Self-test questions

. In relation to the general statement 'consideration must be sufficient but need not be adequate', which one of the following statements is true?

A consideration must genuinely be of equivalent value to the promise it supports.

A consideration need not have any value.

To be 'sufficient', a consideration must have some economic value, but that value need not be equivalent to that of the promise in question.

A consideration need not have any economic value or be of equivalent value to the promise it supports.

. A employs B as a consultant in his firm. B is paid £15,000 plus a 'discretionary bonus'. Over the past year, A's firm has doubled its profits and therefore A decides to pay an additional £8,000 to B for 'all of your help and hard work throughout the past year'. B is delighted and buys a new car in anticipation of the extra money being given to her. Subsequently, A changes his mind and refuses to pay the extra £8,000 to B. Which one of the following statements most accurately summarises the legal position?

A is estopped from changing his mind but he can, on giving reasonable notice, return to the original contract and rely on the fixed annual salary clause.

A's promise is unclear and therefore unenforceable.

B has not provided valid consideration for the additional £8,000 because the promise refers exclusively to her performance over the past year, which amounts to a 'past consideration' only.

B can claim the extra £8,000 because she was carrying out A's instructions over the past year and it was reasonable for her to have expected this extra payment in the light of the 'discretionary bonus' clause in his contract.

. In which one of the following situations is the promise in question unlikely to be supported by a valid consideration?

A enters into a contract with B under which A is to deliver the goods to B by 1 June. Subsequently, the market conditions change dramatically and many clients of B who have entered into similar contracts now seek to cancel contracts or to postpone delivery dates. B promises A to pay £1,000 more provided A makes the delivery by 1 June. A makes the delivery by 1 June.

B owes £500 to A. A agrees to accept a horse belonging to B in full satisfaction of the debt. B delivers the horse to A.

B employs A to carry out decoration work. Whilst carrying out the work, A realises that he is short of money and therefore asks B for an increase in the contract price. B agrees to pay an extra £5,000 provided A completes his work a day earlier than originally agreed. A completes his work a day earlier than originally agreed.

B owes a debt of £2,000 to be payable to A on 1 June. A agrees to accept £1,800 as final settlement of B's debt. B pays £1,800 on 1 June.

. Which of the following statements regarding the doctrine of promissory estoppel is true? [Please select all that apply.]

Promissory estoppel applies only in the context of alteration promises and does not do away with the need to establish consideration to support formation promises.

Promissory estoppel requires a detrimental reliance by the promisee.

Promissory estoppel does not give rise to a new cause of action.

Promissory estoppel has only a suspensory effect and cannot extinguish legal rights.

. Which of the following general statements of law can be extracted from the decision in Thomas v Thomas (1842) 2 QB 851? [Please select all that apply.]

Consideration must be sufficient but need not be adequate.

Consideration needs to move from the promisee.

Performance of an existing contractual duty owed to a third party is normally not valid consideration.

Mere motive in making a promise, unattached to any element of value, is not sufficient consideration.

. B has agreed to employ A to deliver and erect a conservatory at an all-inclusive price of £10,000. Midway through the contract, A informs B that his business is facing financial difficulties and that he will be unable to complete the contract. B agrees to pay an extra £5,000 to A if A completes the job because she has just found a buyer (X) for her house who wants to move in quickly. On completion, A receives £10,000 from B but claims the extra £5,000. B refuses to pay on the grounds that A has not provided any consideration for the additional payment. Which one of the following statements is the most likely to be true?

A was probably only performing his contractual duty, so he has not provided any extra consideration for the £5,000.

A exceeded his contractual duty and is therefore entitled to the extra £5,000.

B is estopped from going back on her words and is bound to pay the extra £5,000.

A is probably entitled to the extra £5,000 because B has derived a practical benefit from the new arrangement.

. A employs B to paint the outside walls of his house for the sum of £2,300. When B completes the painting, A refuses to pay him because he is currently suffering 'liquidity problems'. One month later, A wins a local lottery competition. He contacts B by telephone and tells him that he will pay him the outstanding £2,300 provided B also paints the window frames at the front of the house for an additional £100. B agrees and paints the frames. A now refuses to pay B more than the original £2,300. Which one of these statements most accurately summarises the legal position?

B is only entitled to £2,300 because otherwise A would infringe the principle in Foakes v Beer (1884) 9 App Cas 605.

B is entitled to full payment (£2,300 plus £100) because he exceeded his contractual duty by painting the window frames (The Atlantic Baron [1979] QB 705).

B is only entitled to £100 because the previous painting of A's house is past consideration and cannot be used as justification for the payment of the £2,300 (Re McArdle [1951] Ch 669).

B is entitled to full payment (£2,300 plus £100) because A has received a practical benefit in the shape of his newly painted window frames (Williams v Roffey Bros [1991] 1 QB 1).

. Which of the following consideration rules can be extracted from Pao On v Lau Yiu Long [1980] AC 614? [Please select all that apply.]

A promise to perform an existing contractual duty owed to a third party can be a valid consideration.

Performance of a duty imposed by law is generally not valid consideration for a promise.

Performance of an existing contractual duty owed to a third party may be valid consideration for a promise.

Past consideration can be a valid consideration if it is given at the request of the other party, where the request carries with it an implied promise to pay or compensate.

. A owes B £10,000. With the knowledge that B has run into some financial problems, A starts to pressurise B to agree to a reduction of the debt. B finally agrees to accept £8,000 in full satisfaction of the debt. B receives £8,000 from A and now brings an action to claim the balance. Which of the following statements most accurately summarise the legal position? [Please select all that apply.]

B is not entitled to the balance, because B has received some practical benefit from the payment of £8,000.

B is entitled to the balance, because B's promise is not supported by a valid consideration.

B is not entitled to the balance, because B is estopped from revoking the promise to accept £8,000 in full satisfaction of the whole debt.

B may be entitled to the balance if he can prove that the promise is made under duress.

. A is B's landlord. A offers to reduce B's rent for six months because B is in financial difficulty. B is very pleased and pays the reduced rent for two months. At this point, A demands full payment of rent for those two months because B has won a large amount of money on the National Lottery. Which one of the following statements most accurately summarises the legal position between A and B?

B must pay A the full rent for all six months because the reason for reducing the rent no longer exists.

B has provided sufficient consideration for A's promise to reduce the rent and is therefore entitled to refuse A's request.

A is estopped from going back on his words and is bound to accept the reduced rent until completion of the six months.

A can return to the original contract and claim full rent for the future after a reasonable period following the demand, but is unable to recover the extra rent for any time before that period elapses.

. A consideration for a promise is the promisee's action, inaction or a promise thereof, which induces the promise in question.

True

False

. A consideration for a promise must move from someone other than the promisor, although not necessarily from the party enforcing the promise.

True

False

. As a result of the decision in Williams v Roffey Bros [1991] 1 QB 1, a promise to keep an offer open for a fixed period of time is enforceable if the promisor derives some practical benefit from the promisee.

True

False

. Which one of the following cases is an authority for the principle that performance of an existing contractual duty owed to a third party may be consideration for a promise?

New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd, The Eurymedon [1975] AC 154.

Ward v Byham [1956] 1 WLR 496.

Stilk v Myrick (1809) 2 Camp 317.

Williams v Roffey Bros [1991] 1 QB 1.

. A promise to accept less in full satisfaction of a debt is unenforceable even if a third party makes the part payment.

True

False

. For the doctrine of promissory estoppel to operate, there must be a clear and unequivocal express promise that is relied upon by the promisee.

True

False

. It is well established that, for the doctrine of promissory estoppel to operate, there must be some detrimental reliance by the promisee on the promise.

True

False

. In English law, unlike a claim under the promissory estoppel doctrine, a proprietary estoppel may create fresh rights as a new cause of action for claiming an interest in land.

True

False

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