Contract Law Consideration

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2011-2012 Assessment 1

Nick would be suing Angela claiming the full arrears and the return of the car. Nick can only succeed if he can prove there is no consideration.

Consideration can be defined by Sir Frederick Pollock, approved by Lord Dunedin in Dunlop v Selfridge Ltd [1915] AC 847 where each party must give something in return from what is gained from the other party; ‘An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.’ The traditional definition in Currie v Misa (1875) LR 10 Ex 153; (1875-76) LR 1 App Cas 554 has been criticised where ‘a valuable consideration, in the sense of the law, may consist either in some right, interest profit or benefit accruing to the one party or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other’.

Due to Angela falling ill, Nick accepts half the original amount of rent being payment of a lesser sum but the rule at common law being the rule in Pinnel's Case (1602) 5 Co Rep 117a, is that the payment of a lesser sum will not satisfy the full amount and is not good consideration. Pinnel’s Case (1602) 5 Co Rep 117a establishes the principle that a promise to accept less and not to sue for the balance was unenforceable unless the promisee gave some new consideration for it. In Pinnel’s case Cole owed Pinnel £8-10s-0d but paid £5-2s-2d at an earlier date at Pinnel’s request, claiming that his earlier payment of the lesser sum discharged him of paying the full debt.  However it was held that part-payment in itself was not consideration.

There are exceptions to the rule where consideration may be provided being if the being if the creditor agrees to accept earlier payment of a lesser sum, if the payment is made in a different form or if the payment is made in a different place.

This rule in Pinnel’s case was confirmed by the House of Lords in Foakes...
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