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Consideration

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Introduction

Consideration Francis agrees to build a swimming pool for Gerald for �5,000, payable on completion. After beginning to dig the pool, Francis hits a layer of rock, which makes the work a great deal harder. Francis refuses to proceed unless he is promised another �2,000. Gerald reluctantly agrees to pay Francis, and as a gesture of goodwill he makes one or two small improvements to the pool. On completion, Gerald tells Francis that all he can afford is �5,000. Since Francis is also short of cash, he agrees to accept �5,000 in full settlement. Francis has now discovered that Gerald is rich enough to install a wave machine in his pool. Advise Francis, who now wants to recover the �2,000 that he was promised. All contracts require that something is given in return for something else from the other party, this is known as consideration. There are many definitions of consideration, but Currie v Misa (1875) is a very known one, which states 'A valuable consideration may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other'. A more up-to-date version of this definition however, is from the case, Dunlop v Selfridge (1915), 'An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought'. ...read more.

Middle

request, this is seen as an exception, along with Promissory Estoppel, shown in the cases of Bracken v Billinghurst and Inland Revenue v Fry. Promissory Estoppel, however, is relevant to the case of Gerald and Francis. The concept of Promissory Estoppel is based on the principle that it would be unfair to let the promisor go back on his promise, because this would cause hardship to the promisee. The doctrine traces back to the case of Hughes v Metropolitan Railway Co (1877), although Lord Denning has later developed the doctrine further in Central London Property Trust v High Trees House (1947). In High Trees, Promissory Estoppel was used to suspend liability under the lease, the landlord's rights revived after the war period. Lord Denning's view of D&C Builders v Rees was that rights could be extinguished altogether if it is fair to do so. This contrasts with the cases Tool Metal Manufacturing v Tungsten Electric, Ajayi v Briscoe and Alan v El Nasr. It is difficult to distinguish whether or not the doctrine operates to suspend or altogether extinguish them completely. In Francis's case, it would seem that he would be unable to sue, as he accepted he �5,000, but he could be entitled to the �2,000 extra offered, because he did however, exceed his contractual duty. This was done by him dealing with the extra layer of rock. This could be backed up by the case Hartley v Ponsonby, which is a main contractual duty case. ...read more.

Conclusion

Although Francis accepted the �5,000, he did this under pressure, he was already short of money and needed all he could, however, this is seen as he was being held at ransom. A case with similar case facts is D&C Builders v Rees. A similar circumstance occurred between a builder and a family, where the family, Rees, refused to pay full amount due to the work being unsatisfactory, so they only paid half of the total amount. The builders sued, the defendant claimed Promissory Estoppel, stating that the plaintiff had agreed to part payment of a debt when they accepted the money, and the court then held that the builders were held to ransom to accept the lesser amount, and forced to accept what they could get. "He who seeks equity, must do equity", stated by Lord Denning, is the reason why the defendant was not successful in their claim of Promissory Estoppel, it would have been inequitable and not do justice. In conclusion, Francis is able to sue for the �2,000. Although he accepted �5,000, this was not as part payment of debt seen in Pinnel's case, he accepted it due to no other option, seen in D&C Builders v Rees. Due to the case not being equitable, he is also able to claim Promissory Estoppel, due to the purchase Gerald made of a wave machine. Finally, shown in Hartley v Ponsonby, Francis did exceed his contractual duty due to the rock, and therefore is entitled to the new promise of the additional �2,000. ?? ?? ?? ?? ...read more.

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