Consideration Part Essay Part Problem

Answer both questions
(a) X was having dinner with his father Y. whilst chatting, Y made a promised to X that in the event that X were to pass his LLB examinations, he would be given a car for his birthday. The car model was agreed to be a Ferrari 355 Spider. X stated that he is afraid that Y would forget the promise and wrote the promise down on the back of the tissue paper where Y signed after being repeatedly nagged by X. X passed his examinations and Y refused to buy X the Ferrari but a CLK (Cute Little Kancil) on the pretext that he had paid for the Examination Fees.

Advice X.

Guide:
X does not want the CLK but would want to claim for the 355 Ferrari. One has to note that on the facts, X and Y had came to an agreement that in the event that X were to pass his examinations, Y would buy him a Ferrari i.e. that the element of offer and acceptance being satisfied (Butler Machine Tools v Ex- Cell-O Corp)

However, the other elements that X would need to show on the facts is that he had provided consideration for the promise and there is an intention to create legal relations.

Consideration?

L. Dunedin in the case of Dunlop Pneumatic Tyres V Selfridge incorporated the definition given by Sir Federick Pollock that consideration should be some act or forbearance to purchase the promise of the other. However, the act or forbearance must have some value in the eyes of the law before it could be considered to be valuable consideration (Chappel v Nestle).

On the facts, X is supposed to pass his examinations. Examination are one that is rather subjective. At times, one may had studied really hard but still find that they had failed the exams. But it may be argued that one’s initial obligation or intention for sitting for an exam is to pass their exams. If we are going to assume this, then X may not have provided consideration for the promise.

The case of White v Bluett would indicate to us that for a person to provide consideration, the particular person must actually do something where in which that he is not suppose to do. A clearer picture could be drawn by the case of Hamer v Sidway, where in which the uncle told the nephew that he would pay him something if he would abstain for vices. Here, it was held that the nephew could claim for the promise of the uncle since he had done the act stipulated. One has to take note that one of the reasons that the courts may have taken into consideration is that the liberty of the nephew could have been affected. Although in general, we should abstain from vices, the fact that one has done it, they are giving up their choice of life.

One has to take note, is that in Arrale v Constain Civil Engineering, it was stated that the forbearance must be an activity which the promisee never intended to pursue, then there is no detriment to the promisee nor benefit to the promisor. Drawing an analogy with the cases above, we would be able to come to a conclusion that in order for somebody provide consideration, the person must have shown that he had done something over and above his previous obligations. We would now have to question as to whether what type of student is X. in the event that X is a weak student and due to the promise he had worked harder to pass his examinations, it could be argued that he would have provided consideration. However, in the event that X is a very bright student and would have pass his examinations and would have passed his examinations anyway without the promise, there is no consideration provided.

Intention to Create Legal Relations?
X is advised of the case of Jones v Padavatton which, would dictate that in a contractual relationship of mother and daughter (similarly OTF father and son), the presumption is that there wouldn’t be an Intention to Create Legal Relations.

Therefore, X would not be able to enforce the “contract” in a court of law until and unless X could bring in extrinsic evidence to show that there is such intention (Merritt v Merritt).

On the facts of this question, it could be seen that Y had signed a piece of tissue that he promised that he would buy X the car if he passes the exams. Technically speaking, the situation is some what similar to the case of Merritt v Merritt. However, one has to understand the background behind the said case. On the facts of the case, the husband and wife were going through a divorce. Therefore would be easier to show that the parties would want to be legally bound.

However, on the facts of the question, Y signed the tissue after being repeatedly nagged by X to do so. Would this be sufficient to rebut the presumption of no ITCLR? One has to note that X and Y was merely having dinner when the conversation arose, moreover, the initial intention of putting the promise down on the piece of tissue is because that X was worried that Y would forget about the promise.

Therefore, looking at the surrounding circumstances, it is submitted that it is unlikely that Y wanted to legally bound. Hence, X is advised that he would not be able to sue Y for the Ferrari. (b) Champion is renting Loser's room for the sum of €1000 a month. Champion had defaulted in payment for 3 months. Champion find out that Loser is getting married and would need the extra money. Champion came over to Loser and suggest that Loser were to accept €2000 as the full settlement of the defaulted payment.

Loser is now married and would want to recover the room and would want Champion to leave. Advice Loser

Guide:

Introduction:

It is indicated on the facts that Loser (L) would want to reclaim the room from Champion (C) would like C to move out of the premises. L is advised however that in order for L to do so, he would have to show that C had breached a contractual term which is a condition of the contract (Readon Smith Lines v Hansen Tangen); or committed a serious breach of an innominate term (Hong Kong Fir v Kawasaki Kisen Kaisha).

L would be able to prove that C had breach a term of the contract in the sense that by C did not provide valuable consideration that he paid €2000 instead of €3000. This is because that by looking at the case of Lombard North v Butterworth, one would have to realise that a default of payment of rental would usually would tantamount to a breach of a condition.

Insufficient Consideration?
L is advised to rely on the case of Foakes v Beer which had relied on the rule in Pinnel's case where it was stated that in the event that a person did not fully perform his obligations as on the facts, where C is supposed to have paid €3000 but had only paid €2000, that said person would not have provided valuable consideration. Therefore, C would be in breach of a condition and would entitle L to repudiate the contract and reclaim the room.

Any remedy available for C?

Practical benefit argument?

C would want to rely on the argument laid down by John Adams & Roger Brownsword in their article "the critical path" stated that the rule in Foakes v Beer should be looked at differently today in light of the case of Williams v Roffey Brothers & Nicholls Contractors in the sense that where it was found that in the event that there is a practical benefit, there would be consideration provided.

With this argument, C is going to assert that L would have obtained a practical benefit when he had accepted the lesser sum on the basis of the maxim of "a bird in the hand is better that the birds in the bush" i.e. it is better for L to have taken €2000 rather than nothing.

However, this is merely an academic argument. This argument came to the perusal of the Court of Appeal in the case of Re Selectmove. However, Peter Gibson LJ recognised that there is such possibility but declined to rule on it stating that in the event the courts are going to look at the rule in Foakes v Beer differently today, it must be for either the House of Lords or Parliament to decide before the Court of Appeal to recognise the argument. Therefore, it is submitted that C would not be able to rely on that argument as it still remain an academic argument. Moreover, it is submitted that C may not be able to rely on the Case of Williams as on the facts, C seemed to have taken advantage of the financial position of L as he was getting married and is in need of money. This may tantamount to an economic duress, which would taken as a vitiating factor (Pao On V Lau Yiu Long) in the said case.


Promissory Estoppel ?
C would now want to rely on the obiter judgement of Denning J (as he then was) in the case of Central London Properties v High Trees Housing where it was stated that in the event a promise was made and the promisee had relied on the promise, and it would be unconscionable for promisor to go back on his promise; the promisor would be estopped from going back on his promise. This is to say that since L had promised C that he would accept the lesser sum, he should not be entitled to go back on his promise now as it would be unconscionable towards C. However, the elements that needs to be satisfied in order for promissory estoppel to apply needs to be looked at individually.

C must show that there is a clear and unequivocal promise to accept less by L (Woodhouse Israel Cocoa v Nigerian Produce Marketing). It is submitted that this requirement would be easily satisfied on the facts as there is nothing to suggest that the promise was obtained impliedly. The case of Durham Fancy Goods v Michael Jackson Fancy Goods dictates to us however, that promissory estoppel is only applicable in a situation arising out of a contractual relationship which would be satisfied on the facts as C is renting a room from L and would definitely be in a contractual relationship.

L is advised now that C would be able to rely on promissory estoppel as L is trying to sue C for a breach of contract and C would want to rely on the doctrine as it always act as shield towards the cause of action. (Combe v Combe; Baird Textile Holdings v Marks & Spencer) However, L is advised that C should not be able to rely on promissory estoppel by submitting that C would not be able to show detrimental reliance on the facts. This is because that the case of Ajayi v Briscoe dictates that mere factual reliance i.e. by merely paying the reduce sum; should not be sufficient to show reliance as reliance under promissory estoppel would require detrimental reliance. Moreover, there is nothing on the facts to suggest that C would be place at a worse of position compared to the time the promise was not made to show reliance (as per Robert Goff; The Post Chaser)

Over an above that, it could be argued that C was unconscionable in taking advantage of the financial position of L (getting married) as promissory estoppel being an equitable remedy would not allow such a conduct (D&C Builders v Rees).

Conclusion
Hence it is submitted that since C would not be able to rely on promissory estoppel and would not rely on the factual benefit argument, he would not have provided valuable consideration and would be at breach of a contractual term which is a condition. Therefore, it is submitted that L would be entitled to repudiate the contract and reclaim possession of the room.