CONTRACT CONSIDERATION AND INTENTION

Consideration (Pg 85)

Consideration, as defined by Sir Frederick Pollock in 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, and the promise thus given for value is enforceable. he state of mind of the parties, especially the one performing the act is critical. Executory Consideration Executed Consideration !"ecutory consideration refers to consideration, which is yet to be performed. !"ecuted consideration refers to consideration, which has been performed. #n other words, e"ecuted consideration involves an act or forbearance, which has been fulfilled. Past Consideration refers to an act performed prior to and to that e"tent independent of, the promises being e"changed. Past consideration is no consideration. Roscorla v Thomas (1842) he court held that the promise was made after the transaction had already been concluded and therefore past consideration. Followed in Sim Tony v im !h "hee (1995) ast consideration is no consideration. #n #ao $n v au %iu ong (198&) $an act before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise. he act must have been done at the promisor%s re&uest, the parties must have understood that the act was to be remunerated further by a payment or the conferment of some other benefit, and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance.' (Exce tions !or Past Consideration) Past Consideration "eco#es Executed Consideration (ct done at promisor%s re&uest Parties understood act is to be remunerated Contract must otherwise be enforceable T$o %ain Ru&es on Consideration ). *ust move from promisee but need not move to promisor. T'eedle v !()inson (18*1) the court held that weedle could not enforce the contract between the two fathers because he is not a party, and secondly, no consideration flowed from him. +. ,eed not be ade&uate but #ust "e su!!icient. +happell , +o (d v -es(le +o (d (19*&) he -./ held that the consideration included the wrappers even though they were of no value to ,estle. 'oods( Ser)ices( %oney and Pro erty ( promise to forbear from suing or enforcing a valid claim can constitute sufficient or valuable consideration. !lliance .an) (d v .room (18*4). /0Re1 2inance (d v +heng +hih +heng (1993) he court spoke the words of Cockburn C0 in +allisher v .ischoffsheim (184&)5 *or"earance to sue he same applies to a compromise of a legal action. he re&. is that the legal action must be reasonable and not frivolous, that the claimant has an honest belief that in the chance of success of the claim and that the claimant has not concealed from the other party any fact which, to the claimant%s knowledge, might affect its validity. 6iles v -e' 7ealand !lford 8s(a(e +o (188*)

Past Consideration

Su!!icient

Per!or#ance o! existing contractua& duty to t+ird arty

The 8urymedon (1945) he Privy Council held that even though the defendant was already contractually bound to a third party to do so, the defendant%s act of unloading the ship formed good consideration for the contract with the plaintiff. his was also clarified in #ao $n v au %iu ong (198&) by the -./. his was also accepted in the Singapore -igh Court in SS!. $1elosund !. v 9endral Trading #(e (d (1992)5

%ora& o"&igation , #oti)es -ague or insu"stantia& consideration

8as('ood v /enyon (184&) he court re1ected the plaintiff%s view and held that moral obligation is insufficient consideration for a fresh promise. Thomas v Thomas (1842) he court held that the nominal rent was sufficient consideration by t the husband%s wishes were irrelevant2 motives is not the same thing as consideration. :hi(e v .lue(( (1853) he court held that 3luett%s promise was nothing more than a promise $not to bore his father'. (s such it was too vague and was insufficient consideration for the alleged discharge by his father. +ollins v "odefroy (1831) the words of /ord enterden $if it be a duty imposed by law upon a party regularly subpoenaed to attend from time to time to give his evidence, then a promise to give him remuneration for loss of time incurred in such attendance is a promise without consideration. #f the court finds the promisee did something more that re&uired by an e"isting public duty, then it may be sufficient. "lass;roo) .ros (d v "lamorgan +i(y +ouncil (1925) S(il) v 6yric) (18&9) #t was held that there was no consideration for the captain%s promise because the remaining crew did what they were contractually re&uired. wo sailors deserting was within the usual emergencies found in such a voyage.

Per!or#ance o! existing u"&ic duty

Insu!!icient

Per!or#ance o! existing contractua& duty

-owever, if it is more than what is contractually re&uired, that may constitute good consideration :illiams v Roffey .ros and -icholls (+on(rac(ors) (d (1991) he !nglish Court of (ppeal held that as long as the e"tra payment was not given under duress or fraud, the oral promise was enforceable because the defendant obtained $practical benefits' from the plaintiff%s work. he benefit was that they would not be liable under the main contract for late completion.

#innel<s +ase (1*&2) he part payment of a debt does not discharge the entire debt un&ess the part payment was made at the re&uest of the creditor and the payment was made earlier, at a different place, or in con1unction with some other valuable consideration. 2oa)es v .eer (1884) affirmed Pinnel%s Case the -./ held that 3eer%s promise not to take further action was not supported by consideration. She could claim the money. Promissory !stoppel is an e&uitable doctrine whose origin may be traced to /ord Cairns in =ughes v 6e(ropoli(an Rail'ay +o (1844). 4hen p.e. is established, the court may enforce a promise despite the fact that there was no consideration. . E&e#ents (+en(ral ondon #roper(y Trus( v =igh Trees =ouse (d (1944)> ? D,+ .uilders v Rees (19**)) Parties must have e"isting legal relationship Clear and une&uivocal promise which affects the legal relationship Promisee relied upon promise and altered his position #ne&uitable for the promisor to go back on his promise. Sus ensi)e or Extincti)e 4hen the promisor gives reasonable notice of his intention to revert to the original legal relationship, the original relationship is restored. he effect of p.e. is to suspend promisor%s rights temporarily. Tool 6e(al 6anufac(uring +o (d v Tungs(en 8lec(ric +o (d (1995) -owever, the promise could become 5final and irrevocable if the promisee cannot resume his position.' !@ayi v R T .riscoe (-igeria) (d (19*4) S+ie&d not s$ord his means that it can only be raised as a shield and not a sword, i.e. a defense against a claim and not to commence a suit. +om;e v +om;e (1951) 6people sue you then can use) !ssoland +ons(ruc(ion #(e (d v 6alayan +redi( #roper(ies #(e (d (1993)

Pro#issory Esto e& (*or no consideration)

Intention to Create /ega& Re&ations (Pg 010)

he test is whether a reasonable person viewing all the circumstances of the case would consider that the promisor intended his promise to have legal conse&uences. here is a general presumption that such agreements lack the necessary intention to form a contract. (2a&!our ) 2a&!our (0303)) he !nglish Court of (ppeal held that the claim failed because the parties did not intend the promise to be legally binding. #n +hoo Tiong =in v +hoo Socia& and =oc) S'ee (1959) the plaintiff%s promises were not enforceable because the lack of intention to Do#estic create legal relations. Agree#ents -owever in 6erri(( v 6erri(( (194&) he !nglish Court of (ppeal found the necessary intention and held that the wife succeeded in her claim for breach of contract. here is a general presumption that there is necessary intention to create legal relations. 8d'ards v S)y'ay (d (19*4) he court held that Skyways was legally bound. 4onour C&auses 4hen parties have e"pressly stated that their agreement is not to be legally binding (Rose , 2ran) +o v A R +romp(ion , .ros (d (1925)) /etter o! Co#!ort( intent and %O5s are a&& not &ega&&y "inding . (=ong /ong and Shanghai .an)ing +orp (d v Aurong 8ngineering , $(hers (2&&& ) /etter of awareness held not binding. /lein'or( .enson (d v 6alaysian 6ining +orpora(ion .erhad (1989) Court only found a moral not legal obligation.

Co##ercia& Agree#ents

Pri)ity o! Contract (Pg 015)

he general rule is that no one., other than a person who is a party to the contract may be entitled to enforce or be bound by the terms of the contract. #rice v 8as(on (1833) court held that Price could not succeed, as he was not a party to the contract between the debtor and the !aston. Exce tions (Thai /enaf +o (d v /ec) Seng (S) #(e (d (1993) (gency relationship (ssignment of choses in action /etter of Credit