Performance of Existing Duty Shouldn't Constitute Consideration

Consideration itself means ‘some right, interest, profit or benefit accruing to one party or some forbearance, detriment, loss of responsibility given, suffered or undertaken by the other. Consideration therefore means the element of exchange in a bargain, and in order to satisfy the requirements of English law it must be valuable consideration, i.e. something which is capable of being valued in terms of money or money’s worth, however slight. It may take the form of money, goods, services, promise to marry, a promise to forbear from suing the promise, etc. An exchange of “consideration” whether it be financial or of another sort between the parties to a contractual arrangement is crucial for the agreement to be legally enforceable. They have 2 types performance of an existing duty should not constitute consideration: Performance of an existing domestic and Performance of an existing Commercial.

1.1 Consideration

Consideration is the inducement, motive or price that causes a party to enter into an agreement or contract. To keep covered up in a valid offer and acceptance is the demand of mutual consideration, meaning the parties must each exchange something of value. While this concept does not necessity the parties to exchange equal value, it does necessity that the value exchanged by each party induced the other to enter the agreement. Consideration also can define as the price paid for the promisor’s promise and is the benefit received under the contract. There have some rules relating to consideration: it is essential in every simple contract, it should be present or future but not past, must have some value, although the court is not concerned with its adequacy, must be possible of performance, must move from the promise and must be something more than the promise of an existing obligation.

Consideration is part of the glue that makes a contract binding. It can be the payment of money in exchange for goods or services, or the goods or services themselves in the case of a barter preparation. Consideration can also be a promise to do, or not, do something. Basically, consideration must be something of value, something you wouldn’t usually have but for the agreement. There have 3 types of principles of consideration: executed consideration, executory consideration and past consideration.

1.1.1 Executed Consideration

When a promise is made in exchange for an act, when that act is performance, it is executed consideration. The two forms of consideration thus suggested have been explained as acceptance of an executed consideration, and consideration executed upon request. They occur when the proposal is an offer of an act for a promise, and the act is accepted; or where it is an offer of a promise for an act, and the act is done.

1.1.2 Executory consideration

Consideration is executory when there is an exchange of promises to perform acts in the future. Executory consideration is usually included in contracts where the parties involved cannot put specific value on a consideration of the contract and have to rely upon a third party to do so. For example, if D offers B 10,000 pounds to build D a house, B’s consideration is executory until he has finished the work.

1.1.3 Past Consideration

Past consideration is of no effect to consideration at all. It is where the defendant’s promise is subsequent to the plaintiff’s act and independent of it. If it contained that act must have been performed at defendants request and act must have been at defendant’s request can be exception to the past consideration rule. To make a promise binding, as we know, consideration must move from the promisee. We have seen that this means that consideration must move from the promisee to secure the promise in question which essentially means that it must be simultaneous with, and in response to, the promise in question.

1.2 Performance Existing Duty in Domestic

In the case of Balfour V Balfour (1919) 2 KB 571, Mr. Balfour had agreed to give his wife 30 pounds a month as maintenance for while he was off living in Ceylon. Once he had left, they separated and Mr. Balfour stopped payments. Mrs. Balfour brought an action to enforce the payments. At the Court of Appeal, the Court held that there was no enforceable agreement as there was not enough evidence to suggest that they were intending to be legally bound by the promise. The action failed because there was no indication that the arrangement was intended to be a contract.

In the case of Merritt v Merritt” 1970 1 WLR 1211, A husband and wife separated. They then met to make agreements for the future. After this the husband agreed to pay 40 pounds per month maintenance, out of which the wife would pay the mortgage. When the mortgage was paid off it was agreed he would relocate the house from joint names to the wife’s name. He wrote this down and signed the paper, but later refused to transfer the house. It was held that when the agreement was made, the husband and wife were no longer living together; therefore they must have intended the agreement to be binding, as they would base their future actions on it. This intention was conformational by the writing and therefore the husband had to transfer the house to the wife.

In the case of Beswick V Beswick (1968) AC 58 House of Lords, The agreement was that Peter assign his business to his nephew in consideration of the nephew employing him for the rest of his life and then paying a weekly annuity to Mrs. Beswick. Since the latter term was for the benefit of someone not party to the contract, the nephew did not believe it was enforceable and so did not perform it, making only one payment of the agreed weekly amount of 5 pounds. The widow brought an action to compel the nephew to continue making the payments. She failed in the action in so far as it was brought in her own name because she was not a party to the contract between her husband and her nephew.

1.3 Performance Existing Duty in Commercial

In the case of Stilk V Myrick, 2 Camp 317, 170 Eng. Rep. 1168 (1809), Stilk was contracted to work on a ship owned by Myrick for 5 pounds a month, promising to do anything needed in the voyage regardless or emergencies. Two men deserted after the ship docked at Cronstadt, captain promised the crew the wages of those two men divided between them if they fulfilled the duties of the missing crewmen. But the captain refused to pay after arriving at their home. They would be due the money if the situation created by the desertion of the crew changed their duties to an extent that they would not be bound to continue under the existing contract.

In the case of Glasbrook Brothers V Glamorgan County Council (1925) AC 270, a colliery requested police protection during a strike. The police only had the resources to make visiting patrols, but offered to place constables at the site for a financial contribution. But the colliery refused to pay after the strike the police presented the Colliery with a bill for services rendered. The action of the police was beyond statutory requirements, and payment could be claimed.

In the case of Ward V Byham (1956) 1 WLR 496, the father of an illegitimate child agreed to pay the mother a sum of money for maintenance, provided that the child be well looked after and happy, and that the mother offer the child the choice of which parent to live with when she was old enough to understand. The father made payments until the child’s mother married, and then he refused. The mother sued for breach of contract. This was sufficient consideration.

1.4 Conclusion

For done the assignment of consideration, I’m agree the performance of an existing duty does not constitute consideration, unless that duty is doubtful or honestly disputed. Once a party to do something under a contract, the party cannot change the terms without consideration and expect the new terms to hold. However, consideration arise in a few instances that we call here “problem areas:” gifs, pre-existing duty, promissory estoppels, modification and past consideration.

2.0 Introduction

We now come to what is sometimes referred to as the third essential ingredient for formation of contract. It is, however, doubtful whether it is an essential ingredient. The reason for this is that it is very rarely an issue and that the intention to create legal relations goes without saying in the vast majority of contracts. To create a contract must have an offer, intention to create legal relationship, acceptance and consideration. There are also have various of remedies on breach of contract.

2.1 The General Principles in the Formation of a Contract

Consideration

Intention to create legal relationship

A contractual agreement has conventional been analyzed in terms of offer and acceptance. As a contract is an agreement, to constitute a contract, there must be an offer by one person to another and an acceptance of that offer by the person whom it is made. An agreement or a contract can be defined as the offeror makes an offer which once accepted by another party (promisor), while the offeree contrive a binding contract (promisee).

2.1.1Offer

An offer is a statement of the terms on which the offeror is willing to be bound. Offer is defined by Paul Richards in the law of contract as: ‘An expression of a willingness to contract on certain terms made with the intention that a binding agreement will exist once the offer is accepted.’ It is also important to know the difference between bilateral and unilateral contract. A unilateral contract is an offer or promise by the people who giving the offer or promise without a second party accepting it. The second party generally does not make an express promise and is not obligated to act in any way. While in bilateral contract, the parties each promise one another something. They may agree to do something or to prevent from doing something. Bilateral contract are usually formed in business arrangements. In the case of Carlill V Carbolic Smoke Ball (1893) 1 QB 256, the rewarded had been paid and the promisor was one-sided to promise to the person who performed will get the rewarded. For an offer to be effective it must be communicated. This may seem rather distinct, however circumstances in real life may be more hazy as illustrated.

It must be efficiency to authenticate specific example of where an offer or an invitation to treat exists. An invitation to treat is not an offer, there is a clear differentiation between the two how eves as an invitation to treat shows willingness enter into negotiations rather than a willingness to enter into legally binding contract. Displace of good for sales, whether in a shop window or on the shelve of a self-service store, is usually treated as an invitation to treat and not an offer. The holding of a public auction will also normally be look upon as an invitation to treat. This can be illustrated by the case of Pharmaceutical Society of Great Britain V Boots (1953) 1 QB 401 Court of Appeal, it was held that the goods on the shelves are invitation to treat and the offer take place at the checkpoint. The shop assistant will choose whether to accept the offer from the goods taken by customer to the till and makes an offer to purchase. It’s making an offer by putting the goods on a shelves and the customer accepting this offer by moving the goods into the basket.

2.1.2Intention to create legal relationship

Intention to create legal relationship are one of the essential element in the creation of a binding contract, this intention is implied by the actual that is cannot be concealed. In order to maintain which agreements are legally binding and have an intention to create legal relations, the law draws a differentiation between social and domestic agreements and agreements made in a commercial context. In the case of Balfour V Balfour (1919) 2 KB 571 CA, this case are involved a husband and wife. The husband promised to pay the wife 30 pounds per month while working away. Wife tries to sue him when the husband was breached this agreement. The presumption may not apply because there was no intention to create legal relations. Husbands and wives will make agreements between themselves in a relationship; these are not contracts as both party intends to have them enforced by legal consequences.

2.1.3 Acceptance

An acceptance of an offer means unconditional agreement to all the terms of that offer. One the acceptance effective in taking place on a binding contract, there must to know what constitutes a valid acceptance in order to set up if the parties are bound by the agreement. The acceptance must be communicated to the offeree and the terms must exactly match the terms of the offer. Apart from this, the agreement must be certain, there are the three main rules relating to acceptance. In case of Adams V Lindsell (1818) 106 ER 250, the defendant sold the wool with not referring to the acceptance from the claimant. This is establishing as postal rule since the offer letter was delayed in post. It made the offeror get inform by late, the acceptance then becomes effective when the letter is posted.

2.1.4 Consideration

Consideration is the value given in return for a promise. It is an indispensable element for the formation of a contract. Consideration is something with currency value, autonomous exchanged for an act, benefit, forbearance, promise, right, interest, or goods or services. This is also defined by Sir Frederick Pollock, approves by Lord Dunedin in Dunlop V Selfridge Ltd (1915) AC 847, as ‘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 for value is enforceable.’ In case of Re McArdle (1951), their carried out certain improvement during their tenant, and were offered payment. The promise was unenforceable as all the work had been done before the promise was made and was consequently past consideration.

2.2 Breach of Contract

Breach of contract is contracting party’s reality failure or resistance to perform its obligations under the contract. It also can occur when a person does not do something he/her agreed to do. Breach of contract may affected by repudiation of obligation before the beginning of the contract or its completion. It may also affect by a conduct that prevent the contract’s proper performance such as interfering with the other party’s performance. There are few types or problems of breach of contract such as rescission, specific performance, injunction, damages and restitution.

2.2.1 Rescission

Rescission of a contract is the destruction or annulling of a contract. It implies that a contract between different parties is cancelled. This brings the parties to the same position as they were before they signed the contract. This provides a fair remedy and depends upon the discretion of the parties. Rescission entitles a party to a right to choose to rescind the contract that they were induced to enter as a result of misrepresentation. See the case of Horsfall V Thomas [1862] 1 H&C 90, the buyer of a gun did not inspect it prior to purchase. It was held that the suppression of a defect in the gun did not affect his decision to purchase as, since he was unaware of the misrepresentation, he could not have been inducted into the contract by it. His action thus failed.

2.2.2 Specific performance

Specific performance is an equitable remedy to a contract law dispute. This known as when a court orders the party that broke the contract to perform his/her obligations as agreed in the contract. Specific performance is usually available when the contract involves some kind of unique goods or other strange benefit to the other party, and average money damages aren’t satisfactory. See the case of Walters V Morgan (1861), the defendant agreed to award the applicant a removal lease over land he had just bought. Specific performance was refused as the applicant had produced a sketch lease and induced the defendant to sign the agreement in ignorance of the value of the property.

2.2.3 Injunction

Injunction is a remedy sometimes awarded by the court that stops some exploit being taken. It can be used to stop another party doing something against the terms of the contract. Injunctions are at the court’s direction and a moderator may refuse to give one award damages instead.

2.2.4 Damages

When the primary purpose of compensation is to provide an indemnity for loss, an award of compensatory damages will nevertheless generally vindicate the right to performance of the contract. C and P Haulage V Middleton (1983), the claimant had hired a garage for 6 months and it was agreed that any developments would be the property of the defendant. When the defendant breached the contract, the claimant sued for the price of the improvements. The court held that even if the contract had not been breached, the spending would have been wasted.

2.2.5 Restitution

A fair remedy that restores a person to the position they would have been in if not for the improper action of another. Restitution is a standard remedy for breach of contract and the return of specific property and monies paid. It is also Reimbursements ordered by courts as part of a criminal sentence or civil or administrative penalty.

2.3 Conclusion

As doing this assignment, that I have understanding about the agreement and also remedy of breach of contract. The parties to a contract which is binding must have intended to enter into legal relations. Although this is rarely an issue in a straightforward business or consumer contract, where the parties are friends or are related this element can prevent an agreement from being legally binding.