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What is the Doctrine of Consideration? Explain its relationship to theEquitable Doctrine of Promissory Estoppel.

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Introduction

Phillip Stylianides Group 19 Contract LAWS 1009 Formative Assignment. Q: What is the Doctrine of Consideration? Explain its relationship to the Equitable Doctrine of Promissory Estoppel. Consideration can be seen as, that which one party gives or promises to give in exchange for the others parties performance or their promise to future performance. The classic definition of consideration was given by the court of first instance in the 1875 case of Currie v Misa1 "A valuable consideration, in the sense of the law, 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." Therefore some kind of benefit and detriment to the involved parties must be present in order for good consideration to have occurred. For example if you go to buy a pint of lager you pay for the lager and the barman gives you your pint. You have lost money but gained the pint of lager and the barman has lost the pint of lager but gained the money you paid. Here we can see that if there is good consideration then some degree of reciprocity has been fulfilled. As mentioned in the opening line consideration does not have to be immediate and may be a promise of future performance. Consideration may therefore be executed, where one party performs "an act in fulfilment of a promise made by the other" or executory "where there is an exchange of

Middle

AC 87, however it must be of some economic value White v Bluett (1853). The next two sets of rules state that a promise of performance to which you are already bound either through existing legal duties Collins v Godefroy (1831) 1 B&Ad 950 or through an existing contractual obligation with the promisee is not good consideration. Stilk v Myrick (1809)6 The exception to these rules is a promise that exceeds ones original duty under the law or under the contract to the promisee can be found to be good consideration. Ward v Byham (1956) 2 All E.R. 348 and Pinnel's case (1602) 5 Co. Rep. 117a resectively. There are a number of other rulings under the banner of existing contractual duty that must be noted. Where a promisor asks for more funds to perform an existing duty. From previous examples the general ruling would be that the promisor is not entitled to claim extra that has been demanded. However if as in the case of Williams v Roffey (1990) the promisee obtains an extra benefit or avoids a detriment from the performance of the promise, even if the promisor was already bound under the existing contract this can be considered good consideration. In Williams v Roffey the Court of Appeal ruled that because the promisee had escaped the detriment of late completion penalties and the detriment of not having to find another subcontractor they had in effect received a practical benefit and Williams was therefore entitled to claim the additional sum.

Conclusion

This can be seen in the case of CLP v High Trees Hous Ltd (1947) and also Tool Metal V Tungsen (1955.) In both cases the parties were required to give reasonable notice before obtaining their entitlement. Finally it is widely accepted that unlike consideration, Promissory Estoppel cannot be used to form a contract but only enforces promises to vary existing contracts. Therefore it cannot create a new cause of action. Combe v Combe (1951) 2 KB 215 However this has been challenged in the Australian case Waltons Stores Ltd. V Maher (1988.) The ruling in this case in effect showed that Promissory Estoppel can extend to "the enforcement of voluntary obligations."10 Promissory Estoppel allows the principles of natural justice to be applied in order to mitigate some of the harsh effects of common law rules11 that may have been inapplicable if relying upon the doctrine of consideration. 1 Currie v Misa (1875) LR 10 Ex 153 2 Nutshells contract law 6th Ed R Duxbury P 18-19. 3 Prof Atiyah (1986c) 4 Pao On v Lau Yui Long (1979) [1980] A.C. 614 5 Dr E Laurie LAWS 1009 2003/4 lecture handout No. 3 6 Stilk v Myrick 1809 170 All E.R. Rep. 851. 7 Foakes v Beer (1884) 9 App Cas 605 8 RE Selectmove (1995) 2 All ER 531 (CA) 9 Dr E Laurie 2003/2004 Handout No 3 10 Dr E Laurie 2003/2004 Handout No 3 11 Dr E Laurie 2003/2004 Handout No 3 1 1

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