Topic: CONSIDERATION

The facts are presented in the scenario.

 

The legal issues are as follows:

(1) Whether Shelly action is that of consideration or past consideration Re: Charlie and Sam.

(2) Whether Shelly consideration is executory or executed.

(3) Whether Charlie performance of an existing duty as consideration is defined as a duty imposed by contract or duty imposed by general law.

(4) Whether Sam performance of an existing duty as consideration is defined as a duty imposed by contract or duty imposed by general law.

(5) Whether Shelly part payment of the debt is satisfactory.

(6) Whether they are any remedies available to Shelly.

The first issue to be considered is whether Shelly action is that of consideration or past consideration Re: Charlie and Sam.

It is important, at this time, to discuss what consideration and past consideration is. Consideration is described simply as the price for which the promise of the other person is bought. In Currie v. Misa (1875), it was stated that consideration may consist of either a right, interest, position, benefit accruing to one party or some forbearance, detriment, loss or responsibility given suffered or undertaken by the other. Past consideration is confined to the general rule, that is, past consideration is no consideration. In Roscorla v. Thomas (1842), the defendant sold a horse to the plaintiff, after the sale defendant promised the plaintiff the horse was free of defects. It was discovered this was untrue. Held that the recent undertaking was after the sale and therefore past consideration. In the case of Shelly consideration was given for both parties in the sum of 200.00 and 100.00 respectively. Past consideration is therefore not applicable.

The second issue is whether Shelly consideration is executory or executed.

It is important at this time to define executory and executed consideration. Executory consideration consists of the exchange of mutual promises, the final exchange of which will take place at some future date. Executed consideration consists of a performance or execution of the consideration before the promise. Shelly by analysis is that of executor, some time would have passed before settlement in the future.

The third issue to be considered is whether Charlie performance of an existing duty as consideration is defined as a duty imposed by contract or duty imposed by general law.

If a person promises to pay another for performing an obligation which is imposed on him either by common law or statute, the rule is that the performance of that duty is not consideration for the promise to pay because that person is only fulfilling an obligation that is his duty to perform. In Glasbrook Bros. v. Glamorgan County Council (1925), Police were under duty to protect a coal mine during a strike, they were asked by the manager to provide a stronger guard at an agreed price. The guard requested by the manager was more than thought by police. Held that the extra protection was provided was good consideration for the promise to pay, therefore promise to pay was enforced. Shelly is resident in a gated community, this stronger guard by Charlie would qualify as good consideration; Charlie could enforce the promise to pay.

The fourth issue to be considered is whether Sam performance of an existing duty as consideration is defined as a duty imposed by contract or duty imposed by general law.

If a person is already bound by a contract to perform an obligation (duty) and the person entitled to the benefit of that duty promises to pay additionally (outside the contract) for the performance of the same obligation, the performance is not regarded as good consideration for the promise to pay additional money. The reason is that no benefit has been conferred on the promissory since he is already legally entitled to the benefit of the contract, and there is no detriment to the promise since he is already bound to perform the contract. In Stilk v. Myrick (1809), Sailors had deserted during a voyage home. The captain had promised to divide the wages between the remaining sailors if they worked shorthanded. It was held that the sailors were already under obligation to work the ship home. Charlie was already under contract to perform those obligations to which he was being paid by Shelly and therefore offered no good consideration. It should be noted however that if the person performs an act greater than that agreed in the original contract then that grater act is good consideration to pay additional monies.

The fifth issue to be considered is whether Shelly part payment of the debt is satisfactory.

Pinnel’s Case (1602) is probably the earliest to establish the principle that if one person owes money to another, then an agreement to take a lesser sum to settle the debt, if well-attested, is not a binding obligation. The reason it is not, rests on the fact that there is no new consideration to support the new agreement. In Pinnel’s Case (1602), Cole owed Pinnel £8 10s, but at Pinnel's request paid £5 2s 6d one month before the full sum was due. Cole claimed that there was an agreement that the part-payment would discharge the full debt. The court found in favour of Pinnel, because part-payment of an original debt did not make for fresh consideration. Therefore the agreement was not a contract. Shelly by only making a part payment could be liable for the balance as there was no new consideration agreed to by the parties.

The sixth issue to be considered is whether they are any remedies available to Shelly.

Shelly would be advised not to pay Sam, success would depend on the fact that Sam performance of an existing duty as consideration is defined as a duty imposed by contract and he was therefore obligated to perform that consideration. Pinnel’s Case (1602) however commits her settling the debt as it qualifies as only part payment.