CONSIDERATION

Consideration: Something of value in the eyes of the law given in exchange for a promise

Note: Consideration is NOT required for contracts under seal (i.e. Deeds).

Benefit-Detriment aspect of Consideration

- A benefit conferred on the promisor OR

- A detriment suffered by the promisee
- What constitutes consideration? Chappell & Co. Ltd v Nestle Co. Ltd (1960) -> 3 chocolate
bar wrappers can be considered consideration.

Consideration must be requested by the Promisor

- Combe v Combe  If Promisee chooses to incur a detriment voluntarily, there is no

consideration

Consideration must move from the Promisee

- Tweddle v Atkinson (the father of the groom and father of the bride entered into an
agreement that they would both pay sums of money to the couple)
- Consideration need NOT move back to the Promisor. It can move to a third party
- Note: Joint Promisees  If the contracting parties are joint promisees, then one of them can
provide consideration on behalf of other promisees: Coulls v Bagots Executor and Trustee Co
Ltd

Past consideration is no consideration

- An act done prior to and independently of a promise cannot be considered consideration as

it is NOT done in exchange for the promise
o A promise that is given as a mere expression of gratitude for past services is
unsupported by valid consideration
- Past consideration: Act of forbearance undertake without reference to promisor’s promise
VS Executed consideration: Act of forbearance undertaken in return for promisor’s promise
o Carlill v Carbolic Smoke Ball Co -> Executed consideration
- Pao On v Lau Yiu Long exception  Did a share swap. Pao agreed to delay selling the shares
for Lau agreeing to buy shares back from pao at $2.50. Later Pao amended Pao demanded
that instead of that, Lau would merely indemnify Pao if the share price fell below $2.50.
Defendants (Lau) argued that their promise to indemnify the plaintiff was not enforceable as
the plaintiff’s promise not to sell the shares was past consideration and therefore not valid
consideration.
- Courts held that an act done before a promise was made can be good consideration if:
o Act done at promisor’s request
o Understanding that act would be paid for
o The promise for payment is enforceable if it had been made in advance of the act

Consideration must be sufficient not adequate

- “Sufficiency” having value in the eyes of the law

- “Adequacy” the consideration has a value comparable to the value of the promise
 Intangibles and moral obligation

- Not sufficient consideration White v Bluett Ward v Byham

Special Situation: Public or Legal Duty

- Mere performance of such public duty imposed by law does not, without more, constitute
sufficient consideration
- But if the promisee exceeds the requirement of the legal duty, by providing something extra,
then constitutes sufficient consideration. Glasbrook Brothers v Glamorgan County Council

Existing Contractual duty Owed to third party

- Performance of an obligation to a party does not preclude that performance from serving as
consideration to a different contract with a 3 rd party
- Scotson v Pegg: Scotson entered into a contract with 3 rd party to deliver coal to 3rd party or
anyone nominated by 3rd party. The 3rd party nominated Pegg. At Pegg’s request, Scotson
was to deliver the coal (from Scotson’s ship) in return for Pegg unloading the coal at a
certain rate. Pegg failed to unload at the agreed rate, thereby delaying Scotson’s ship.
Scotson sued Pegg for losses due to the delay

Promise to pay more for the same

- Stilk v Myrick (1809): In the course of a voyage 2 of the seamen desert, and the captain not
being able to find others to supply their place, promises to divide the 2 men’s wages among
the remainder of the crew in exchange for them working the ship safely back to London
Ruling: This promise is void for lack of consideration for the captain’s promise
- Williams v Roffey (1991) -> Accepted in Singapore
The agreement was enforceable and did not fail for lack of consideration. Plaintiff (Williams)
informs defendant (Roffey) that his costs had increased and had difficulty finishing the
contract. Defendant agrees to make an additional payment in return for the plaintiff’s
promise to perform his existing contractual obligations. The plaintiff enjoyed
practical/factual benefits or avoided a detriment. Plaintiff avoided the need to engage
another sub-contractor and more importantly avoided the liability of delay under the main
contract. And this factual benefit constituted sufficient consideration
- Modification of the contract is valid as along as both parties intended to be bound by the
modification and there was no improper pressure or fraud committed to obtain the promise)
- Gay Choon Ing v Loh Tze Ti Terrence Peter -> “diluted doctrine of consideration where
Singapore courts are more ready to find the existence of consideration”

Partial payment: Promise to receive less for the same

- In a Partial repayment of a debt, even after the debtor has promised to forgive the balance
of the debt, the debtor is allowed to enforce payment in the future. The Debt is not forgiven
without the debtor furnishing consideration to the creditor
- Foakes v Beer (House of Lords): An agreement between a debtor and creditor, that in
consideration of the debtor paying down part of the judgement debt and costs and on
condition of his paying to the creditor by instalments the creditor will not take any
proceedings in the judgement. Ruling: This is nudum pactum, being without consideration.
It does not prevent the creditor after payment of the whole debt to enforce payment of
interest upon the judgement.
 - Unresolved: Gay Choon Ing v Loh Sze Ti Terence: “in the Singapore context…there is…
no legal impediment from the perspective of precedent preventing the Singapore courts
from extending the reach of Williams to such a situation as well…”

Promissory Estoppel
It prevents a person from going back on his promise even though the promise is not
supported by consideration.
Central London Property Trust v High Trees House Ltd (1946)
- Lam Chi Kin David v Deutsche Bank AG (2010)
To invoke promissory Estoppel, ALL the following elements must be met
1. Existing legal relationship (Look at ICLR)
2. A clear and unequivocal promise by the promisor not to insist upon his original contract
rights -> Representation
3. Promisee must have relied on the promise  Reliance on the Representation
4. Inequitable for the promisor to go back on his promise
5. Doctrine is invoked as a shield, not a sword

2. Clear and unequivocal promise

- Silence or inaction would generally not constitute a clear promise as it lacks certainty

- A promise does not have to be express but can be implied by words or conduct Hughes v
Metropolitan railway company

3. Reliance on the promise

- Reliance in the narrow sense: Promisee already suffered a detriment in fulfilling the contract,
prior to the promisor indicating that he wishes to go back on his promise

- Reliance in the broad sense: Promisee did not suffer any immediate disadvantage but instead
might have enjoyed a benefit from the promisor’s promise. ‘detriment’ would arise if promisor
allowed to retract his promisee

4. Inequitable to go back on promise

- Inequitable concept overlaps substantially with “detrimental reliance”

- It would be inequitable for the promisor to resile his promise upon which the promisee relies
and suffers a detriment as a result

ICLR - Intention to Create Legal Relations

- Even in agreements whereby both parties have furnished consideration, it is not necessarily
enforceable unless the parties intended for the agreement to be legally binding
- This is determined by the facts of the case on an objective basis

Social and domestic agreements

- Presumption that the parties do not intend for the agreement to be legally binding.
- Balfour v Balfour – The agreement was motivated by the parties’ natural love and affection
for each other and relying on good faith for the fulfilment of the promises
- Merrit v Merrit – Presumption can be rebutted Couple of Merritt v Merritt was estranged
unlike the couple in Balfour v Balfour who was living in amity at the time of the agreement.
 As such they were making a serious agreement with the intention to create a legal
relationship

Business and commercial agreements

- Presumption that the parties intend to be legally bound

- Presumption can be displaced by clear statement to the contrary
- Letters of comfort  Depends on the intention as evidenced by the surrounding
circumstances
Issued by auditors to lenders as solvency opinions on whether a
borrower can meet the payment obligations of a loan
- Hongkong and Shanghai bank Corporation v Jurong Engineering Ltd ->
o Evidence showed that the parties did not seriously place any reliance on the comfort
letter
o Text of the letter was not sufficiently certain to support the creation of binding
obligations

Notes:

- An act done prior to and independently of a promise cannot be considered consideration as

it is NOT done in exchange for the promise & 3 points outlined under Pao On
- Qns: Can acceptance to receive less for the same be estopped?
- Definition of promissory estoppel & point 5 about the shield and sword

Not familiar abt case law at all: (Red means need to memorise)

- Sufficient consideration -> Nestle

- Consideration requested for by promisor – Combe v Combe???
- Consideration must move from the Promisee -> Tweddle v Atkinson???
- Existing Contractual duty Owed to third party -> Scotson v Pegg
- Pay more for the same -> Stilk v Myrick, William v Roffey, Gay Choon Ing v Loh tzi ti Terrence
peter (diluted doctrine of consideration)
- Past consideration -> Pao On exception
- Promissory estoppel -> Lam Chi Kin David v Deutsche Bank AG
- No ICLR -> Good r/s between couple -> Balfour v Balfour
- ICLR -> Bad r/s btw couple -> Merrit v Merrit