#5802 - Consideration - Irish Contract Law

Consideration – Introduction

Consideration means something of value in the eyes of the law moving from the plaintiff.

Thomas v Thomas

An act or forbearance of one party, or the promise thereof, is the price for which the promise of value is bought, and the promise thus given for value is enforceable.

Pollock, Principles of Contract Law

McCoubray v Thompson (1868)

Facts

• A third party wished to convey land and have it split evenly between the plaintiffs.

• All parties agreed that upon the conveyance of the land to the defendant he would pay the plaintiff half the value.

Issue

• Consideration – Moving from the Promisee

Judgment

• The plaintiff cannot maintain an action as the consideration did not move from him to the defendant.

Barry v Barry (QB 1891)

Facts

• The defendant was willed a farm by his father on the condition that he pay the plaintiff 20.

• In the presence of the plaintiff, the executors of the will asked him whether he would pay the money to the plaintiff prior to receiving the farm, to which he assented.

Issue

• Consideration – Moving from the Promisee

Judgment

• O'Brien J (concurring)

• There was consideration in this case – where someone has a legacy, their forbearing to enforce it can be a valid consideration, also the plaintiff's consent was required for the execution of the will.

• Holmes J (concurring)

• As the plaintiff could have taken steps to enforce the legacy and by forbearing to do so he had given valuable consideration to the defendant.

• Gibson J (concurring)

Sufficiency and Adequacy

Thomas v Thomas (QB 1842)

Facts

• The defendant promised to convey a house to the plaintiff if she were to pay 1 a year towards the ground rent and keep the house in repair.

• The defendant didn't keep his side of the agreement

Issue

• Consideration – Ground rent & maintenance

Judgment

• The contribution and requirement to maintain are not burdens which are inherent in the property – if so they would be due to a landlord, not an executor or to go towards death duties etc.

• Thus the property is not a gift.

• The contribution is a thing newly created upon granting the property, it is valuable consideration and thus there is a binding agreement.

Chappell & Co. v Nestle (HoL 1959)

Facts

• The plaintiffs owned the copyright of a song, copies of which they sold to the defendants for the purpose of retail sale.

• The defendants sold the recordings to the public for a certain price upon receipt of wrappers from their products.

• The plaintiffs claimed that selling the records was a breach of copyright.

Issue

• Consideration – Wrappers – Marketing campaign

Judgment

• Viscount Simons (concurring)

• If the consideration is the evidence of a successful marketing campaign then it is valid.

• It cannot be the wrappers themselves as they are worthless.

• Thus, the copyright Act is not infringed as it applies to retail sales only, where money constitutes the entire consideration.

• Lord Reid (concurring)

• There were cases where the sending of wrappers was of benefit to Nestle and in these cases there was a contract.

• Lord Tucker (concurred)

• Lord Keith of Avonhom (dissenting)

• The wrappers are of no value to Nestle – they receive no indication of increased sales from them that they could not get from their accounts anyway.

• Lord Somervell of Harrow (concurring)

• Even if Nestle placed no value in the wrappers, they had stipulated that they be part of the consideration.

• They did derive a benefit from them in that it encouraged the purchase of their chocolate.

O'Keeffe v Ryanair (HC 2002)

Facts

• The plaintiff was offered free flights for herself and another for life if she agreed to do some publicity as the airline's millionth passenger.

• She agreed to do so and some time later the defendants put qualifications on her flights.

• She sued for breach of contract.

Issue

• Consideration – Publicity Work – Surrender of anonymity

Judgment (Kelly J)

• The consideration to support a contract must be real i.e. capable of estimation in value.

• In this case the surrender of anonymity and privacy and the partaking in the publicity for the benefit of the defendants was real consideration.

• The defendants considered it valuable and there is no reason why the court should not consider it so either.

Re Wilson (HC 1932)

Facts

• The testator agreed to convey certain property to his son in consideration of his natural love and affection.

Issue

• Consideration – Natural Love and Affection

Judgment (Johnston J)

• This is was not a bargain involving mutual considerations but a gift and as such is not enforceable.

O'Neill v Murphy (NI CA 1936)

Facts

• The plaintiff done work as an architect for the defendants (a religious order), they could not afford to pay him and an agreement was worked out whereby he would accept prayers as part payment.

• He later sued for the rest of the money.

Issue

• Consideration – Prayers

Judgment

• per Andrews LJ Prayers were not valid consideration.

Hamer v Sidway (NY CA 1891)

Facts

• The defendant promised the plaintiff that if he refrained from drinking, smoking, swearing or gambling until he was 21 he would give him $5,000.

• The plaintiff came of age and sought the money.

Issue

• Consideration – Refraining from debauchery

Judgment (Parker J)

• The plaintiff had abandoned his legal rights to engage in the activities – thus this was valid consideration.

Hawkes v Saunders (KB 1792)

Facts

• The defendant was the executor of a will and had promised the plaintiff that she would pay him his legacy.

• If she were sued in her capacity as executrix (as opposed to here where she was sued as a person in her own right) she would have to provide the legacy.

Issue

• Consideration – Moral obligation

Judgment

• Lord Mansfield

• The moral obligation that would bind her in equity constitutes a valid consideration for a contract.

• Lord Willes (concurred)

• Lord Ashhurst (concurred)

• Buller J

• Wherever a defendant is under a moral obligation to pay, that is good consideration.

• If this were not a rule, there is a loss to the plaintiff and a benefit to the defendant constituting consideration, in that the plaintiff does not have possession of goods which he has a right to have and the defendant has possession of them.

Eastwood v Kenyon (KB 1840)

Facts

• The plaintiff had been executor of the estate of the defendant's father-in-law, and had gotten into debt in tending to the estate which redounded to the benefit of the defendant.

• The defendant having been informed of this agreed to pay the money owed but failed to do so.

Issue

• Consideration - Moral Obligation

Judgment (Lord Denman CJ)

• Voluntary assumptions of just debts should not be good consideration.

Commodity Broking v Meehan (HC 1985)

Facts

• The plaintiffs were clients of the defendant's company, which went bankrupt.

• The defendant agreed to pay back debts that he owed at a certain rate.

Issue

• Consideration – Forbearing to sue

Judgment (Barron J)

• There was no consideration in this case – forbearing to sue is good consideration but in this case there was no agreement to that effect.

Past Consideration

Eastwood v Kenyon (KB 1840)

Facts

• The plaintiff had been executor of the estate of the defendant's father-in-law, and had gotten into debt in tending to the estate to the benefit of the plaintiff.

• The defendant having been informed of this agreed to pay the money owed but failed to do so.

Issue

• Past Consideration

Judgment (Lord Denman CJ)

• The consideration in this case was past – the benefit had been transferred to the defendant before the promise.

• This does not amount to good consideration and is unenforceable.

Roscorla v Thomas (QB 1842)

Facts

• The plaintiff bought a horse from the defendant and was later promised that the horse was 'free from vice'.

• The defendants statement turned out to be a lie.

Issue

• Past Consideration

Judgment (Lord Denman CJ)

• The general rule of consideration is that it must coincide in time and space with the promise.

• Thus the purchase money is not good consideration for the subsequent promise.

Lampleigh v Braithwait (KB 1615)

Facts

• The defendant was convicted of murder and asked the plaintiff to secure the King's pardon for him.

• This plaintiff did so and after his success was promised a reward by the defendant.

• The defendant never gave him the reward.

Issue

• Past Consideration

Judgment

• Where a consideration is past, but is rendered at the promisors request, then a subsequent promise will be binding.

Bradford v Roulston (Ex. 1858)

Facts

• The plaintiff employed the defendant to sell his ship.

• The purchasers were short some money and the defendant asked the plaintiff to sign the bill of sale and promised him that he would pay the balance.

• The plaintiff did so and later committed the promise to writing, in spite of which the defendant didn't pay.

Issue

• Past consideration

Judgment

• Lampleigh v Braithwait adopted, where A at B's request tenders consideration, and afterwards, B in consideration of the Act makes a promise, the promise will be enforceable.

Pao On v Lau Yiu Long (PC 1979)

Facts

• The plaintiffs and defendants had an agreement whereby they exchanged shares in each others companies, on the condition that the plaintiffs retain 60% of their shares for a certain period of time.

• In order to protect against a collapsed share price the defendants had agreed that they would buy the shares at a fixed price when the period was up, the plaintiffs later realised that this would preclude their making a...