TRANSCRIPTS
Unit 7, Lesson 3, Exercise B 1.34 Part 5
I’m going to finish with some comments on how judges have interpreted consideration – in other words, the case law. Now the fact of the matter is that the case law is highly complex. The reason for this is that in any agreement there are a number of different factors; not to mention the fact that judges can interpret these factors in different ways. We’ve already seen this in the cases involving past consideration. Let’s take what the courts have decided to be good consideration. For consideration to be good it must be sufficient. That means it is measurable in economic terms. However, it does not have to be adequate. That is, in economic terms, what the offeree gives does not have to match what the offeror thinks is the real value.
OK. Where was I? Oh yes – good consideration. The courts have interpreted good consideration in a number of ways: payment, provision of a service, et cetera. For example, you’ve probably heard of the famous chocolate manufacturer Nestlé. It was in the case of Chappell v Nestlé that what amounted to adequate consideration was discussed. The facts of the case were that as an advertising promotion, the chocolate company, Nestlé, offered to sell records of a popular song to customers in return for a very small sum of money and three chocolate wrappers. The copyright to the records was owned by Chappell and they claimed that they were entitled to royalties on the sales of these records under the Copyright Act 1956. The royalties were based on the ‘retail price’. It was held that the wrappers, though worthless in themselves, amounted to good consideration because the purchasers of the chocolate bars, the offerees, had given something adequate to the company, the offeror.
To sum up, then, the point is that the law recognizes that consideration must have some economic value even though this economic value cannot be precisely quantified.
Oh, I almost forgot to mention your research topics. OK, well, one important aspect of consideration is how it is affected by the doctrine of privity of contract. The doctrine of privity of contract means that a contract is only enforceable by the parties who made the contract, normally known as the promisor and the promisee, and not by third parties. A good starting point to understand this doctrine is the case of Dunlop v Selfridge [1915]. Also, how the common law
doctrine laid down in this case should be interpreted in the light of legislation such as the Contracts (Rights of Third Parties) Act 1999. I’d like you to find out the main criteria for deciding who is permitted to sue under the terms of a contract.
Unit 7, Lesson 4, Exercise B 1.35 Extract 1
OK, so what we’ll be discussing now is how judges have interpreted what good consideration is. Now, as we know, consideration under English law is a requirement for the formation of a contract. Last time I asked you to look at the contentious case of Williams v Roffey Brothers [1991] 1 QB 1. What was decided in this case, and why was it contentious? Under common law, an agreement cannot be enforced without consideration, and performance of an existing contractual duty is not consideration. However, in this case the Court of Appeal held that the new agreement conferred additional practical benefit on Roffey by enabling the company to avoid the penalty clause. So the judges appeared to be saying that a contract is enforceable even if there is no consideration. Now, I’d like to hear your views.
Unit 7, Lesson 4, Exercises C and D 1.36
Extract 2 JACK: Well. I’d like to make two points. First, If you do something that is already required under a contract you’re not entitled to additional payment.
LEILA: Can you expand on that, Jack?
JACK: Sure, Leila. In the case of Stilk and Myrick the sailors demanded extra wages because they had to do the work of two other sailors who had run away from the ship. The court held that they weren’t entitled to the money as there was no consideration. So the point is that you cannot enforce a promise to pay you additional money for work you have already agreed to do.
LECTURER: OK. So, what’s your second point, Jack?
JACK: I was coming to that! My second point is that in the Williams and Roffey Brothers case, Williams did give Roffey consideration because Roffey managed to avoid paying out under the penalty clause. Williams had provided a practical benefit.
LEILA: Yes, but that’s true in Stilk and Myrick too. Even more so, I’d say. They had to work really hard
125
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139
