Requirements for a valid contract

1
Requirements for a valid contract

• Offer
• Acceptance
• Intention
• Consideration
• All MUST be present for the contract to be valid
• Other requirements
• Capacity
• Free Consent
• Certainty of object
• Possibility of performance

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Consideration Definition

• Benefit to promisor or detriment to promisee
• Currie v Misa (1875)
• Types of consideration
• Executory a promise for a promise in the future
• Executed a promise for an act that is wholly
  performed at the time of contract (usually seen
  in reward situations)
• Past Consideration promise of payment comes
  after the act

3
Examples

• Are these consideration?
• 1. I Promise you 10 if it rains tomorrow!
• 2. I promise you 10 if you pass your exam!

4
Consideration

• You cannot sue for breach of contract if there is
  no consideration.
• Eg. If A promises to give B 100, B cannot sue A
  if A changes his/her mind.
• A gift is not a contract, unless done by deed.

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Rules of consideration (1)

• Consideration does not have to be equivalent
• Chappell Co. Ltd v Nestle Co. Ltd. (1960)
• Consideration must be sufficient. Not
• Natural love and affection - Bret v J S (1600)
• Promise to do the right thing White v Bluett
  (1853)

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Rules of consideration (2)

• Past consideration is not good consideration
• Re McArdle (1951) - Wife of son repaired house
  for father-in-law who died. Document was signed
  by next of kin to pay after sale of the house.
  Never paid.
• Lampleigh v Braithwait 1615 Re Caseys
  Patents (1892) Good consideration
• Consideration was by request
• Roscorla v Thomas (1842) Not good consideration
• Receipt for horse after sale

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Rules of consideration (3)

• Already required to do so under contract - Stilk
  v Myrick (1809
• Exception unsafe voyage Hartley v Ponsonby
  1857
• Both cases involved extra payment for crew
  members who jumped ship

8
Existing Contractual Duty

• Williams v Roffey (1990)
• When a party to an existing contract later agrees
  to pay an extra "bonus" in order to ensure that
  the other party performs his obligations under
  the contract, then that agreement is binding if
  the party agreeing to pay the bonus has thereby
  obtained some new practical advantage or avoided
  a disadvantage.
• In this case there were benefits to Roffey
  including
• (a) making sure Williams continued his work
• (b) avoiding payment under a damages clause of
  the main contract if Williams was late
• (c) avoiding the expense and trouble of getting
  someone else. Therefore, Williams was entitled to
  payment.

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Third party consideration

• Price v Easton (1833)
• John promises to pay Mary 20 if her son washes
  his car. After Marys son washes Johns car, he
  decides not to pay.
• Can Mary sue John?
• Tweddle v Atkinson (1861) Fathers of a couple
  getting married promised to give the newlyweds a
  joint cash gift. Both fathers died. Groom sued
  wifes fathers estate.

10
Existing Statutory Duty

• Collins v Godefroy (1831)
• Godefroy promised to pay Collins if Collins would
  attend court and give evidence for Godefroy.
  Collins had been served with a subpoena. Collins
  sued for payment. 

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Existing Public Duty

• England v Davidson (1840)
•  50 reward to 'whoever would give such
  information as should lead to the conviction of
  the offender or offenders' 
• Held The duty of a police officer is the
  prevention of crime - police officers are not
  under a duty to provide information
• Glasbrook Brothers Ltd. V Glamorgan County
  Council (1925) Request for police protection
  during strike
• Harris v Sheffield United Football Club (1987)
  Large sums of overtime had to be paid to police
  officers to police football match

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US Comparison Existing Public Duty

• Gray v Martino (1918) US
• Martino offered Gray, a police officer, a reward
  if he could determine the identity of persons who
  had stolen her jewellery. She refused to pay
  after receiving the information
• Held Public policy forbids outside remuneration
  for official duties performed by a public
  servant.

13
Part-payment of debt

• Pinnels Case (1602)
• If you are bound to pay a certain sum of money,
  paying a lesser sum does not discharge the debt
  even though the creditor agrees.
• If the Creditor changes his/her mind later and
  decides to sue for the balance, he will be
  successful, because you have not provided the
  consideration promised in the first place!
• Confirmed in Foakes v Beer (1884)

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Part-payment of debt Exceptions

1. Early payment
2. Substituted performance
3. Payment of lesser sum in dispute of value of work
   performed
4. Promissory estoppel

15
Promissory Estoppel

• When one party depends on the promise or conduct
  of another and acts in his/her detriment in
  reliance on that promise.
• First established in Hughes v Metropolitan
  Railway (1877)
• Clearly laid down in Central London Property
  Trust Ltd v High Trees House Ltd 1947
• Fully restated and defined by Lord Denning in
  Combe v Combe 1951

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Intention

• The parties to a contract must intend to have a
  contract and be legally bound by it
• Intention may be expressed, or implied by conduct
• The Courts assume
• Parties to domestic social agreements do not
  intend to be legally bound
• Parties to business agreements intend to be
  legally bound

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Harvey v Facey 1893

• Harvey Will you sell us Bumper Hall Pen? Send
  lowest cash price.
• Facey Lowest cash price for Bumper Hall Pen is
  900
• Harvey We agree to buy Bumper Hall Pen for 900
  asked by you.
• Was there intention?

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Fun transaction

• An informal contract can contain formal intention
• Simpkins v Pays (1955)