Performance of an Existing Duty Should Not Constitute Consideration

Question 1

The orthodox view is that, performance of an existing duty should not constitute consideration. Discuss

Learning Outcomes:

To show an understanding of what constitutes a consideration.

To be able to identify the factors affecting the court’s decision in the findings of ‘consideration’ in relation to performance of an existing duty.

Be able to give reasons for your approach.

Question 2

What are the general principles in the formation of a contract? What are the various forms of remed

Answer for Question 1

Introduction

Consideration

Consideration is an important element for the formation of a contract. A contract that unsupported by consideration is not a binding contract. Sir Frederick Pollock defined consideration as: “An act of forbearance of one party all the promise there of, is the price of which promise of the party is bought and the promise does given for value is impossible.” Paying of promising to pay money in return for the supply of goods or services constitute the most form of consideration. It also consists of a promise to perform a desired act or a promise to refrain from doing an act that one is legally allowed to do.

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Performance of an Existing Duty

Existing duty is where a promisee is already bound to perform an existing legal duty. The judges’ view is that, in a contract if the promisee agrees to perform a contractual or public duty, there is no consideration.

Performing an Existing Duty of Social or Domestic Agreement

Social or Domestic agreement is an agreement made between married couple, family members or friends. It usually does not consider as a legal enforceable contracts.

Balfour v Balfour (1919) 2 KB 571 CA

In the case of Balfour v Balfour (1919) 2 KB 571 CA, Mr. Balfour and Mrs. Balfour were lived in Ceylon but move to the England subsequently. After that, Mr. Balfour went back to Ceylon but his wife can’t accompany him back due to health problem. Mr. Balfour orally promised that he would pay £30 per month for his wife until she could rejoin him, but later they get divorced and he refused to continually make the payment for his wife. Thus his wife sued him for the payment stopping and the court allowed Mr. Balfour’s appeal. The court held that it was just an oral agreement, it was lack of an intention to be a legally enforceable contract, and hence there was no consideration between them.

Merritt v Merritt (1970) 2 All ER 760 CA

In the other case, Merritt v Merritt (1970) 2 All ER 760 CA, Mr. Merritt left his wife, Mrs. Merritt and went to live with another woman. After that, Mr. Merritt was promised to paid her 40 pounds a month and they had made an agreement which was in written form promised her once she has clear the mortgage of their jointly-owned house, he would transfer the house as her ownership, but he failed to do that. Hence, Mrs. Merritt succeeded to sue him because court held that they had written an agreement, thus it had intention to be legally bound and consideration was made.

Thomas v Thomas (1842) 114 ER 30 QB

Thomas v Thomas (1842) before Mr. Thomas is dead, he had orally instructed that he will give his small house to her wife, Mrs. Thomas and only required her to pay 1 pound every year for the ground-rent in front of two executors. Until one of the executors was dead as well, then the one who left and intended to drive out Mrs. Thomas from the small house. The court held that because of Mrs. Thomas was paying for the ground-rent, therefore she was fulfilling her duty, and thus there was no new valid consideration to make the promise enforceable.

Beswick v Beswick (1968) AC 58

In the case of Beswick v Beswick (1968) AC 58, Mr. Beswick had sold his business to nephew for the exchange for the payment of 6 pounds per week for him and 5 pounds per week for Mrs. Beswick for the rest of life. His nephew has stopped making payment to Mrs. Beswick once her husband died. She brought an action force Mr. Beswick’s nephew to continually make the payment. She failed because of the court said that she was not a party to the contract, it was a contract made between her husband and nephew, therefore there was no any consideration between her and nephew.

Performing an Existing Duty of Commercial Agreement

Commercial agreement is agreement made by company or public. It is a legal enforceable contract. Performing an existing duty often does not constitute consideration but there are some situations where performing existing duty does constitute consideration.

Stilk v Myrick (1809) 2 Camp 317

In the case of Stilk v Myrick (1809), two out of eleven ship’s crew were deserted before it had completed its voyage, the rest of the crew then threatened to leave unless the captain of the ship divided up the deserters pay amongst them. The captain promised to pay the remaining crew extra money if they sailed the ship back, but later refused to pay and was sued by the crew. The court said that the agreement was invalid for the new consideration, because the ships crew had only done what they were already bound to do. Thus the captain did not have to pay the extra money.

Collins v Godefroy (1831) 1 BAd 950

This case regarded a contract argument of the issue of consideration of a promise. The claimant, who had been summoned to court to act as a witness in a civil case and had been promised a fee by the defendant for compensation for the loss of time incurred through attendance. However the court held that when a duty or responsibility was an obligation, the promise of remuneration is made without consideration. Lord Tenterden CJ states that “If it be a duty imposed by law upon a party subpoenaed, to attend from time to time to give his evidence, then a promise to give him any remuneration for loss of time incurred in such attendance is a promise without consideration”. Since the witness in this case was under a public obligation to attend court anyway, it could not form consideration for a contract. Generally, performing an existing duty which is already owed does not constitute consideration, unless that duty is doubtful or honestly disputed. If the promisee provided something extra or exceeds beyond the duty of the contract then the original contract will be invalid and the new contract will be form.

Hartley v Ponsonby (1857) 7 E & B 872

In this case, a ship left England with a crew of 36, but as a result of desertions these were reduced to only 19, including just five able seamen, who were promised extra pay if they would help to sail the ship back to England. The court said this promise was enforceable because the crew was so reduced that it was dangerous to sail on and the captain would have had no right to demand it. The original contract had come to an end, and the seamen were free to make a new contract on whatever terms might be agreed.

Glassbrooke Bros v Glamorgan County Council (1925) AC 270

In this case, a mining colliery requested police protection during a strike, in the form of a body of officers quartered on the premises and was promised by Glasbrook Brothers Ltd an agreed remuneration for their services. After the strike the police presented the Colliery with a bill for services rendered but colliery refused to pay. When the firm later reneged on the bargain, Glamorgan County Council pursued the agreed duty through a civil suit on behalf of the Police Authority which they won. Glasbrook later appealed but the initial judgement was upheld. It was held that although performing a statutory duty could not be sufficient consideration to support an agreement, the action of the police was beyond statutory requirements, and payment could be claimed. Although the police authority are bound to provide sufficient protection to life and property without payment, if in particular circumstances, at the request of an individual, they provide a special form of protection outside the scope of their public duty they may demand payment for it.

Conclusion

In my point of view, performance of an existing duty does constitute consideration. Once the offeror has requested offeree to do something and promised to give benefits in return, then this will sufficiently constitute a consideration. As the offeree performing a duty, he or she is actually putting effort on it to doing it and thus offeree deserve to get back benefits. It is unfair to the offeree as he follows the promise and performs the duty but didn’t get back benefits as the offeror promised.

Answer for Question 2

Introduction

Contract

A contract is a legally binding agreement between two or more persons in which there are a promise to do something in return for a valuable benefit known as consideration. According to section 2(h) of the Contracts Act (CA) 1950, state that an agreement enforceable by law is a contract whereas in section 2(g) of the CA 1950, state that an agreement not enforceable by law is void. It is legally binding on the parties. In order to form a contract requires four essential elements which is offer, acceptance, intention to create legal relation and consideration.

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Offer

An offer is made when one party makes it clear by words or action, that he is willingly to be legally bound as soon as the offer is accepted by the person to whom it is made. It can be made to one person (Bilateral) or to a group of persons or to the whole world at large (Unilateral). A bilateral offer can take the form of a promise to do something in return for the promise of the offeree to do something. A unilateral offer is a one-sided promise to pay or reward someone for the performing an act. It is a one-sided promise because it is made without the offeror knowing who the offeree is. According to section 4 (1) of the contract Act 1950 communication of the offer is complete when the offeree knows about it. An offer can be made orally return or by conduct. If it is made orally or in writing it is an express offer. It is made by conduct then it is an implied offer. In the case of Carlill v. Carbolic Smoke Ball & Co., The English Court of Appeal decided, inter alia, that by depositing ₤100 with Alliance Bank, the Co. had demonstrated their intention to be legally bound by the terms of the offer. It was a general offer made to the world at large and the Plaintiff, by using the smoke balls twice daily as specified in the advertisement for over a period of 3 weeks and having contracted influenza, had accepted the offer. Generally advertise through medium such as newspaper is not offers but it is invitation to treat. For example, in the case of Partridge V Crittenden (1968) (1) WLR 1204, the defendant advertised on a magazine “Bramblefinch cocks and hens, 25s”. He was charged by offering a wild bird for sale and it was contrary to the Protection of Birds Act (1954). It was construed that this advertisement was an invitation to treat not an offer and he was acquitted. An auction for sale is not an offer but nearly an invitation to treat. They will be no offer unless it is clearly communicated to the offeree and it must be to the knowledge of the offeree. An offer continuous to exist until it is accepted unless it is revoked.

Intention to Create Legal Relations

The courts will not enforce any contract unless it is clear that the parties intended to be legally bound by their agreement. It is presumed that this is the intention in normal commercial contracts, and that it is not the intention in respect of domestic and social agreements, but each of these presumptions is rebuttable.

Acceptance

According to Section 2(b) of the contract Act 1872, it states that when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise. Acceptance of an offer is the final and unqualified assent to the terms of the offer. An acceptance whether it is oral or written must be communicated to the offeror before the contract to be enforced. With regards to the postal rule acceptance is complete when the letter is posted or the telegram is communicated to a person authorized to receive it for transmission to the addressee. In the case of Adams V Lindsell (1818), the defendant wrote to plaintiff offering to sell some wool, and asked to reply “in course of post”. The offer was delayed two days in the post and plaintiff’s acceptance was late in coming back. On the day before arrived, defendant already sold the wool to third party. The court held that the offer had been accepted as soon as the letter had been posted, before the wool was sold to the third party. Despite the acception for the postal rule, acceptance in the form of fax, telegram or e-mail must be communicated to the offeror for a contract to be binding. If the terms of the offer are amended this would be amount to a counter offer. In the case of Hyde V Wrench (1814), defendant offered P his farm for £1000. If an offeree makes a request for further information with regards to the product or services that will not amount to a counter offer but a mere enquiry.

Consideration

Section 2(d) of the contract Act 1872 defined consideration as “when at the desire of the promissory, the promise or any other who has done or abstained from doing or does or abstained from doing or promise to do or abstained from doing. Something such act or abstinence or promised is called a consideration for the promise. Consideration is an important element for the formation of a contract. A contract that unsupported by consideration is not a binding contract. Paying of promising to pay money in return for the supply of goods or services constitute the most form of consideration. It also consists of a promise to perform a desired act or a promise to refrain from doing an act that one is legally allowed to do. In the case of Roscorla v Thomas (1842) 114 ER 496, QB, plaintiff bought a horse from defendant for £30. The defendant additional promised that the horse was not more than 5 years old and was “sound and free from vice”. The court said that the pre-existing and executed consideration could not support the subsequent promise.

Remedies of Breach of Contract

The remedies available for breach of contract to the injured party will depend on the nature of the breach. The party committing breach of contract is called the ‘guilt party’ and the other party is called the ‘injured party’. Typically, the remedy for breach of contract often is an award of money damages intended to restore the injured party to the economic position that he or she expected from performance of the promise or promises. There are five remedies available for the breach of contract, which are rescission, damages, specific performance, injunction, and restitution.

Rescission

If a contract is set a side by one party on the ground that the vary formation of the contract has been negatively by misrepresentation, fraud, coercion or undeal influence which induce the party to enter into the contract and the contract is treated as though it never existed by the restoration of the parties to their original position. When the contract is set a side by one party but it brings only future obligation to an end and allows the party to sue for damages for breach of contract. The example the case is Planche v Colburn (1831).

Damages

Damages are avoided to compensate the injure party for any consequences as the breach of contract. In the section 74 of the contract at 1950 states that when a contract has been broken, the party who suffers by the breach is entitle to receive from the party who has broken then contract a compensation for any lost or damages cause to him thereby, which naturally a rows in the usual cause of dealings from the breach or which the parties new when they made the contract to be likely to result from the breach of it. Example case is Victoria Laundry (WINSOR) LTD v Newman Industries LTD 1949

Specific Performance

Specific Performance is an equitable remedy where the court directs that the contract be performed according to its terms. As it is an equitable remedy, it is given at the description of the court and is not available as of rights. The provisions governing this remedy contain in the specific relief Act 1950. Example case is Sky Petroleum v. VIP petroleum 1974.

In-Junction

An injunction is an order that made by court when an individual is required to enable other parties prohibit permanently or temporarily in doing something and prevent from the doing if the act in the future. In addition, it can state that money damages are unable to address all problems. The example case of this is Warner Brothers Pictures v Nelson (1937) 1 KB 209. Injunction is a specific relief that given by preventing a party from doing that which he is under an obligation not to do in section 4(c) Specific Relief Act 1950. An injunction may be granted to restrain the breach of a negative stipulation/term in a contract, where a promisor covenants not to do something. It is granted at the discretion of the court by injunction which can be either temporary or perpetual.

Restitution

A party who has entirely or in part perform his side of the contract and not receive the agree counter performance in full may sometimes be entitle to restitution in respect of its own performance. Where this consists of the payment of money, the payor will simply seek to get it back; where it consist of some other benefit he claim recompense. For example: the case of Attorney General V Blake (2001) 1 AC 26.

Conclusion

To form a contract there must have four essential elements which are offer, acceptance, intention to create legal relations and consideration. A legally contract is formed when offeror offer something to offeree which offeror intends to create a legal relation with the offeree and for exchange offeree will give back consideration which something valuable to the offeror. There are few remedies for the breach of contract, which are recession of contract, damages, specific performance, injunction and restitution. These remedies used to protect victims who suffer in the loss which caused by someone who breaks the.