Consideration and Promissory Estoppel Notes
Poole: Contract Law ANSWERS - SELF TEST – ENFORCEABILITY OF PROMISES– INTENTION TO CREATE LEGAL RELATIONS, CONSIDERATION, PROMISSORY ESTOPPEL AND DURESS 1. What is the effect of including an "honour clause" in a written agreement? (2) An "honour clause" has the effect of rebutting the normal presumption of an intention to create legal relations in a commercial agreement (1). Its effect is to render the agreement binding in honour only so that it will not be a legally binding contract. (1)
2. What is the consideration to support a unilateral promise? (1) The consideration to support a unilateral promise is performance of the act requested (Carlill v Carbolic Smoke Ball). (1)
3. Why were the chocolate wrappers held to be part of the consideration in Chappell v Nestle? (1) The chocolate wrappers were held to be part of the consideration because they were requested by Nestle i.e. submitting the chocolate wrappers was part of the act they requested in exchange for their promise. (1)
4. Pao On v Lau Yiu Long is authority for two propositions relating to what can constitute consideration. Explain these propositions (4). (a) Pao On is authority for the previous request device i.e. the past consideration rule can be avoided if it is possible to find a previous request which carried with it an understanding or implied promise to pay (or give some protection)(1). Any act or promise which follows thereafter will not be past consideration in relation to that implied promise or understanding. The later express promise will merely fix the amount of the payment or the exact form of protection (1). (b) Pao On is also authority for the fact that performance or promising to perform an existing contractual duty owed to a third party can be a good consideration to support a promise (1). Therefore the Ps ' promise to perform the contractual duty owed to the Fu Chip Company (to retain some of the shares for one year) could be a good consideration to support the Ds ' (majority
2. What is the consideration to support a unilateral promise? (1) The consideration to support a unilateral promise is performance of the act requested (Carlill v Carbolic Smoke Ball). (1)
3. Why were the chocolate wrappers held to be part of the consideration in Chappell v Nestle? (1) The chocolate wrappers were held to be part of the consideration because they were requested by Nestle i.e. submitting the chocolate wrappers was part of the act they requested in exchange for their promise. (1)
4. Pao On v Lau Yiu Long is authority for two propositions relating to what can constitute consideration. Explain these propositions (4). (a) Pao On is authority for the previous request device i.e. the past consideration rule can be avoided if it is possible to find a previous request which carried with it an understanding or implied promise to pay (or give some protection)(1). Any act or promise which follows thereafter will not be past consideration in relation to that implied promise or understanding. The later express promise will merely fix the amount of the payment or the exact form of protection (1). (b) Pao On is also authority for the fact that performance or promising to perform an existing contractual duty owed to a third party can be a good consideration to support a promise (1). Therefore the Ps ' promise to perform the contractual duty owed to the Fu Chip Company (to retain some of the shares for one year) could be a good consideration to support the Ds ' (majority