BetterLawNotes-5 (2)

CONTRACT LAW

What this curious phrase seeks to convey is that the courts will insist that the agreement amounts to a bargain, but not that it is a fair bargain: ‘the adequacy of the consideration is for the parties to consider at the time of making the agreement, not for the Court when it is sought to be enforced’.

Bolton v Madden (1873) LR 9 QB 55, 57 (Blackburn J).

As long as the promisee can show that he has given something (i.e. that he has incurred some detriment or conferred some benefit) at the promisor’s request, there will be sufficient consideration.

‘. . . when a thing is to be done by the plaintiff, be it never so small, this is a sufficient consideration to ground an action’ Sturlyn v Albany (1587) 78 ER 327, 328.

The consideration must have ‘some value in the eye of the law’* but the extent of the value is immaterial. This is brought out by the concept of nominal consideration. D agrees to sell his yacht, worth £50,000, to C for £1. The consideration for D’s promise to sell, the promise of payment of £1, is nominal, but perfectly good.

* Thomas v Thomas (1842) 2 QB 851, 859 (Patteson J).

Bainbridge v Firmstone (1838) 8 A & E 743

The defendant asked to weigh two valuable boilers belonging to the claimant and promised to leave the boilers in the same condition as he found them. However, the defendant, having dismantled the boilers to weigh them, left them in pieces. The defendant argued that there had been no consideration for his promise. Held: there was valid consideration. There was a detriment to the plaintiff in parting with possession of the boilers. Further, the defendant had wanted to weigh the boilers and the court did not need to enquire as to the precise benefit he expected to derive.

Charnock v Liverpool Corporation [1968] 1 WLR 1498

C took his damaged car to D’s garage for repair. It was agreed that the bill would be met by the insurance company who promised D to do so. The court held that the mere leaving of the car at D’s by C was sufficient consideration for an implied promise that the work would be done within a reasonable time. The garage requested he leave the car there – needed the car to the repairs so that they could obtain payment from the insurers.

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Using the smoke ball three times a day for two weeks was a detriment to the claimant and amounted to good consideration for the company’s conditional promise to pay.

Chappell & Co Ltd v Nestlé & Co Ltd [1960] AC 87

Nestlé ran a promotion whereby the public could send in 1s 6d together with three chocolate bar wrappers in order to receive a record. The wrappers, when received, were valueless and thrown away by Nestlé. One issue for the House of Lords was whether the wrappers formed part of the consideration for the supply of the record. By a bare majority, the House of Lords held that the consideration for the promise to supply the record was both the payment of money and the sending of the wrappers. Lord Somervell said that it was irrelevant that the wrappers, when received, were of no value to Nestle: ‘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 promisee does not like pepper and will throw away the corn’ (at 114).

‘It seems to me clear that the main intention of the offer was to induce people interested in this kind of music to buy (or, perhaps, get others to buy) chocolate which otherwise would not have been bought. It is, of course, true that some wrappers might come from chocolate which had already been bought, or from chocolate which would have been bought without the offer, but that does not seem to me to alter the case . . . The requirement that wrappers should be sent was of great importance to the respondents Nestle; there would have been no point in their simply offering records for 1s. 6d. each. It seems to me quite unrealistic to divorce the buying of the chocolate from the supplying of the records . . . I do not see why the possibility that, in some cases, the acquisition of the wrappers did not directly benefit the respondents Nestle should require us to exclude from consideration the cases where it did . . .’ Lord Reid (at 108).

Bennett v Bennett [1952] 1 KB 249

Mrs B agreed with her husband that she would not apply to the court for maintenance for herself or the children and she would indemnify the husband against any legal expenses arising out of the agreement. In return the husband promised to pay an annuity to his wife and son and to transfer certain property to her. Mr B subsequently failed to pay the annuity. The Court of Appeal held that the promise not to apply to the court was void, being contrary to public policy. Given that this promise formed the only consideration moving from Mrs B, it could not be severed from the agreement and the husband’s promise to pay the annuity was therefore unenforceable. (Note that this decision was effectively reversed by statute.)

Thomas v Thomas (1842) 2 QB 851

The claimant was the widow of John Thomas. The deceased had left his estate to his executors under his will but had expressed before his death the wish that his wife be given the house for her life or for so long as she remained a widow. The executors were willing to put this wish into effect. An agreement was drawn up stating that ‘in consideration of such desire’ the executors would convey the house to the widow for her life or for so long as she remained a widow. Under the agreement the claimant agreed that she would pay an annual sum of £1 towards the ground-rent and that she would keep the house in good repair. The executors then refused to execute the conveyance. The Court held that the agreement was enforceable. While the deceased’s motive that his widow should have the house was not good consideration for the executors’ promise to convey, the claimant’s own promises (to pay the annual sum of £1 and to keep the house in good repair) were good consideration for the executors’ promise to convey the house to her.

Edmonds v Lawson [2000] QB 501

The case involved a claim by a pupil barrister that she was entitled to be paid the national minimum wage by the defendants, the members of her chambers, under the National Minimum Wage Act 1998. Ultimately, the claim failed. One issue that arose was whether she provided consideration for the chambers’ undertaking to provide her with the necessary education and training. On this issue, the Court of Appeal held, while the claimant did not undertake to do anything in return beyond that which was conducive to her own professional development, the agreement of the claimant and other pupils to undertake training with the chambers provided the defendants with a pool of selected candidates who would compete with each other for recruitment as tenants.

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