Notes & Practice on Contract Law

What is the concept of good consideration?

Good consideration refers to the legal requirement that a valid contract must be supported by consideration, which is something of value exchanged between the parties involved. Good consideration means that the consideration must meet certain criteria to be considered valid and enforceable.

Is past consideration considered good consideration?

No, past consideration is generally not considered good consideration. Past consideration refers to something that has already been done before the agreement is made. However, there are exceptions to this rule. If the act was requested by the promisor, both parties contemplated payment, or if the features of a valid contract existed, then past consideration may be considered valid.

Does good consideration have to be equivalent to market value?

No, good consideration does not have to be equivalent to market value. It must have some value in the eyes of the law, no matter how small. While it is not necessary for consideration to be adequate or equivalent in value, it should still have some value.

Are moral obligations or natural love and affection generally considered sufficient consideration?

No, moral obligations or natural love and affection are generally not considered sufficient consideration. In the case of Thomas v Thomas (1842), the court ruled that an agreement between an executor and a testator’s wife, allowing her to live in the matrimonial home after the testator’s death for a nominal payment of £1 per year and an agreement to maintain the house, was considered a valid agreement. The court stated that the testator’s wishes were not considered “consideration” in a contractual sense, but the payment and the agreement to maintain the house were deemed sufficient.

What are the considerations regarding duties owed by law?

a) Existing public duty: If someone is already obligated by law to carry out a particular task, agreeing to do that task is not considered sufficient consideration for a contract. However, if a party exceeds their public duty or performs a special service, it may be valid consideration.

b) Existing contractual duty: Offering to perform a duty already required under an existing contract is not sufficient consideration. However, if the performance exceeds the requirements of the contract, it can be considered good consideration.

c) Contractual duty owed to a third party: The performance of an existing contractual duty owed to a third party can be considered sufficient consideration.

Can a waiver of rights to consideration be withdrawn?

Yes, a waiver of rights to consideration can be withdrawn under certain circumstances. In the case of Charles Rickards Ltd v Oppenheim, it was established that a waiver of rights can be revoked if reasonable notice is given. A waiver is not necessarily permanent and can be revoked for a specific period of time or by giving notice. For example, a buyer may revoke their promise to accept late delivery of goods if the delivery does not comply with the terms of the contract, even if they had previously waived their rights to do so.

Are domestic agreements between husband and wife presumed to be legally binding?

No, there is a rebuttable presumption that agreements between spouses living together harmoniously are not intended to be legally binding. However, if the agreement explicitly states otherwise, it may be enforceable. This presumption does not apply if the spouses are estranged or no longer living together at the time of the agreement.

Can a spouse enforce a broken promise made within a domestic setting?

Generally, promises made within a domestic setting are not legally enforceable unless there is clear evidence to the contrary. In the case of Balfour v Balfour, where a husband promised to pay his wife £30 per month until she returned from a different country, the court rejected the wife’s attempt to enforce the promise. The court held that domestic arrangements are not intended to be binding unless facts are presented to rebut the presumption against enforceability. However, if spouses have separated and agreed in writing, the promise may be legally binding.

Do agreements between parents and children have legal effect?

No, agreements between parents and children are generally not legally binding. In the case of Jones v Padavatton, where a mother bought a house for her daughter with the expectation that the daughter would support herself by renting out rooms, the court held that an agreement between parent and child falls into the same category as an agreement between husband and wife. The daughter failed to rebut the presumption against an intention to create legal relations since the parties were on good terms when the arrangement was made.

Are social agreements between non-relatives presumed to be legally binding?

No, there is a presumption against an intention to create legal relations in social situations. However, this presumption can be rebutted if the claimant can show that reliance was placed on the agreement. For example, if parties contribute cash jointly to enter a competition with the expectation of sharing the prize, the arrangement may be legally binding. In the case of Simpkins v Pays, where a grandmother, her daughter, and a lodger jointly entered a newspaper competition by sharing the cost of entry, the court held that there was a joint enterprise with an intention to share any prize, making the agreement legally binding.

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