CONTRACT LAW

Revocation of an offer:
The offeror may withdraw (revoke) his offer at any time before acceptance. However, once a
valid acceptance has been made, the offeror is bound by the terms of his offer. An offer cannot
revoke after acceptance. The leading cases are (Payne v Cave and Routledge v Grant). The
offeror must communicate the revocation to the offeree to make it effective as per the case of
(Byrne v Van Tien oven). Therefore, the postal rule as per (Addams v Lindsell), does not apply to
revocation of offers as it is not effective until communicated to the offeree. LJ Lindley had
remarked in Byrne regarding revocation using posts, “it maybe as well to point out the extreme
injustice and inconvenience which any other conclusion would produce”.
Where the offeror keeps an undertaking to keep the offer the open for a stipulated time, he’s
not bound by his undertaking unless the offeree has given consideration in return for it. Where
the offeree gives consideration to keep the offer open for a period, there is a separate binding
contract known as option offer and revocation within that period will be breach of a contract.

3. Lapse of an offer
an offer may lapse and thus become incapable of acceptance by the following;

a. By the passage of time;

An offer will lapse through the passage of time under the following circumstances:
i. Where acceptance is not made within the period made by the offeror;
ii. Where no time period is prescribed and acceptance is not made within a reasonable time.
What is reasonable time will depend on the circumstances. (Rams gate Victoria Hotel v
Montefiore)
b. By the death of either of the parties;
The death of the offeror or the offeree may cause the offer to lapse. In relation to the death of
the offeror, it appears that, if the offeree knows that the offeror has died, the offer will lapse; if
the offeree is unaware of the offeror’s death, it will probably not lapse the offer. The leading
case is (Bradbury v Morgan).
C. By non-fulfillment of a condition precedent;
Where the offeror makes his offer subject to the fulfillment of a condition, failure on the part of
the offeree to fulfill the condition will prevent acceptance from taking place. The leading case is
Financing Ltd v Stimson’s.
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Article Reference:
- “A Promising Idea: Reconceptualizing the Formation of Unilateral Contracts” by Oxford
University Undergraduate Law Journal.
ACCEPTANCE:
An acceptance is the final and unqualified expression of assent to the terms proposed by the offeror
(HYDE V WRENCH). This is sometime called the mirror image rule, as there need to be a mirror image
acceptance of the offer (ARCADIC CONSULTING LTD V AMEC LTD). In other word an acceptance must
exactly match all the terms offer. The original offer should be accepted as it is, without presenting any
counter offers.

There is no rule that acceptance must be made by words it might be held by conduct leading case is
(Reveille Independent LLC v Anotech International (UK) Ltd [2016] EWCA Civ 443). Here, the claimant and
the defendant had been dealing for some years with no written contract. The defendant drew up a draft
contract and the claimant made some minors amendments. Later, the defendant file the document but
did not communicate his acceptance. They continued to work but a dispute arose and it was questioned
whether the written agreement was valid. The court held that the contract was valid as the acceptance
took place by performing the contract without any objection as to the terms. Moreover, in (Intense
investment ltd v development venture ltd and another), the action of transferring the money was
deemed to be a sufficient conduct in order to constitute as acceptance.

Conduct will only amount to an acceptance if it is clear that the offeree did the act in question with the
intention, objectively assets, accepting the offer (De Moris associate v Voyce), Although, in (Tayler v
Allen) parker j held that an offer can be accepted by conduct but not when the conduct is not clear
regarding both the intention for such an agreement.

Where an offer is made to a particular person or group of people no valid acceptance may be made by a
person who is not an offeree (Boulton v Johne).

*Acceptance must be communicated;

The general rule is that acceptance must be communicated to the offeror. Acceptance applies the
moment it is actually brought to the attention of the offeror and thus it will be deemed to have been
communicated. Where the offer merely intended to accept, but did not communicate his intention to
the offeror, there is no contract, i.e., “mere/only mental assent is not sufficient” (Entores v Miles far east
corporation)

***Acceptance by silence; -PRINCIPAL

The general rule is that acceptance of an offer will not be implied on mere silence on the part of the
offeree as held by Wills J and Ketting J (Felthous v Bindly). An offeror cannot arbitrarily impose
contractual liability upon an offeree by merely proclaiming that silence shall be deemed as consent.
More specifically, an offer cannot be accepted by remaining silence, however, in 1972 academic Miller
had Felthous as the waiver of communication had been agreed by both uncle and nephew. This rule is
strictly followed to avoid unwanted contractual arrangement and protect the offeree. It also protects the
offeror as mental assent to offer does not amount to an acceptance unless communicated. That would
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also have given the offeree the best of both worlds as through acceptance by silent, the offeree could
argue that he had accepted the contract if it had been a good one and in case of a bad of contract, the
offeree could claim that he had not accepted.

Contrastingly in (Rust v abbey life,) the claimant applied for a bond and upon asking for the bond to be
refunded, it was stated that there had been no contract. Brandon LJ held that there was an acceptance
by the parties conduct despite acceptance not being expressly done through words. Similarly in the
Hannah Blumenthal case, it was accepted that silence could be effective to rule out arbitration in a
contract. Bingham J opined in (Cie Franchise v Deutch Continental) that the requirement of acceptance
should be communicated to the offeror can be avoided if requirement of communication is expressly or
impliedly waived.

Alan Barron in his journal article titled, “acceptance by silence an insurance contract” pointed out
another exception in relation to renewal of indemnity insurance polyhierarchical Reference:

- “Silence: efficacy in contract formation – a comparative review of French and English law” by Parviz
Ossia’s.

Third party communication of acceptance;

It is possible for a contract to come into existence when a person other than the offeree informs the
offeror of acceptance. In other words where a third party informs the offeror of the facts of acceptance.
However, no contract will arise if the communication is made by a third party, without the authority of
the offeree, in circumstances indicating that the offerees decision to accept was not yet regarded by him
as irrevocable (Dickinson v Dodds; Powell v lee). The third party must be a reliable source of information.

#Exceptions of the general rule of communication of acceptance;

There are three 3 exceptions of general rule:

1.Unilateral contract (Carlill v carbolic smoke ball company)

2.Postal rule (Adams v Lindsell)

3.Offerors fault (Entores v Miles Far East Corporation)

Unilateral contract
The communication of acceptance is waived in a certain number of situations. The clearest example of
this is in relation to unilateral offers, where the need for communication is waived or implied by conduct.
the leading case is (Carlill v Carbolic) a similar situation would apply in reward cases where a reward is
offered in return for lost property. All those who searched for the item in question need not inform to
offeror of their intention to accept the offer; the acceptance is complete when the finder returns the
item to the offeror (Upon full completion of the requested act). It is stated in (Dualia v Four Milbank
Nominees) that acceptance of unilateral offers requires complete performance. Goff LJ held in Dualia the
offeror may revoke at any time up to the point the act has been fully performed, subject to the
qualification that one’s performance has commenced the offeror is under an implied obligation not to
prevent that performance.
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Postal rule
The postal rule was set down in (Addams v Lindsell) and can be seen as per

Who is authorized to receive letter. It is not properly posted by putting it into the hand of a postman who
is only authorized to deliver letters (Re London and northern bank ex prate jones), however, not that the
postal rule applies only to the letters of acceptance not to letters revoking an offer.

The postal rule places a greater burden on the offeror then the offeree. The postal rule applies even
where the acceptance is delayed or lost in the post (Household fire insurance v Grant) but it must be
reasonable for the offeree to use post as a means of communication (Henthorn v Frasor). In Henthorn,
lord Herchell remarked, “Where the circumstances are such that it must have been within the
contemplation of the parties that according to the ordinary usages of mankind, the post might be used
as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is
posted “. In Household, it was held that a contract was made at the moment the latter of allotment
(Acceptance) was posted. The offeror does not need to know to the letter been posted, whenever the
offeree posts the latter of acceptance has the offer has been accepted. even if the latter get lost or the
offeror does not receive it on time or does not receive it at all, the acceptance will not be hampered.
This has further developed in (Brownlie v four seasons) by lord Sumption who clarify that in case the
latter never arrives, the risks lie with the offeror.

Postal acceptance will not be reasonable in the following four circumstances

i. Where the offeror expressly or by implication requests a speedy response (Quenerduanie v

Cole).

ii. Where the offeror has made it clear that acceptance must actually be notified to him. For
example, if he states 'by notice in writing' or 'let me know'(Holwell Securities Ltd v Hughes). Besides,
Bramwell LJ stated in Household fire insurance v Grant that postal rule can be avoided by stating "your
answer by post is only to bond if it reaches me".

iii. Where it would lead to manifest inconvenience and absurdity. It is when the offeree gets the
offer in the fastest way but chooses to reply in the slowest method (Holwell Securities Ltd v Hughes).

iv. Where the letter is lost because it has been incorrectly addressed(misaddressed); (Getreide-
Import Gesellschaft v Contima), the postal rule does not apply. If the postal rule does not apply,
acceptance will be effective when the letter of acceptance is received by the offeror (actual notification).

The Singaporean case of Chwee Kin Keong v Digilandmall.com Pte Ltd held that, it would be sensible to
avoid the postal rule and require a receipt.

The postal rule applies to not instantaneous modes of communication and was applied for acceptance by
telegram. In Cowan v O'Connor, acceptance took place when the telegram was posted at the post office.
This decision is based on the assumption that a sending of a telegram is analogous to the mailing of a
letter. (Article Reference: - “Offer and Acceptance Appraised-The Postal Rule” by Sanel Susak. - “The
Postal Acceptance Rule in the Digital Age” by Dr. Marwan Al Ibrahim).

digilandmall.com
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The offerors fault

In exceptional cases the conduct of the offeror may be taken into account and the offeror may be
precluded from denying that he received no acceptance if it is his own fault that he did not receive it. If,
for instance, “A telex acceptance is sent during office hours but is simply not read by anyone at the
offerors office when it is transmitted on his office”. (The Brimnes), or, “if the ink in the teleprompter fails
on the receiving end but the clerk does not ask for the message to be repeated, the offeror may be
deemed to have received the communication of the acceptance in question”.

Prescribe method of acceptance

Where the offeror prescribes a specific method of acceptance the general rule is that the offeror is not
bound unless the terms of his offer are complied with.

The offeror may lay down a particular method of communication he desires but to achieve this, he must
use clear words (Holwell security v Huges), where the offeror has sufficiently used clear words, a court
will hold the offeror bound by an acceptance which is made in a form which is no less advantageous to
him then the form which he prescribed (Manchester diocesan council for education v commercial and
general investment LTD)

In (Tinn v Hoffman) the view appears to has been taken that even if the offeror has prescribed a
particular method of acceptance, an acceptance by any method equally expeditious would constitute a
valid acceptance.

Can go a fastest method not slower.

A better or faster method can be used but a worse, lesser for slower one cannot be used. For example,
the offer or has said to call but an email can be sent. In (Yates v), the defendant had offered the claimant
that land could be bought to notice to be writing sent by registered or recorded delivery post. The
claimant sent a letter acceptance this offer by ordinary post but defendant refuse to accept it as valid. It
was held to be valid method of acceptance and was not disadvantageous as the method stipulated was
only to ensure delivery.

Communication by instantaneous method

Where an acceptance is made by an instantaneous mode, actual communication is required and the
postal rule does not apply. Acceptance communicated by telex is effective at the moment it is received
by the offeror (Entores v miles Far East corporation), this result was confirmed in1982 by the HL in
(Birnkibon v Stahag Stahl) in (Mondial shipping BV v Astatrte shipping) it was held that communicated by
telex outside the office hour was ineffective at the time until when the office re-opens in the next
business hours. It would be very lightly that the same rule applies to communication by facts. The court
confirmed this rule in the most recent case of (JSC Zestafoni Nikoladze v Ronly Holdings Ltd), which dealt
with acceptance by

Lord Wilberforce in Brinkibon, stated that there was no universal rule to cover all such cases. They must
be resolved by reference to the intention of the parties, by sound business practice and in some cases,
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by a judgment where risk would lie. In (Entores) lord Stanning stated that in the cases of telephone the
acceptance is communicated when……….

This lordship further stated “the rules about instantaneous communication between parties is different
from the rule about post”. Lord Fraizer confirmed this and stated in Bringkibon that responsibility it was
on the person who receives the message if they choose not to their machines. The offeree must ensure
that his acceptance is clearly understood by the offeror. There is no direct authority in English law on the
use of telephone answering machines. However, it appears from (Entores and Brinkibon) that there is no
binding acceptance until there is actual communication. In the case of electronic mail, it is thought that
the telex analogy is more appropriate. The offeree will not be liable if the offeror doesn’t receive the
acceptance via and an instantaneous method. Also is (Thomas v BPE solicitors), it was stated that it is not
clear as to whether email acceptance is effective when it arises or at the time when the offeror could
reasonably have been expected to read it, it was suggested acceptance will be communicated when the
offeror receives and read the email. Article Reference:

- “Electronic mail and the postal rule” by Deveral Capps.

- “Forming electronic contracts in the United Kingdom” by Simon Jones.

- “E-confidence: offer and acceptance in online contracting” by Faye Wang.

Revocation/Withdrawal of acceptance

In general, an acceptance cannot be withdrawn but there is a suggested possibility that withdrawal of an
acceptance can be made by using a quicker method before the acceptance reaches the offeror (For
contrasting view see the Scottish of (Countries of Dunmore v Alex gender ); the south African case of (A
to Z bazars v ministry of agricultural); (Wenkhein v Arndit) if the offeree sent the letter of acceptance by
the postal method and later he calls up and says he wants to revoke or withdraw his acceptance, it is
possible or acceptable in the eyes of law.

Unilateral Contract
Revocation in unilateral contract:

In case of a unilateral contract, the offeror cannot revoke his offer once performance by the offeree has
begun as held by LJ Denning and LJ Somervell.

In (Errington vs Errington and Woods), in this case, the court of appeal held that a fathers’ promise was a
unilateral offer which could not be revoked once the couple had embarked upon performance, provided
that they did not leave performance incomplete and unperformed.

***However, in (Luxor vs Cooper) the HOL refused to imply an obligation on the offeror that he should
not prevent the offeree from completing the performance. And thus, high consideration will be required
from the offeree which gives the offeror a right to revoke the unilateral offer. Here, the owner could
revoke his promise at any time before the sale was completed as the amount promised was more than
the consideration provided, even after the estate agent had made an extensive effort to find a buyer.
Although, this case was in contrary with the UKHL’s decision in (French and Company vs Leeston Shipping
Company), where the agent had been favored.
CONTRACT LAW

*Revocation in unilateral contract must be communicated via the same medium by which the offer was
communicated by giving it similar prominence American case of (Shuey vs USA).

*In unilateral cases can acceptance be made in ignorance of the offer?

The general rule is that performance of the requested act does not amount to an acceptance unless the
party performing the act did so with knowledge of the existence of an offer.

It is sufficient that the offeree knows about the offer at the moment before the act of
performance/acceptance is complete (Gibbons v Proctor). Offers cannot be accepted in complete
ignorance.

Even if the offeree knows about the offer at an earlier time but it was not present in his mind at the time
of performance/information was given, no reward can be claimed as per the Australian case of (R v
Clarke).

At last, in case of a unilateral contract where full performance is required by the offeree to be accepted
by the offeror, the court will imply an obligation on the part of the offeror not to prevent completion of
performance which obligation arises as soon as the offeree starts to perform (Errington as confirmed by
Dualia v Four Millbank Nominees). In Dualia Goff LJ stated obiter, “the offeror is entitled to require full
performance of the condition which he has imposed…. there must be an implied obligation on part of
the offeror not to prevent the condition becoming satisfied, which obligation it seems to me must arise
as soon as the offeree starts to perform. Until then the offeror can revoke the whole thing, but once the
offeree has embarked on performance it is too late for the offeror to revoke his offer”.

The offeror any revoke the offer mid performance if it was expressly stated at the time of making the
offer that the offeror reserves the right to revoke the offer at any given time (Great Northern Railway
Company v Witham).

Article Reference:

- “Acceptance of Offers for Unilateral Contracts by Partial Performance of Service Requested” by Henry
W. Ballantine.

- “Some Problems of Revocation and Termination of Offers: Necessity of Communication-Time of

Revocation-Death” by W. J. Wagner.

The principle of battle of forms

It is at times difficult to determine which of the party’s terms govern the contract and such a situation is
known as “The battle of forms”. This takes place when both the parties want to use their own standard
terms and conditions to regulate the contract. For instance, in (British road services v Arthur Critchley),
while delivering a consignment whisky bottle to the defendant, a delivery note purporting to incorporate
the claimants “condition of carriage” was handed and stamped by the defendant who in turn, route
received under the defendant’s condition on the receipt. Here the applied “last shot rule” which referred
to the final document exchange between the parties after multiple counters offers that governs the
terms of the contract. In doing so, the court held that defendants’ words on the receipt was a counter
CONTRACT LAW

offer which was accepted when the claimant proceeded with the delivery of the whisky. Thus, the
contract incorporated the defendant’s terms and conditions.

Likewise, in (Butler machine tools v Ex cell O Corporation), the seller’s standard form allowed them to
increase the price to that prevailing at the date of delivery and also included that their terms will prevail
over any terms and conditions of the buyer. The buyers accepted the offer on their own standard order
form which had no price variation clause while the seller signed and returned the slip to the buyers.

Subsequently the seller had tried to invoke the price variation clause but the buyers argued that the
contract is governed by their terms. The EWCA found for the buyers. Using the traditional principles of
offers and counter offer, Lawton LJ and Bride LJ stated that the buyers reply was a counter offer that was
expressly accepted by the sellers when they signed and returned the acknowledgement. A similar
instance was seen in (GHSP Incorporated v AB Electronics Ltd).

Question and Answer Demo

Introductory part:

The issues identified in this scenario are if there is intention to create legal relationship (ITCLR), given
that Bella and Adell are sisters. If Bella’s statement about selling her car to Adel constituted an offeror if
it was merely an Invitation to Treat need further clarification. If Adel’s offer was accepted and then Adel
CONTRACT LAW

will be in breach of contract if she refuses to deliver the car. This scenario also raises the issues of
counter offer and the rule of acceptance by silence.

Firstly, it is worth considering if there is an ITT in reference to Bella’s statement about selling her car to
Adel “on a business basis” given that their sisters.

The general rule as established in the court is that social and domestic arrangements between family
members are intended to be legally binding as seen in the case of Balfour v Balfour. Where it was held in
the court of appeal that the agreement between a husband and wife was not an enforceable contract,
because it was a social and domestic arrangement. However, this presumption can be rebutted if there
was clear evidence that the agreement was intended to create legal relations between the parties
involved as seen in the case of merit v Meritt, where the court of appeal held that the written agreement
between the husband and wife was intended to create legal relations and a presumption against such an
intention does not apply, since the husband had left the wife. Looking at the facts in this scenario and
the application of the case stated above, it will be reasonable to suggest that, Bella saying she wants to
sell the car to Adel “on a business basis”, demonstrates that, Bella’s intention was to create legal relation
with Adel which would have been legally binding.

The question is if Bella made an offer or an Invitation to treat (ITT). An offer is the expression of
willingness to enter into a legally binding contract on certain terms and conditions which must be
accepted by the person to whom it is addressed (Storrer v MCC); (RTS Flexible System v Molkery Aloys
Mollar). For there to be an offer the statement must be clear and certain, communicated and must show
an intention to create legal relation. It must not include any further discussions/negotiations and if it
does, it is not an offer but an ITT. An ITT is an expression of willingness to make an offer or to start a
negotiation which may lead to a binding contract as seen in the case of Gibson v MCC.

Looking at the fact and applying the case stated above, Bella saying she wants about “about 1 lakh
pound’ constitutes an ITT and not an offer. As using the word ‘about’ is veg and uncertain and it presents
an opportunity for further negotiations ……...Adel becomes the person actually making an offer which
would have led to a legally binding contract, if Bella accepted the offer. Bella responded to Adel’s email
on 3rd February saying, she won’t sell the car for 1 Lakh pound and she wants 125 thousand pounds. For
an acceptance to be valid, it must be a mirror image of an offer and should not include further
terms/negotiations as seen in case of Hide v Range. When Bella wants 25 thousand pounds, she is not
accepting the offer rather she is making a counter offer toward Adel. A counter offer…………and a fresh
new offer is made (Hide).

Another issue identified in this scenario is Bella’s request that Adel should not respond to her email
unless she does not want the car at the cotted price of 125 thousand pounds.

The general r ule is that acceptance is not effective until it is communicated to the offeror and that
silence will not amount to an acceptance. There is also the rule that the offeror cannot impose a
contractual obligation to accept an offer. This is seen in the leading case of Felthous v Bindley, where it
was held that an uncle had no right to impose the sale of his horse on his nephew where the nephew did
not accept the offer and that silence did not amount to acceptance. So, there was no binding contract.

Looking at the facts in this scenario it will be reasonable to suggest that Bella’s statement “to avoid any
further misunderstanding, don’t email unless you don’t want the car at this price”, demonstrates that
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Bella was imposing the sale of her car on Adel and her request for silence would not amount to a valid
acceptance, therefore, there is no binding contract between the sisters.

It is clear that Adel was unaware of the terms of the counter offer made by ……. because she did not
email further; hence, she did not accept or reject the offer which she should have clearly communicated
to Bella since her conduct clearly shows that she was an going to accept the counter offer. However, Adel
can demonstrate that there was no ITCLR between themselves as the general rule states that
arrangements between family members are not intended to be legally binding (Balfour). Adel can also
demonstrate that Bella’s request for silence of the acceptance of Bell’s offer does not constitute a valid
acceptance and Bella can’t impose the sale of the car on her. Hence is not legally bound to pay for the
car (Felthous v Bindley).

For a contract to be valid, there must be an offer and acceptance by both parties. Bella made a counter
offer which require an acceptance and she requested a silent acceptance from Adel which make Bella
bound by the term of selling the car. Alternatively, Adel’s silence in this scenario may constitute an
acceptance according to the case of (Rust v Abey Life Assurance company), an exceptional case where
the court of appeal held that the failure by the proposed insure to reject the insurance policy offer to her
for seven months was enough to justify a presumption that she had accepted the policy, so a binding
contract had been concluded.

To conclude, it may be reasonable to suggest that a binding contract has been concluded between the
sisters hence Bella is legally bound to deliver the car to Adel.

CONSIDERATION
Consideration is an essential ingredient of enforceability in an agreement. The classic 90th century
definition of consideration as per Lush J, found in the case of (Currie v Misa), is that, a valuable
consideration, “any consist either in some right, interest, profit or benefit accruing to one party, or some
forbearance, determent, loss or responsibility given, suffered, or undertaken be other”.

A more consist definition has been given by pollock, namely that, “An act or forbearance of one party, or
the promise thereof, is the price for which the promise of the other is Brought, and the promise thus
given for value is enforceable”. Pollock definition was adopted by the HL in (Dunlop v Selfridge), the
leading modern case of consideration.

Executory and Executed consideration

Executory consideration is where contracting parties make promises to each other to perform something
in the near future after the contract has been formed. The classic example is a contract for the sale of
goods where the seller promises to deliver the goods in the future, and the buyer promises to pay for
them either on delivery or by some other credit arrangement. At the time of the agreement, neither side
has done anything towards the performance of the promises made but the agreement still has
contractual force, and a party who fails to carry out his promise can be sued. A bilateral contract usually
involves executory consideration.
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Executed consideration is where, at the time of the formation of the contract, the consideration been
performed. The classic example is a unilateral contract where a promise of the reward has been made
and the price paid in exchange for that promise is the performance for the act stipulated in the offer
(Carlill v Carbolic smoke ball company). The required act is both the acceptance of the offer and the
executed consideration.

Rules governing consideration

a. Consideration must not be past;

It is not generally possible to use as consideration some act or forbearance which has taken place
prior to the promise to pay. According to pro. Traitle, only consideration which is given at time of
promise or after the time of the promise for which it is given will be enforceable. Consideration must
be given in return for the promise of the other party. If one party has completed performance before
the other promise payment, then it is unlikely that the earlier act was done in return for the promise
of payment and the promise will only be regarded as an expression of gratitude or gift but nothing
more. The rule has been supported on the basic that it prevents unscrupulous people to forcing into
contract foe something not agreed by them. The general rule is that consideration cannot be past is
well illustrated by the cases of (Eastwood v Kenyon; Roscorla v Thomas; Re McArdle). In Re McCardle
the claimant had made some repairs to the property and after the work had been done, a document
has signed by her husband’s siblings to pay her for the repairs which they latter refuse to do. The
court took into account the actual sequence of the events and held that her consideration for their
promise has passed as it came before they signed the agreement to repay her.

Similarly, another example showing how harsh this rule can be was seen in (Eastwood v Kenyon),
where the girl was left in the care of Eastwood who borrowed money to help with the girls
upholding. After the girl’s marriage, her husband, Kenyon, promised to pay Eastwood for having up
the girl but he failed to do. It was held that the consideration provided by Eastwood was not a good
consideration and it was in the past and so, Kenyon must have been obligation but not a legal one.

Further, in (Roscorla v Thomas), after a purchasing a horse, the defendant told the claimant that the
horse was “sound” and “free from vice”.

The horse turned out to be unsound and claimant sued for breach of warranty. But the court held
that it was unenforceable as the promise was not a part of the sale but was made after words.
Denman CJ explained this position, “in the present case, the only promise that would result from the
consideration, as stated, and be coextensive with it, would be to deliver the horse upon request”.

Article References:

- “Rationale of Past Consideration and Moral Consideration” by Hugh Evander Willis.

- “Origins of the doctrine of consideration” by J. Baker.

In 1937, the Law Revision Committee in their 6th interim report on ‘The Statute of Frauds and the
Doctrine of Consideration’ had recommended the abolition of the past consideration rule although,
it was rejected.
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An exception to the past consideration rule exists where some prior act or service was provided by
the promisee at the promisor’s request and it was always understood that payment would be made
for that for that service. Even if the act or service is carried out without any mention as to the
payment or the promise to pay comes after the service is performed, it will be enforced by the
courts. This exception is referred to as the doctrine of implied assupsit (Promised), and can be traced
back to the case of (Lampleigh v Braithwait), where had asked to the claimant to get him king’s
pardon for killing a man which the claimant did and so, the defendant promised to pay him which in-
fact, he never did. It was held that the claimants act was good consideration as it was a result of the
defendant request and there existed an implied understanding that payment would be made at the
time of request.

However, the requirements were recognized by Lord Scarman in the privy council’s decision in (Pao
on v Lau Yiu Long), according to which three condition must be satisfied for the exception to apply:

1. The act must have been done at the promisor’s request (Lampleigh v Braithwait);
2. The parties must have understood that the act was to be rewarded either by a payment or the
conferment of some other benefits (Re Casey’s parents) (Objective test will determine) (Mutual
understanding)
3. The payment or conferment of other benefit must have been legally enforceable had it been
promised in advanced.

if these 3 requirements are satisfied, then the exception of the rule of past consideration will be
established. Note that the 2nd requirement is deemed to the most difficult to prove and requires
objective evaluation. His lordship had also stated, “an act done before the giving of a promise to
make a payment or to confer some other benefit can sometime be consideration for the promise”.

Article Reference:

- Yihan GOH and Man YIP in “Past Consideration or Unconnected Consideration” opined that a norm
has developed as courts are willing to find such requests to apply the exception.

b. Consideration must move from the promisee

The rule that consideration must move from the promisee effectively means that a party who has
not provided consideration may not bring an action to enforce the contract. Pro. Treitel stressed that
this rule Is related to, but must be distinguished from, the doctrine of privity of contract (Third party
rights), which states that only a person who is party to the contract may sue or be sued on that
contract.

In (Dunlop v Selfridge), lord Haldane said that the two principals were fundamental. Often the
separate rules are stated within the same case, one judge relying on the consideration rule, another
one on the doctrine of privity. This is evident in the old case of (Price v Easton), which illustrate the
principle that “consideration must move from the promisee” as acknowledge by Lord Denman, who
didn’t find consideration as the claimant could not “show any consideration for the promise moving
from him to the defendant”. However, Littledale J had decided the same but on the basis of privity of
contract which was absent.
CONTRACT LAW

The case of (Tweddle v Atkinson), illustrates the rule that consideration must move from the
promisee. The case concerned an agreement reached between two fathers of a couple who were
about to get married, under which the father of the bridge was to pay 200 pound and the father of
the groom 100 pound to the bridge groom. William Tweddle the plaintiff. The groom sort to enforce
his father in laws promise, but Wightman, Crompton and Blackburn j held that the groom could not
as he had not provided any consideration for the promise. The claim was also argued to fail due to
the groom not been a privy to the contract.

It was also seen in the case of (Bolton v Madden) that the promisee can provide consideration by
conferring a benefit on a third at the request of the promisor. Thus, consideration need not move to
the promisor.

However, an exception lies in relation to collateral contracts. For instance, in (Shanklin Pier Ltd v
Detel products Ltd), the claimant had hired painters to paint the pier using the paint sold by the
defendant, who assured it will not peel. The paint turned out to be defective and the claimant was
successfully able to bring an action against the defendant despite of not having a contract between
them.

Article References:

- “Consideration and the Joint Promisee” by Brian Coote.

- “Consideration. Validity of Consideration. Consideration Moving to Promisor from Third Person” by

Harvard Law Revie.

c. Consideration need not be adequate but must be sufficient

According to the doctrine of freedom of contract, the courts will not interfere with a bargain freely
reached by the parties. It is not the courts duty to assess the relative value of each party’s
contribution to the bargain. Once it is stablished that a bargain was freely reached, it will be
presumed that each party stipulated according to his wishes and intention at the time. As
commented by Traitle, the courts are not interested in whether there has been a good or bad
bargain made but only that a bargain exists and they will seek to enforce the bargain that is actually
agreed by the parties. It is deemed that adequacy will be decided by the parties themselves as
stated by Atiyah in “contract and fair exchange”. There is no reason, for example, why a party shan’t
be bound by a promise to sell a new rolls Royce car for 1 penny. If the agreement is freely reached,
the inadequacy of the price is immaterial to the existence of a binding contract (Chappel v Nestle
and company).

The House of Lords held, in this case, that the chocolate wrappers were part of the consideration
even though they were of no further value once received by the company. Lord Somervell stated
that the chocolate wrappers are, in his view, in law, part of the consideration. It is said that when the
wrappers were received by Nestle Company they were of no value. “This, I would have thought
irrelevant. A contracting party can stipulate for what consideration he chooses. As the whole object
of selling the record (gramophone record) was to increase the sales of chocolate, it seems to me
wrong not to treat the stipulated evidence of such sales as part of the consideration.”
CONTRACT LAW

Further, Lord Thomas had clearly stated that, “consideration must be something which is of value in
the eye of law”. Although Atiah argued that this doesn’t fall under “Benefit/ detriment analysis of
consideration”. This was counter argued by Pro. Traitle who stated, “consideration must have some
economic value”. The rule was again reaffirmed in (Midland v Green).

In the case of (Thomas v Thomas), before the husband died, he wished his wife to inherit the house
and so, the executors of the property will agreed that the wife could remain in the house with a
nominal ground rent of 1 pound per year. The executors’ action to dispossess the wife failed as the
payment of the ground rent, however small and inadequate, was still held to be consideration as
explained by Patterson J. Therefore, it was held to be valid consideration.

Consideration must be sufficient

Consideration must have some value in the eyes of the law, it matters not how small the value is so
long as it is worth something if a value of thing is identified then there will be sufficiency of
consideration and, as seen above, the court will not inquire as to its adequacy. Sufficiency has been
interpreted as mean that a promise must be real, tangible and have some actual value but natural
affection and care doesn’t amount to sufficient consideration.

In the case of (White v Bluett), a father promised to discharge his son from the obligation to repay
money he had borrowed if the son refrained from complaining about the father’s distribution of his
property among his children. His father’s executors sued the son for the money. It was held that
there was no consideration from the son for his father’s promise. The father had every legal right to
distribute his property as he choose and his son had no legal right to complain about the
distribution. The son was, therefore, giving nothing up by forbearing to complain and so, no
consideration could be found in the absence of an economic value as explained by Pollock. Although
the court didn’t define what economic value meant here. This decision cane be contrasted with
Chappel and raises question regarding the economic value of the wrappers.

Contrast (White v Bluett) with the American case of (Hamer v Sidway). In this case, an uncle promise
d his nephew 5 thousand pounds if the nephew were to refrain from “drinking liquor, using tobacco,
playing cards and gambling for money until he becomes 21 years of age”. The nephew complied with
the request but the defendant, the uncle’s executors refuses to make the payment. It was held that
the promise was enforceable because the nephew had provided consideration by restricting his
lawful freedom of action and there was no information as to how arduous that would have been for
him. This rule is also supported by the case of (Pitt v PHH Asset Management), which states that
forbearance to sue can amount to sufficient consideration.

Here again Atiyah criticized that the benefit detriment analysis did not fit.

For a long time, it was thought that consideration should have some economic value, but in (Ward v
Byham), the principle was extended to consideration other than economic value. Here, the
defendant promised to pay maintenance subject to their child being well looked after and happy. It
was held that the mother had provided sufficient consideration by ensuring the child was well
looked after and happy. In (Edmonds v Lawson), it was held that a pupil barrister had provided
sufficient consideration under a contract of apprenticeship through which the chamber had obtained
benefits.
CONTRACT LAW

Article Reference: - “The Gift beyond the Grave: Revisiting the Question of Consideration” by Roy
Kreitner.

When will an existing obligation be a good consideration

We will consider pre-existing obligations, which may arise out of a contract between the same
parties, under the public law or duty or out of a contract with a third party, an determine in what
circumstances an existing obligation will be deemed to be good consideration.

**Existing obligation under a contractual duty;

The question is whether the party claiming to have given consideration has done anything more that
he was bound to do under a previous contract with the other party. If not, there is no consideration
to enforce the further promise of the other contracting party (Stilk v Myric).

In this case, the captain of a ship promised his crew that, if they share the work of two seamen who
had deserted the ship between them, the wages of the deserters would be shared out between
them. It was held that the promise was not binding because the seamen gave no consideration; they
were already contractually bound to do any extra work to complete the voyage. Lord Ellenborough
remarked, “there was no consideration for the ulterior pay promised to be mariners who remained
with the ship.

The application of the rule in these circumstances, may seem rather harsh but if a promise of this
nature had been delayered enforceable, it might have encouraged unscrupulous screw members to
blackmail the shipmaster into agreed to make extra payments when the ship was in foreign waters as
explained by lord Kenyon. From this perspective, the court could justify its refusal to enforce the
agreement two ways, one direct and the other less direct. Putting the reason directly, the court
could simply say that agreement of this kind are contrary to public policy; less directly, the court
could say that the agreement failed for want of consideration. Indeed, in the reports of (Stilk v
Myric), there are issues of both the direct (public policy) and the indirect (lack of consideration)
justification that said, the accepted view is that the decision of (Stilk v Myric) turned on the want of
consideration.

With the modern development of the doctrine of economic duress, it is now possible for the courts
to dismiss claims for additional payment (Stilk v Myrick), either by holding that there is no
consideration or by treating the promise to pay as voidable because it was obtained by economic
duress.

In contrast to (Stilk v Myric), in exceptional case of (Hartly v Ponsonby), where many crew members
deserted and left the ship depleted the captain promised the remaining crew members 40 pound
extra pay if they would complete the voyage. It was held that the promise was binding. It was
dangerous to put to sea a ship so undermanned. The seaman were not obliged to do this under their
contract of service and were, therefore, free to enter into a contract, which would include the extra
CONTRACT LAW

remuneration for the remaining part of the voyage. The key to (Hartly v Ponsonby) is that the
desertion was on such a scale that the context in which the seaman were employed was (Through no
fault of the remaining seaman) radically different to that envisaged in the original agreement.
Putting this in terms of the classical requirement of consideration, the seaman in (Hartly v Ponsonby)
gave added value (Over and above their original contractual obligations) when they agreed to
complete the voyage. Lord Campbell CJ cited the case of (Harris v Weston) and stated that a ship’s
crew is expected to complete the journey in the event of an emergency but here, there had been no
such emergency.

The general principle contained in (Stilk V Myrick) and the exception noted in (Hartly v Ponsonby)
were approved in (North Ocean Shipping v Hyundai) (the Atlantic Barron). However, a more
remarkable development can be discerned from the case of (Willims v Roffey Brothers and Nicholes
contractors). A significant exception to the basic rule occurs when the party making a promise to pay
extra is said to receive an extra benefit from the other party’s agreement to complete what he was
already bound to do under the existing arrangement.

In this case, it was held that, as a result of Roffey Brothers’ promise to pay extra money, Roffey
obtained certain practical benefits: he avoided losing money under the penalty clause in the contract
with the main contractor, and the cost and inconvenience of finding an alternative contractor, and
also had benefited from the altered working arrangements. Consequently, in the absence of
economic duress, there was consideration for the Roffey’s promise to pay additional money and,
therefore, the promise to do so was binding.

Glidewell LJ summarized the position and established five requirements for the doctrine of practical
benefit to be applicable: Common law Exception

1. A has entered into a contract with B to do work for supply of goods or services;

2. At some stage, before A has completely performed his obligations under the contract, B has a
reason to doubt whether A will or will be able to complete his side of the performance;

3. B thereupon promises A an additional payment in return for A’s promise to perform his
contractual obligations on time;

4. As a result of giving his promise, B obtains a practical benefit or obviates a disbenefit; and

5. B’s promise is not given as a result of economic duress or fraud on the part of A.

The case of (Willims v Roffey Brothers) seems to be a special case which is limited to a business
contract where one party freely agrees to increase the agreed price so that the performance is
viable. In line with this view, the decision and the force it has as a precedent is subject to major
limits. Firstly, the case have no application outside the context of renegotiation (so it has no impact
on the general requirement of consideration) Secondly, in the context of renegotiation, it applies
only to a promise to increase the agreed price. Accordingly, it has no application to cases where a
creditor agrees (even freely agrees) to accept a lesser sum in settlement of a debt. This case did not
overrule Stilk but refines its limitations.
CONTRACT LAW

Besides, Russel LJ had remarked that the court would take “a pragmatic approach to the true
relationship between the parties”. While, Lord Steyn in ‘Contract Law: Fulfilling the Reasonable
Expectations of Honest Men’ opined that " The courts have shown a readiness to hold that the
rigidity of the doctrine of consideration must yield to practical justice and the needs of modern
commerce".

Existing obligation under a public duty

A similar question could be asked as to whether the party claiming to have given consideration has
done any more than he was already obliged to do under public law. The principal in these
circumstances, is that merely carrying out a public duty imposed by the law will not amount to
sufficiency of consideration (Collins v Godefrey). In this case Collins was subpoenaed by Godfroy to
attend as a witness in an action. Collins subsequently brought an action against Godfroy, claiming a
fee for his attendance. Assuming that Godfroy had expressly promised to pay the sum, claimed a s
compensation for loss of time, was there any consideration for the promise? It was held that there
was no consideration for the promise the duty to attend was a duty imposed by law. Lord Tenterden
remarked, “if it be a duty imposed by law upon a party regularly subpoenaed… then a promise to
give him any remuneration… is a promise without consideration.

A recent example is (Leeds United FC v Chief constable of west Yorkshire Police), where it had to be
considered whether the claimant should pay the police for policing the streets and carparks near the
football club ground. It was held to be the polices responsibility as it falls within normal policing
obligation to maintain public order and so, the claimant did not have to pay.

The issue of sufficiency of consideration has also arisen in respect of rewards claimed by police
officers, in giving information, are doing no more than their public duty? (England v Davidson)

(Exception)However, in the case of (Harris v Sheffield United FC), it was stated that, to maintain law
and order a substantial police presence was required inside the defendant football ground and this
involve a significant amount of police overtime. According to the police, there attendance at the
request of the club amounted to “Special police services” for which, by states the defendant obliged
to pay. The club refused to pay as the police were merely carrying out their normal public duty to
ensure law and order. It was held that responsibility of the club was to take all reasonable steps to
ensure that the game took place in conditions that did not occasion danger to any person or
property. The attendance of the police was necessary to assist the club in thew fulfilment of this
duty, which went beyond the maintenance of law and order, and for which the club should pay.
similarly, In the case of (Glasbrook Bros v Glamorgan CC), during a strike, additional police officers
were required for which the defendant promised to pay but later refused. The court found for the
police officers as they went beyond their existing public duty by providing additional officers.
Although L Carson and L Blanseburgh dissented as they were of the opinion that the police officers
had performed within their public duty to prevent any danger and nothing more.

The desire of the court to find sufficiency of consideration in some circumstances starches the limit
of the concept beyond realistic boundaries.
CONTRACT LAW

Also, in (Word v Byham), a mother had gone beyond her statutory duty by ensuring the child was
well looked after and happy which constituted to sufficient consideration. Thus, she was entitled to
the maintenance payment as promised by the defendant. Article References:

- “Leeds United 'owed £800,000' by West Yorkshire Police” by the BBC.

- “The cost of policing football matches: a decision in favour of clubs” by Squire Patton Boggs.

- “Promises to Perform an Existing Duty” by A. G. Davis.

- “Consideration in contract: Performance of an Existing Duty” by Inioluwa Olaposi.

Existing obligation owed to a third party

1. Where A has contracted to supply sum goods or services, X to B for an agreed price imagine the
flowing two scenarios: (a). B Agrees to pay additional sums to A for the supply of X; and

(b). C (Third party) agrees to pay additional sums to A for the supply of X to B

Does A provide consideration (by promising to supply X, or actually supplying X in return for (a) B’s
promise or (b)C’s promise?

As we have seen, the answer in scenario (a) is in the negative from (Stilk v Myrick) onwards, at any
rate, until (Willims V Roffey Brothers), the courts refused to accept that A provides good
consideration (by promising to supply X or actually supplying X) in return for co-contractor B’s
promise. However, as we will now see in scenario (b), where the promise is made by a third-party C,
the law takes a different view. Here it is settled that A (by promising to supply X or actually supplying
B), does provide good consideration, even though A is doing no more than supplying goods or
services as per the contract with B. quite how these squares with the classic benefit and detriment
analysis of consideration is moot. After all, A seems to incur no fresh detriment. Arguably, A’s claim
might be stronger if the arrangement with C is a unilateral contract rather than a second bilateral
contract, and it has been suggested by lord Wilberforce that A does incur fresh detriment because C
now has a claim for breach of contract if A fails to supply X to B (but this argument suffers from the
circularity that C only has such a claim if there is a contract with A which requires there to be
consideration, which is precisely the question at issue). At all events, the cases are unequivocal: A
provides consideration for C’s promise. Scotson v Pegg; New Zealand Shipping Company v AM
Satterthwaite & Co (a.k.a. the Eurymedon); Pao on v Lau Yiu Long.

In the case of The Eurymedon, Lord Wilberforce stated that,

“An agreement to do an act, which the promisor is under an existing obligation to a third party to do,
may quite well amount to a valid consideration and does so in the present case: the promisee
obtains the benefit of a direct obligation which he can enforce”.

This proposition is illustrated and supported by (Scotson v Pegg), which their Lordships consider
existing obligation owed to a third party is a good consideration in the eyes of law. here, the buyer of
CONTRACT LAW

some coal had paid the defendant to carry and unload it. The supplier of the coal, the claimant, also
paid the defendant to do the same and brought an action to recover the money as the defendant
was already under an existing duty to carry and unload the coal. It was held that an existing
contractual duty owed to a third party to the contract can amount to valid consideration for a new
promise. The defendant was entitled to get paid twice for doing the same thing and the claimant
could not recover the sum of money.

Besides, in (Shadwell v Shadwell), an uncle promise to pay his nephew a sum of money for a year
until the nephew incomes reached a certain amount, provided the nephew gets married. The
payments stopped when thew uncle died and the nephew sued his uncle estate for the remaining
payments. Erle CJ remarked that performance of the marriage contract was consideration, even
though the contract was made with a third party to the agreement (The uncle). His lordship
recognized that marriage could be a benefit to interested relatives, and so the uncle derived a
benefit from the marriage, therefore the marriage was a good consideration.

Part payment of a debt is not a good consideration

Where a debtor pays a lesser sum to his creditor than that which is due the debtor is not discharged
from his obligation to pay the balance. At common law, the debtor remains liable even where the
creditor has agreed to release him from further liability, for the creditors promise I not supported by any
consideration moving from the debtor. Simply paying a smaller sum than that owed will not be sufficient
consideration, since the debtor has done only what he was legally obliged to do under the debt contract.
This rule was articulated by sir Edward Coke in Pinnell’s case in 1602 and was later confirmed in the cases
of (Foakes v Beer) and (Re Selectmove). The factual benefit that might accrue to the creditor from
securing some payment rather than nothing at all is not regarded as sufficient and some separate
consideration is required, according to the UKHL decision from the case of (Foakes v Beer). Herer, the
claimant and the defendant had agreed that Foakes would pay in installment and Beer would not take
any action if the debt was paid by the agreed date. Beer demanded interest and sued when Foakes
refused to pay. Applying Pinnell’s case Foakes was liable to pay.

The question whether part payment of a debt may ever result to be a good consideration has part
intellectual debate. Commentators generally believe that the HL made a mistake when they concluded
that this could never be the case (“The Doctrine of Consideration and the Reform of the Law of Contract.
A Comparative Analysis” by Chloros)

The exception to the general rule of part payment of a debt

The rule, as stated above, is only applicable if the promise of the creditor to accept a lesser sum is
unsupported by fresh consideration from the promisee (the debtor). However, if, at the creditors
request, some new elements is introduced, such as payment at a different place at a different time, or a
different thing, compliance with this request will amount to consideration for the waiver this concept
CONTRACT LAW

was acknowledged in Pinnell’s case itself. In Pinnell’s case, the defendant owed some money to the
claimant who had sued for the recovery of the debt. At the request of the claimant, the defendant had
paid a lesser sum, a month before the debt was due to be paid and stated that they had an agreement
that this part payment would discharged the entire debt. Lord Coke held, “payment of a lesser some on
the day in satisfaction of a greater some can’t be any satisfaction of the whole… but the gift of a horse,
Hawk or robe etc. in satisfaction is good. For it shall be intended that aa Hawk, horse, or robe, etc. might
be more beneficial to the plaintiff than the money”. Thus, by paying some money early the defendant
had provided the claimant with a further benefit which was good consideration. However, Sullivan “In
Defence of Foakes v Beer” as it provided clear guidelines as to what constitute consideration.

Article reference: - “Consideration and Estoppel: the thawing of the ice” by Atiyah.

Connection of practical benefit with part payment of a debt:

The principle in (Willims v Roffey), gave rise to issues regarding part payment of a debt as
stablished in Pinnell’s case and (Foakes v Beer). In Re Selectmove, it was held that the principle
of Williams does not apply to part payment of debt. Although, in the case of (MWB Business
Exchange limited v Rock Adv Ltd), Arden LJ held that when an ongoing contract is varied so that
on party’s obligation to pay money is reduced, the variation is binding as long as the other party
receives a practical benefit. In MWB, the property owner was bound by an oral agreement to
accept a late payment and a revised schedule of further payments with the occupier who had
failed to make payments as per the original written agreement. Here, a practical benefit has
been received as some arrears were recovered and the flats would not be empty. Ming Ren Tin
in “Contractual variation: long live the doctrine of consideration?” referred to the recent
Singaporean case of Ma Hongjin v SCP Holdings where the doctrine of consideration for
variation for promises was supported to be retained and not abolished. Regarding MWB Paul S.
Davis in varying contracts stated that it was not completely satisfactory for the court to side step
(Foakes v Beer) and resort to practical benefit.
Article References:
- “Sailors, subcontractors and consideration” by Halson.
- “Contract, Consideration and the Critical Path” by John Adams.
- “Contractual variations and promises to accept less: pragmatism in the Court of Appeal” by
Adam Shaw-Mellors.
- “Party-agreed formalities for contractual variation - a rock of sense in the Supreme Court?” by
Janet O'Sullivan.
- “MWB Business Exchange: The practical benefit doctrine marches” by Roberts.
- “No oral modification clauses: solid as a rock” by Dr Leslie Dodd.
CONTRACT LAW

The development of the doctrine of promissory stopple

As has been stated above, promissory stopple can operate as an equitable exception to the
general rule that part payment of a debt without fresh consideration does not discharge the
debt obligation.
The case from which the modern doctrine of promissory stopple derives is (Huge v
Metropolitan railway company). This equitable remedy prevents a party from going back on
their promise when another party has relied upon the promise. Drawing on the developed
principle of (Huge v Metropolitan railway Company), an extending them where it suited,
Denning J in the case of (Central London Property trust v High trees house ltd) (High trees case),
formulated the doctrine of promissory stopple. While the consensus of legal opinion is that
Denning J developed the original doctrine beyond its established parameters, the doctrine is
now very much part of the English law of contract.
High trees facts;
In September 1939, the plaintiff’s leased a block of flats to the defendants who planned to lease
out the individual flats. When World War two broke out the defendant had difficulty in leasing
out all of the flats, and so in 1940, the landlord agreed to accept just half of the ground rent
stipulated in the lease. This arrangement continued until 1945, by which time all the flats were
fully let and the plaintiff’s sort to returned to the terms of the original agreement. The plaintiff’s
brought an action against the defendants, claiming the full original rent both for the future and
the last two quarters of 1945. It was held by Denning J that the action should succeed. The
parties intended the reduction of the rent to be temporary measure while the flats could not be
fully let. The flats were fully let early in 1945 and, therefore, Denning J held that the plaintiff
should be able to recover the full rent from the last two quarters of 1945 onwards. Denning J
expressed the view, Obiter, that the plaintiff’s would not have been able to recover the rent for
the period between 1940 and 1945, even though there was no consideration for the promise to
accept reduced rent. The reason for this was that he thought there was a general equitable
principle where by-
“A promise intended to be binding, intended to be acted on and in-fact acted on is binding so
far as it’s terms properly applied”.
The decision is controversial since it appears to conflict with (Foakes v Beer). The case of (Foakes
v Beer) stablished that part payment of a debt could never be a good consideration for
satisfaction of the whole of the debt. It could be argued that promissory stopple circumvents
this principle. However, despite the adoption of the doctrine of promissory stopple by the
courts, there has been acute judicial keenness to constrain it within very strict parameters and
this will now be considered.
CONTRACT LAW

Denning J imposed 6 requirements to be satisfied for the doctrine (Promissory stopple) to be

applicable:
1. A clear and unequivocal promise;
2. Change of position by promisee in reliance on the promise;
3. Reliance need not be detrimental;
4. Inequitable for the promisor to go back on the promise;
5. The doctrine is suspensory in nature not extinguishing the legal rights;
6. The doctrine can be used as a shield but not as a sword.

*A clear and unequivocal promise

There must be a clear and unequivocal promise or representation that existing legal rights
will not be fully enforced. The promise must be intended to affect legal relations and not
simply amount to gratuitous privilege given to the promisee. It is apparent from (Huges v
Metropolitan railway company) that the promise need not be expressed but can be implied,
as it was in that case, through conduct. (Woodhouse v Nigerian produce) is also a relevent
case where it was held that the buyers conduct in accepting the invoice unquestionably
amounted to an implied clear and unequivocal promise to accept on those terms.

*Change of position by promisee in reliance on the promise;

It is essential element of the doctrine of promissory stopple that the debtor (Promisee)
should have relied upon the promise or representation, i.e., it must have influence the
conduct of the party to whom it was made (Ajayi v Briscoe). In this case the defendant
position was not altered.

*Reliance need not be detrimental;

Must the promise’s alteration of position, in reliance on the promise, be to his detriment? In
(Ajayi v Brisco), the requirement that the promisee must alter his position was interpreted
to mean alter in a detrimental way. Although detriment is not essential, it may be easier to
establish that it is inequitable for the promisor to go back on his promise where the
promisee has acted to his own detriment. Later, in the case of (Alan WJ and company v El
Naser Export and Import), the court held that it was not necessary that promise should have
acted on to his detriment.

*Inequitable for the promisor to go back on the promise;

CONTRACT LAW

The doctrine only applies where it would be inequitable for the creditor (Promisor) to go
back on his promise. As Lord Goff stated in the Post chaser, it does follow in every case in
which the representee has acted or failed to act, in reliance on the representation, that it
will be in equitable for the representor to enforce his rights.
The use of promissory stopple, as an equitable doctrine, is at the discretion of the court.
Even if the other elements of the doctrine are made out, it may still not be applied because
it would be inequitable in the circumstances to do so. (D and C Builders v Rees). In this case
the claimant has done some work for the defendant for which money was owed but the
defendant complained that the work was not satisfactory and she would only pay a limited
amount. The claimant reluctantly accepted the payment to avoid bankruptcy. It was held
that could claim the remaining amount as the part payment taken was under duress.

*Does The doctrine is suspend in nature or extinguish the legal rights?

In (Collier v Wright) (Also applicable for the above-mentioned principle), Arden LJ held that
if a debtor offers to pay part of a debt and the creditor voluntarily accepts, and in reliance of
the acceptance the debtor pays the part in full, the creditor is bound by promissory stopple
to accept it as satisfaction of the whole debt. The reliance makes it inequitable for the
creditor to resile from his promise. Here, the court held that the effect of the promise is to
extinguish to the creditor’s legal rights for the rest of the debts.
However, in (Ajayi v Brisco), the question as to whether a promissory stopple was revocable
was considered. In this case, it was stated that, “the promisor can resile from his promise on
giving reasonable notice which need not be a formal notice, giving the promisee a
reasonable opportunity of resuming his position”. This is consistent with the general view
that promissory stopple is only suspensory in nature, bearing exceptional cases where the
promisee cannot resume his position. further in the case of (Tool Matal Manufacturing Co v
Tungsten Electric co), it was held that the promisor can resume his full legal rights under the
contract after giving reasonable notice of his intention to do so.

*The doctrine can be used as a shield but not as a sword.

Promissory stopple can only act as a defence to an action; it cannot be used as a cause of
action. This was made clear by the judgements of Denning, Asquith and Birkett LJ of the
EWCA in the case of (Combe v Combe). In the language of the council for the husband in
(Comb v Comb), “the doctrine is a shield and not a sward”. Here, the court held that
promissory stopple could be applied as the wife has used the doctrine as the cause of action
against her husband for maintenance payments.
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In "Consideration in Contracts," Atiyah argued that the entire idea of promissory estoppel is
based on the erroneous assumption that a promise acted on in a way intended, or at least
expected by the promisor, is not enforceable as a binding contract. He further stated that it
may be too late to repeal the entire doctrine of promissory estoppel.
Maggie Hemsworth in “Contract: consideration, motive and part-payment” stated, “One
particular facet of English common law, we may say a particular strength, is that
developments are brought into being in an incremental way; evolution rather than
revolution is the English preferred mode of operation.”

PART PAYMENT MADE BY A THIRD PARTY

Besides, there are further exceptions to the rule in Pinnell’s Case such as where part
payment is made by a third party. In the case of (Hirachand Punam Chand v Temple), the
claimants were money lenders who lent money to the defendant and then sought return of
the money but could not get a response from the defendant and contacted his father, who
agreed to settle the full amount for a substantial amount. The father paid but the claimants
retained the promissory note and sued the son. It was held that payment made by the
father was sufficient to discharge the whole amount. There was good consideration as the
existing duty to make payment was on a third party. Another similar case where this
principle was applied is (Welby v Drake).

Answer
The given set of facts mainly concerns the doctrine of consideration; particularly where
parties change existing contractual arrangement that is the rules of pre-existing obligation
under a contractual duty, the rules of part payment of a debt along with the doctrine of
promissory stopple needs to be discussed.
(Janes v fantastic friers) (FF)
Janes and FF clearly entered into an enforceable contract. The question that needs to be
determined is whether ff has provided good consideration for the extra payment of 2000
pounds. In order to determine that, the principle that is applicable here is preexisting
obligation under a contractual duty. Whatever ff did (installing 5 deep fat friers) they were
under an obligation to do that within the 7000 pounds. The court will further determine
what consideration ff has provided to janes for the extra 2000 pounds. The leading case in
this area is (Stilk v Myric) (Hartly v Ponsonby). Where it was stated that existing obligation
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under a contractual duty is not a good consideration for the fresh promise. However, if ff can
show that they have done something extra or went beyond their existing duty then it may
be held to be a good consideration in the eyes of law. In this regard, ff cannot show that
they did something extra for the 2000 pounds. So, janes is entitled to reimburse the money
from ff. however, ff has the last resort to be relied upon even if they could not provide good
consideration for Janes’s promise. if ff can show that they provided as practical benefit to
Janis for the 2000 pounds then the promise can be enforced the common exception derived
from the leading case of (Willms v Roffey bros). Glidewell LJ had established 5 requirements
for the doctrine to be applicable.
Firstly, there must be a contract of goods or services; so, between janes and ff there was
contract of supply of service, thus the first requirement is satisfied. Secondly, there must be
a doubt that the work will not finished within due time; janes may have a doubt that ff will
not be able to finish the work by 31 January due to the increased of the cost of aluminum.
Thirdly, as a result, one party promises to other to pay extra sum of money; janes unlikely
made a voluntary promise to ff in this in this regard. So, the third requirement seems to be
difficult to be satisfied. Fourthly, one party will give a practical benefit or obviates a
disbenefit to the other; ff didn’t provide a practical benefit to janes as janes count joint
celebrate her birthday and opening the shop on 31 Jan. so, the fourth requirement seems
not to be satisfied. Lasty, the promise wasn’t made as a result of economic duress or fraud;
this seems to be cleared that ff puts janes into some sort of economic duress which is
evident from the facts that they will stop the work immediately if 2000 pounds is not been
paid.
From the overall determination, it is seen that all the requirement of Glidewell couldn’t be
satisfied. Hence, the court will put an obligation on ff to return those 2000 pounds to janes.
(Janes v Elliot)
The rule in Pannel’s case as affirmed in Foaks v Beer provides that part payment of a debt
cannot be good consideration for the whole debt nor can be an arrangement to pay
installments even is equivalent to full amount (Re select move), in other words the paying
part of the money owed will not discharge the whole debt unless it can be brought within
one of the exceptions stated in Pannal’s case.
According to the general rule Elliot is entitled to receive 10 pounds an hour from Janice,
does the forgoing 2 pounds is not a good consideration according to (Foaks v Beer).
However, it is evident from the facts that Elliot took 3 chicken drumsticks instead of the
forgoing of two pounds, which may amount to a good consideration according to the
exceptions mentioned in Pinal’s case. So, 3 chicken drumsticks can be said to be ‘a different
thing’, which the court will consider as a good consideration from Janice’s perspective.
However, the issue of intention to create legal relationship also needs to be determined, as
the facts states that “as we are old friends” will fall in the category of the presumption that
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this is a social and domestic contract and the presumption is one of party’s do not intend to
create a legal relationship in social and domestic contract (Balfore). This is a rebuttable
presumption and if the party can show that there is a business and commercial transaction
involved then according to Merit v Merit and Saulsbury v Saulsbury, will be applicable and
the court may consider that the parties do intend to create a legal relationship.
(Janice v Margaret)
The similar rule is applicable in terms of Margaret, i.e., part payment of a debt. Since
Margaret also accepted 1 pound less per hour and in return, she didn’t take anything from
Janice. Thus, it can be argued that Janice is under an obligation to pay the full 10 pounds per
hour according to the service contract (Foaks). Here, Janice won’t be able to show that she
provided good consideration for the forgoing of 1 pound and further Janice won’t be able to
rely on the exceptional principle in Pinnell’s case.
When the business is booming on 1st June both Elliot and Margaret want a full payment
under the original contract (10 pounds per hour), which Janice refuses. So, from the above
discussions it was seen that one party had given consideration and the other party had not,
but they can always revive back to the original contract by relying on the doctrine of notice.
The issue between Margaret and Janice needs to be considered as well, whether Margaret
can enforce the debt from Janice. According to the cases of Foaks v Beer and Pannel’s case,
part payment of a debt is not a good consideration. The exceptions stated in Pannel’s case,
different place; different time or different thing don’t apply in terms of Margaret. The case
of Re Selectmove has stated that not to reinforce Foaks with Williams v Roffey Brothers.
Recently, Kitchin LJ in EWCA in the case of MWB stated that if the Debtor gives a part
payment of a debt and the creditor obtains a practical benefit then it will be a good
consideration. From the given facts, it could not be identified whether Margaret has
obtained a practical benefit from the part payment of Janice. Then, Janice will try to rely on
the equitable doctrine of promissory estoppel. This defense is available for Janice, where a
promise has been m made that is unsupported by consideration, but it would be inequitable
to allow the promisor (Elliot & Margaret) to go back on the promise. The requirements came
from the doctrine articulated by Lord Denning in Central London Property Trust Ltd v High
Trees House Ltd. relying on the older case of Huges v Metropolitan Railway Company.
The first requirement is there must be a clear and unequivocal promise to suspend existing
contractual rights; this requirement seems to be satisfied as both Elliot and Margaret
promised to Janice that they will take less than 10 pounds per hour till the business
improves.
The second requirement is change of position of promisee in reliance if the promise. This is
also satisfied as Janice has saved on wages from both Elliot and Margaret and further
bought a large picture for the chicken shop.
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The third requirement is reliance need not be detrimental to; here Janice does not have to
show that she suffered loss by relying on Elliot and Margaret’s promise.
Fourthly, it is inequitable for the promisor to go back on the promise. If Elliot and Margaret,
go back on their promise then it will be unjust and unfair for Janice.
The last requirement is that the doctrine can be used as a shield, not as a sword. Janice is
using the doctrine as a defense in order to protect herself from the back pay claim (first
march onwards).
To conclude, the advice from Janice would be that she can reimburse the extra two
thousand pounds paid to FF and FF would be under an obligation to return the extra money
to Janice. For the second contract Janice in under no obligation to pay the back pay from
first march as she can rely on the doctrine of promissory estoppel, but she is under an
obligation to revert back the original contract and pay full 10 pounds per hour from 1st June
onwards subject to both Elliot and Margaret, serving a notice to Janice.

{There will always be 2 variations in consideration question

i. Promise to pay more: existing obligation under a contractual duty, under a public duty,
owed to a third party.
ii. Promise to accept less: part payment of a debt}

The given question deals with the doctrine of consideration. The rights and liability of each
party will be discussed in turn. For a promise to be enforceable, it must be supported with
consideration. As per (Curry v Misa), (Dunlop v Selfridge), consideration is what is given in
return for a promise and has a sufficient value in the eyes of law.

a. (a)First situation; the issue concerns whether Roger can be entitled to claim the money
from his neighbor Sadik. The issue is one of whether both the neighbors have the
intention to create a legal relationship between themselves according to (Balfore v
Balfore) or whether the court will consider that there is business or commercial
transaction involved between Roger and Sadik as stated in (Merit v Merit). It is evident
from the fact that the consideration Roger provided is in the past. Now the question is
whether Roger can rely on the principle of past consideration to claim the money.
Consideration must be given in return for the promise or act of the other party. If there
is no consideration then the promise is a gratuitous one which may impose a moral but
not a legal obligation. A promise that is made to reward an act is unenforceable as the
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consideration that is provided is in the past. As per the cases of (Eastwood v Cannon);
(Roscorla v Thomas); re McArdle, past consideration is not a good consideration.
Therefore, it is clear from the fact that Roger by cleaning the garden has provided
consideration in the past and therefore it cannot be enforced.

b. (b)In this present question, the issue is whether Ursula can claim the 200 pounds after
trimming Victor’s hedges. The issue in this question is about duty owed to a third party
(Scotson v Pegg; The Eurymedon; Shadwell v Shadwell).
As per the case of (Currie V Misa), a valuable consideration in the sense of law may
consist either some right, profit, interest or benefit accruing by one party or by some
forbearance, detriment, loss or responsibility given, suffered or undertake by another.
Ursula can claim the money after the completion of the work. If he does the job, it will
be a valid consideration of Thierry’s offer and it will be a valid acceptance by Ursula and
he can legally claim the money and he can legally claim the money.

c. (C)In this present scenario, the issue is whether Wait will be entitled to claim the reward
if he agrees to withdraw the threat as per the case of (Cock v Wright), a promise to give
a claim where the promisor has a reasonable belief in and is valid and non-frivolous is
good consideration for a contract. As per the case of (White v Seamon), a promise not to
enforce a valid claim is valid consideration for a promise even on return, even if the
claim was doubtful in law. As per the given scenario, wait threaten to sue the university
despite knowing that his claim will be unsuccessful which clearly indicates that his claim
will be invalid and as a result the principle of (Cock and Wade) may be applied to state
that universities promise to wade is not a good consideration and as a result he will not
be entitled to claim the money.

d. (d)The issue to discuss in this present scenario is that whether Yolanda can claim the
reward of 100 pounds from Xaxa, after keeping a special watch on her cottage. As per
the case of Collins v Godefroy, performance of an existing legal duty/public duty is not
usually a good consideration for an additional promise. When a person or public official
agrees to carry out one or more of his existing legal duties in return for payment, it will
not generally be enforceable because there is no consideration for the promise. As he
had a legal duty to fulfill or because public policy generally suggests the law not to
encourage these opportunities for extortion as such promise would create. However, if it
can be shown that the public official has done more than his existing obligation then the
promise will be enforceable. As per the cases of Harris v Sheffield United FC, Glasbrook
Bros v Glamorgan CC & Ward v Byham, the EWCA held that police were under a duty to
prevent crime, maintain law and order and consequently, the provision of police services
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in areas in adjacent to the football ground which the club neither owned nor controlled
could not be charged for. So, it is evident from the fact that by keeping special watch on
Xaxa’s cottage, Yolenda has done more than her existing obligation and will therefore be
entitled to claim the 100-pound reward.

e. (e)the issue concerns whether Prof. Zen will be entitled to claim the reward from
student’s father for clapping loudly whereas he was contractually obliged to with the
university to do so. As per the cases of Scotson v Pegg and the Eurymedon with regards
to the performance of, or promise to perform, an existing obligation owed under a
contract. So therefore, we can conclude that Prof. Zen will be entitled to claim the
reward even though he is contractually bound to do so with the third party.

Some value, profit or benefit exchange in return of the promise between the parties is regard as
consideration (Currie v Misa) ;(Dunlop v Selfridge). For a valid binding contract to be
enforceable consideration is mandatory as it is considered as the “Badge of enforceability”.
However, ‘Promissory estopple’ is an example of exception of this requirement, which discharge
the obligation of consideration (Huge v Metropolitan railway company); (Huge v Metropolitan
railway Company).
The information is mainly about the legal idea of consideration in contracts. It talks about how
parties can change an existing contract, how partial payments on debts work, and the concept
of promissory estoppel. These ideas involve the rules for existing obligations in contracts and
the legal effects of making changes to them. In simple terms, the facts show how important it is
to understand the legal rules about contracts and what can happen if you change them.
We will also considered here the governing rule of consideration here that pre-existing
obligation under contractual duty and part payment of a debt is not a good consideration
(Part payment) According to the rule established in Pannel's case, which was confirmed in
(Foaks v Beer), illustrate that making a partial payment towards a debt or agreeing to pay in
installments does not constitute valid consideration for the entire debt. Unless the payment falls
under one of the exceptions outlined in Pannel's case, the debtor is still obligated to pay the full
amount owed by him.