Contract law tutorial (11/8/2023)

Assignment due (17th Aug) – Before class

Florence owns five adjoining houses, numbers 1–5 High Street Magictown, which she intends to rent
to local people and students. On 1 September she advertises the properties as available in the local
newspaper but does not state a price. Advise Florence as to the legal implications of the following
events.

a) Zebedee, a handsome student, contacts Florence who agrees to rent No 1 High Street to him
for £50 per month. Zebedee is amazed at the low rent and agrees immediately.
 Issue: Can the nominal value amount to a valid consideration?
o Intro and briefly explain
 Law: Consideration need not be adequate but must be sufficient & provide authority
o Define and explain (what does adequate and sufficient means?)
o Chappel v Nestle (summarize)
o Thomas v Thomas (summarize)
o Relate it back on the facts
 Application: how does the law apply to the facts of the case?
o Based on the facts, will the nominal value amount to a valid consideration?
 Conclusion:
o However low the price may be, according to the law, if the promisor decides it to
be as such, then it will be considered sufficient in the eyes of the law.

All agreements require something to be given in return for something else from the other party, the
“something” is known as consideration. Lush J in Currie v Misa held that, a valuable consideration
may include either, in some rights, interest, profit or benefit accruing to one party, or some
forbearance, detriment, loss given or undertaken by another party.

The rule of consideration stated that, consideration need not be adequate but must be sufficient. This
simply means something of value in the eyes of law is given in return for the promise, and it can
include even a trivial act. Based on the facts given, Zabedee is given an exceptionally low price to
rent the house, which is 50 pounds. This raise the question that whether the nominal price can amount
to a valid consideration? As per Lord Sommervell in Chappel v Nestle, he famously stated that in an
agreement, one party is at the liberty to decide what they want in return. This suggest that even a
small thing like a peppercorn will be considered valuable, even if the other party does not actually use
the item. In essence, consideration is whatever the person making the promise decides it to be. The
word “adequate” implies a generous enough to appear fair in a bargain of monetary value, while the
word “sufficient” means that it is enough recognisable value to satisfy the courts. Hence the House of
Lords in Chappel recognised the value of a chocolate wrapper to be sufficient in order to enforce the
promise, although it was trivial in economic value. Professor Atiyah was of the opinion that, the
decision in Chappel does not fit the definition of consideration which requires some form of benefit or
detriment. Because it will not make sense to say that by giving wrappers it resulted in benefit or
detriment, hence, the wrappers were not a benefit. However, Professor Treitel argues that, Prof Atiyar
did not consider that the court do not look at how valuable the consideration is, so long as it has some
value the court will recognise it as consideration. In short, based on the law, the low price for rent will
amount to a valid consideration. Thus, if the house were to be rent to Zabedee at 50pounds per month,
it will be a sufficient consideration.
Ruth is a metal worker involved in the following events:

1. (a) She contracts to repair the local church bells for £10,000. When she begins repairing them,
she discovers that there are voids in the bells that were not previously discoverable. She tells
the vicar that the extra work involved will cost her an extra £5,000. The vicar reluctantly
agrees to pay this and holds a sponsored hymn singing to raise the extra money.

Having completed all the work above, the Vicar refuses to pay the extra £5,000 when his
sponsored hymn singing only raises £5.

Intro:
All agreements require something to be given in return for something else from the other
party, the “something” is known as consideration. Lush J in Currie v Misa held that, a
valuable consideration may include either, in some rights, interest, profit or benefit accruing
to one party, or some forbearance, detriment, loss given or undertaken by another party.

Issue: Based on the facts, Ruth is already under a contract to repair the local church bell for
10,000 pounds. But, in the middle of the repairing process, she discovered voids in the bells
that were not previously discoverable. Now, she is demanding for an additional 5,000 pounds
for the repairing cost. The question is whether Ruth is entitled for the extra amount despite
already being under an existing contractual duty? The present facts concern a discussion on
performance of an existing contractual duty. This is because, Ruth was simply performing her
existing contractual duty to repair the bells, this may include any void encountered during the
performance of her existing contractual duty. The general rule is that performance of an
existing contractual duty will not amount to a good consideration.

Law: The authority of performance of an existing contractual duty comes from the case of
Stilk v Myrick where it was held that performance of existing contractual duty will not
amount to sufficient consideration. The Campbell’s report shows that Stilk’s claim failed
because he had not provided any consideration as he was merely performing his contractual
duty. Unless the performance was over and above the existing duty which constitutes
consideration, in Hartley v Ponsonby 17 out of crew of 36 deserted and leaving a few
remaining crews of seamen. The desertion of such large proportion rendered it dangerous to
continue the voyage. Ultimately, the court held that the seamen were entitled to enforce the
promise because they agreed to continue the journey even though they do not have to do so at
that time, and that amounted to a good consideration. But why cant we say the same in Stilk v
 Myrick? Technically, the master of the ship was benefited by Stilk’s promise to work the ship
home and thus it will amount to a good consideration. As such, the 2 established authority
was challenged in Williams v Roffey Bros, where it stated that if there is practical benefit, the
court is likely to held that there is a good consideration despite performing of an existing
contractual duty.

Application: From the surface of the facts, Ruth is seen to be performing her existing
contractual duty, hence, only if there is practical benefit, she is likely to be entitled to the
extra amount. In light of the practical benefit, as per William v Roffey Bros in order for the
practical benefit to apply, it must be shown that there is indeed a practical benefit obtained by
the promisor in making the promise, based on the facts, the benefits of having a fully repaired
bell is that, it will attract more attention to the public which will result in more people coming
to the church and the vicar saves time by not having to find another metal worker.
Furthermore, an important aspect to the practical benefit is that, it must not be obtained by
economic duress. This is where Vicar might argue to prevent practical benefit. Vicar might
claim that he was under pressure to agree on the extra payment. Pao On v Lau Yiu Long
stated that there has to be a coercion in order to vitiate consent to amount to duress and that
commercial pressure alone is insufficient to constitute duress.

In addition, we must also consider whether the pressure is considered as illegitimate or it is

just a normal pressure. In Pakistan International v Times travel the supreme court emphasised
that the elements required for economic duress were, the making of an illegitimate threat,
whether there is sufficient causation between the threat and the threatened party who is
making the payment, lastly the lack of any reasonable alternative when facing the threat. On
the facts, Vicar is unlikely going to be successful in his economic duress claim because the
facts are silent pertaining to any pressure put upon the vicar, he was reluctant but that alone
will not satisfy any illegitimate threat, which further affirmed that no causal link to prove the
threat. Assuming that the church was not in a hurry to repair the bell, the vicar has the
reasonable alternative to choose another person to repair the bell. As a result, the
requirements for duress is not satisfied.

Conclusion: In short, if the court consider that the practical benefit applicable in the absence
of economic duress, Ruth may be entitled to the extra 5,000 pounds.

 Define consideration
o Performance of contractual duty
o Please discuss economic duress
The given scenario requires explaining the law of consideration and advise the party, Ruth. The
classic definition of consideration is given by Per Lush J, in the case of Currie v Misa, where he stated
consideration as, “…some right, interest, profit or benefit occurring to one party, or some forbearance,
detriment, loss or responsibility given, suffered, or undertaken by the other.” According to the
definition, consideration is defined as a benefit acquired by one party while the other suffers a
disadvantage, and vice versa.

Consideration is the second necessary component for a contract to be valid, together with agreement
and intent to create legal relationship (ITCLR). In view of the giving scenario, Ruth has contracts to
repair the local church bells for £10,000 and may be deemed to be under legal duty to
perform the existing contractual duty. That said, Vicar’s reluctance to agree in the first instance can
be related to his refusal to pay the extra £5000. Traditionally, Ruth has simply performed her
existing contractual duty to repair the bells which may include any void encountered
during the performance of her existing duty as a result there will be no good consideration. An
authority for such proposition is Stilk v Myrick [1890] and Foakes v Beer [1884]. Nonetheless, this
view has been challenged in the decision of the Court of Appeal in Williams v. Roffey Bros &
Nicholls [1991]. From the given fact one might be tempted to say that there was no practical benefit
obtained from Ruth performance as she has only performed her existing contractual duty. Second,
Vicar was unable to deliver the promised made due to low income from the sponsored
hymn singing which only raised £5. Third, the Vicar agreed to pay the extra money reluctantly.
Fourth, Ruth will try to prove that the church benefited in a practical way by having a fully repaired
bell and this will attract enough traction to the public. And because the church is not for profit
organization, it can be inferred; nevertheless, whether it will fulfil the consideration is up to the
court's judgment. Finally, there was no fraud by Ruth, but the Vicar may claim that he was under
pressure to agree on the extra payment and in claim that an extra £5000 is not reasonable as they had
agreed to contracts for £10,000 to repair the bell, however, this is up to the courts to consider such
submission. So, if Vicar can satisfy the court about the exception of practical benefit, then Vicar
will be bound to pay the full money, otherwise Vicar won’t be bound to pay the full money.

Performance of a contractual duty

GR: performance of an existing contractual duty owed to a promisor is not a good consideration

Authority: Stilk v Myrick, the seamen had a contract to sail the ship back to London, 2 out of 11
seamen deserted during the voyage and the master was unable to find replacement for the deserters
and he agreed to share the wages of the deserters between them if they would work the ship back
without the 2 seamen. When Stilk demanded his share, the master refused to pay. The Campbell’s
report shows that Stilk’s claim failed because he had not provided any consideration as he was merely
performing his contractual duty. Ultimately, the court held that the performance of an existing
contractual duty cannot amount to a good consideration.

In contrast: in Hartley v Ponsonby, 17 out of crew of 36 deserted and leaving a few remaining crews
of seamen. The desertion of such large proportion rendered it dangerous to continue the voyage, but
the seamen agreed to continue the voyage on being promised extra pay upon completion. The master
refused to pay, but the court held that the seamen were entitled to enforce the promise because they
agreed to continue the journey even though they do not have to do so at that time, and that amounted
to a good consideration.

Practical solution:
Answer to question no: 02

The given scenario requires explaining the law of consideration and advise the party, Ruth the classic
definition of consideration is given by Per Lush J, in the case of Currie v Misa, where he stated
consideration as, “…some right, interest, profit or benefit occurring to one party, or some forbearance,
detriment, loss or responsibility given, suffered, or undertaken by the other.” According to the
definition, consideration is defined as a benefit acquired by one party while the other suffers a
disadvantage, and vice versa. Consideration is the second necessary component for a contract to be
valid, together with agreement and intent to create legal relationship (ITCLR).In view of the giving
scenario, Ruth has contracts to repair the local church bells for£10,000 and may be deemed to
be under legal duty to perform the existing contractual duty. That said, Vicar’s reluctance to
agree in the first instance can be related to his refusal to pay the extra £5000. Traditionally, Ruth has
simply performed her existing contractual duty to repair the bells which may include
any void encountered during the performance of her existing duty as a result there will be no good
consideration. An authority for such proposition is Stalk v Myrick [1890] and Foakes v Beer [1884].
Nonetheless, this view has been challenged in the decision of the Court of Appeal in Williams v.
Roffey Bros & Nicholls [1991]. From the givenfact one might be tempted to say that there was no
practical benefit obtained from Ruth performance as she has only performed her existing contractual
duty. Second,Vicar was unable to deliver the promised made due to low income from
thesponsored hymn singing which only raised £5. Third, the Vicar agreed to pay theextra money
reluctantly. Fourth, Ruth will try to prove that the church benefited in apractical way by having a fully
repaired bell and this will attract enough traction to thepublic. And because the church is not for
profit organization, it can be inferred;nevertheless, whether it will fulfil the consideration is up to
the court's judgment.Finally, there was no fraud by Ruth, but the Vicar may claim that he was
underpressure to agree on the extra payment and in claim that an extra £5000 is notreasonable as they
had agreed to contracts for £10,000 to repair the bell, however,this is up to the courts to consider such
submission. So, if Vicar can satisfy the courtabout the exception of practical benefit, then Vicar
will be bound to pay the fullmoney, otherwise Vicar won’t be bound to pay the full money.For
consideration to be valid, it must be sufficient, but need not be adequate. Ruthagreeing to repair the
Local Dog rescue Kannels for £50 could be sufficient. InChappel and Co Nestle [1960]. It was
established that the consideration given inreturn for a promise does not have to be equal in value.
However, can buying thematerials to do the job be considered to be of value to Ruth, I
don’t think so,However, in this case, Ruth has agreed to do the repair for the said amount, hencewill
be bound to perform the contract. In the given fact of scenario three, deals with past consideration.
According to ReMcArdale [1951], past consideration means that the consideration was
alreadycompleted before the promise was made. As a result, Lady Godiva’s considerationafter the
making payment and receipt of the gate from Ruth could be unenforceable.However, the court may
consider w hether However,. Nevertheless, it for the court to decide whether voids that were not