideration.
What constitute consideration?
The mutual promises were constitute a consideration for each other. For example, I promise you to do something, in consideration for which promise you promise me to do another things. The person who creates the promise is promisor and the person who accepts the promise is call promise. A promise on one side is a good consideration for a promise upon the other. It is not necessarily doing an act, but may be the making of a promise to do an act, which may constitute the consideration. This has to depend upon the requirements of the offer and acceptance. In all bilateral contracts the consideration for the promise of each is the promise of the other. A promise to perform an existing duty is no consideration unless it binds one within an exact time to do or refrain from doing an exact thing. A promise cannot be a consideration unless it is exact enough to be broken.
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Performance of an existing duty
Existing duty is a promisee that already bound to perform an existing duty. Beyond the existing duty that which they are already contracted is consideration. In the orthodox view, performance of an existing duty does not constitute consideration for the new promise.
Performance of an existing duty of domestic/ social
These issues are well illustrated by the case of Thomas v Thomas (1842). This case is talking about P’s husband had made it clear that if his wife survived him, she should have the use if his house. After her husband’s death, P agreed with the defendant, her husband’s executor, that she should have the use of the house as long as she did not remarry. Her husband’s executor made the agreement largely in deference to the deceased’s clearly expressed wishes. But P was also asked to pay one pound per year to the executors under the agreement. P had provided consideration for the promise.
In the case of Balfour v Balfour (1919) D is the person who worked as a civil servant in Ceylon, he left his wife (P) in England. P had been advised by her doctor that her health was not sufficiently good to accompany her husband. Before departing, D promised to pay P an allowance of 30 pound a month whilst they were apart. P sued D for breach of his promise. The trial judge found that there was consideration given for D’s promise and she ruled in P’s favors.
In the case of Merritt v Merritt (1970), a husband (H) left his wife (W) and moving out of the house that was in their joint names, and went to live with another woman. H and W later met to discuss their financial arrangements for the future. H promised to pay 40 pound per month to W, and they had written an agreement that in consideration of W’s paying off the mortgage on their jointly-owned house, H would transfer the ownership to W but he failed to do that. Therefore, W able to sue H because court held that they had agreement which wrote by H, thus consideration was made.
In the case of Ward v Byham (1956), the mother (P) was under a statutory duty to look after her illegitimate daughter, but it was held that she provided consideration for the father (D)’s promise to pay her one pound per week for doing precisely that. In fact, P was under a legal obligation to look after her daughter. But she was argued that she was beyond her existing duty by undertaking the child in well looked after and happy.
Performance of an existing duty of commercial/ public
In the case of Stilk v Myrick (1809), the facts arose out of a return voyage from London to the Baltic, during which two sailors had deserted and the captain was unable to find replacements for them. He therefore promised to divide the wages of the two deserters amongst the remaining crew members in exchange for them sailing the ship short-handed on the home voyage. Largely on the grounds of public policy, to deter extortion, the action brought by the one of the crew, to enforce this promise, failed. An alternative reason for the decision was that the crew members provided no consideration for the captain’s promise, as they were only fulfilling their existing duty by sailing the ship.
In the case of Collins v Godefroy (1831), P was subpoenaed to give evidence on D’s behalf at a trial in which D was involved. D was promised to pay him six guineas that is 6.30 pound. But P was unsuccessful in his attempt to enforce D’s promise, as he failed to provide consideration for his promise. P was under a legal duty to attend court because of the subpoena. In general principle, person that does not provide consideration for another person’s promise by simply performs an existing duty.
In the case of Glasbrook v Glamorgan CC (1925), during a miners’ strike, a mine owners were fearful of violence occurring. Their assessment of the amount of police protection that they needed differed from that of the police whose job it was to provide it. Eventually, the police did agree to mount a stationary guard, which they did not think necessary, but they did so on the basis that it would be paid for by the company. The company agreed to pay for more extensive police operation, but later refused to make the payment, claiming that the police were entitled to recover the payment as they had done more than perform their existing duty.
In the case of Williams v Roffey Bros (1990), having agreed to refurbish a block of flats. DD were the main contractors for this work, and had engaged the P as sub-contractors to carry out carpentry work. Part way through the contract, P got into financial difficulties, at least in part because the contract price for the carpentry work was too low. DD promised to pay P for complete the work. DD was default on their promise of additional payments. P sued for additional payments. DD argued that since P promise to complete, the work on the flats were only doing something they were already bound to do under the existing contract with DD, they provided now new consideration.
In my opinion, I agree that performance of an existing duty can constitute consideration. If performance of an existing duty should not constitute a consideration, it may make everyone simply make a promise with others in any situation. It may make the people lose trust on each others. Consideration will automatically constitute while offeror having a promise with others. An agreement will breach due to the party is failed to perform his duty.
A contract is a biding legal agreement between two or more parties which is an offer is made and accepted. The general principles in the formation of a contract are offer, acceptance, consideration and intention to create legal relations. Every contract must have the four general principles, contract is cannot be successfully form without the four general principles.
Breach of contract may occur while one party refuses to perform his side of the bargain. Every breach of contract will give an injured party the right to recover the damages which is the remedy for breach of contract. There are five remedies for breach of contract which are rescission of contract, damages, specific performance, injunctions and restitution.
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Formation of a contract
Intention to create legal relations
Acceptance Figure 1
Figure 1 is the formation of a contract. It consists of offer, acceptance, intention to create legal relations and consideration. According the law, to have an agreement must have an offer by one party and an acceptance of the terms of that offer by the other.
An offer occurs when there is a willingness to be bound by the term of the contract or agreement. An offer also can be a promise by offeror to enter into a contract, on a particular set of terms, with the intention of being bound as soon as the offeree is made signifies his acceptance. The offeror is invites an acceptance to offeree, the offeree can choose either accept or reject it, if the offeree is respond “yes, I accept.” then an offer has been made. An offer can be made either to an individual person which is call bilateral, or to a group of people or to the general public which is call unilateral. A bilateral offer can be take the form of promise to do something that in return on the promise of the offeree to do something. A unilateral offer is one side promise to give a reward for performing and do something. Moreover, unilateral offer is made without the offeror knowing who the offeree is. An offer may be in written, orally or implied by conduct. An offer can be differentiate into two types, which is express offer and implied offer. Express offer is made orally or in writing. Implied offer is by conduct, it means the offer is already full fill the terms. In additional, offer may be made with unreliable degrees of complexity because in fact what amounts to an offer can give rise to differences of opinion. An offer is continue exist until it is accepted by the offeree except the offeror revoke it. The statement must be clearly deliver to the offeree if not the offer does not exist. Generally, advertisements that from newspaper, flyer or television are not an offer, those consider is invitation to treat. Moreover, an auction for sale cannot consider is an offer but it nearly to invitation to treat.
Acceptance of an offer occurs when there is the final of an unqualified acceptance to the terms of the offer. Which means the offeree finalizes the contract and accept the terms of offer that given by offeror. Normally there will be a period of negotiation. New terms and conditions will be introduced through negotiation in effect amount to a sequence of counter offers to the original offer and cancel the terms of the original offer. This applies in the case of instantaneous communication, such as telephone, letter, telegram and email. The acceptance cannot be redrawn once it has been communicated but an offer can be revoke anytime before it is accepted.
Intention to create legal relations
In commercial transactions it will be presumed that they did intention to create legal relations, unless there is an express statement to the contrary. In the case those involve social and domestic agreement, there are usually be presumed that the parties did not intend such consequences. It is a method of restricting the enforceability of social and domestic arrangements. It could be argued that if both parties to an agreement provide consideration, there should be no need for any further requirement of an intention to create legal relations.
Consideration is the requirement of obligation on the both parties to a contract. The promisor must receive something which the law recognizes as a benefit and namely something of value. If a seller promises to deliver the goods to customer, after that the seller will have a consideration that the customer is paying for them, or his promise to pay for them. The customer suffers a detriment by so doing, in exchange for the benefit conferred upon him by the seller. In other words, if a party promises something and asks for nothing in return, there is no consideration and the promise is not legally enforceable. Consideration may be executor which is an exchange of promises by the parties, the promisor might request a promise. For example, payment for goods to be delivered in the future. Executed and executor consideration are commonly referred as a good consideration. Past consideration is a promise which is made after an act has been performed is generally not enforceable. Past consideration in British is not a good consideration whereas in Malaysia it is a good consideration.
Remedy for breach of contract
One party to a contract can rescind it because of substantial nonperformance or breach by the other party. The party who knowingly and willfully fails to perform cannot complain that the other party to the contract has injured him or her by terminating the contract. The right to rescind does not arise from every breach but is permitted only when the breach is so substantial and fundamental that it defeats the objective of the parties in making the agreement. The breach must pertain to the essence of the contract. The act must be an unqualified refusal by the other party to perform and should amount to a decision not to be bound by the contract in the future. A party to a contract who is in default cannot, however, rescind because of a breach by the other party.
When one party to a contract abandons it and refuses further performance or her conduct shows that she is repudiating the contract, the other party is entitled to rescission. A disagreement over the terms of the contract and a subsequent refusal to perform in a particular manner by one of the parties do not constitute an abandonment of the contract justifying rescission.
Damages are the remedy that most often used for a breach of contract. The party that does not breach the contract can recover any lost or damages in an amount equal to the sum or value that he had fully performed from the party who broken the contract. Payment is the way that made by the breaching party to the non-breaching party. If the mistake is big, the promisor can recover the cost whereas if the mistake is small, the promisor may be limited to recover.
Specific performance is where the court orders the breach party to performance and fulfills their contractual obligation. If damages are insufficient as a legal remedy, the party that does not breach the contract may look for a substitute remedy that is specific performance. This judgment often happens when the subject issue of a contract is in argument.
An injunction is a remedy that the court’s order which is ordering the breach party what should do or not to do a certain act in the future. It can be used to stop the breach party for doing something against the terms of contract. Injunction at the court’s discretion and judgment may refuse to give one and award damages instead.
Restitution is a remedy designed to restore the breach party to the position occupy previous to the formation of the contract. Normally, the non-breach party will seek restitution when contract is voided by court due to a breach party is incompetence or incapacity. See the case of C and P Haulage v Middleton (1983), the plaintiff had hired a garage for six months and agreed that any improvements would be the property of the defendant. When the defendant breached the contract, the plaintiff sued for the cost of improvements.
Contracts are important to business, it helps to protect both parties from any surprises or damages. Without a contract, there will be less people to do business due to scare to be cheated and getting loss. With a contract, it might lower the risk to getting loss if contract has been breach. Even the contract was breach, they still can claim back how much they are loss.
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