Classification of Consideration
1.Executory
2.Executed
3.Past
1.Executory consideration
At the time of forming the contract, a promise is made by a party to the contract in
return to a promise made by another party to the contract.
Special feature : Performance is due; it will be completed in the future
EX: A promised to sell his car for 4 million rupees within 2 weeks
B promised to buy A’s car for 4 million rupees within 2 weeks
2.Executed Consideration
At the time of forming the contract, one contracting party has already performed
their obligations : and other party promising to perform
EX: Unilateral contracts – Bank loan contracts
3.Past Consideration
A subsequent promise made to a consideration that made in the past
EX: A’s uncle spend for A’s higher education
Later ,A promise her uncle to repay the expenses
It is not a valid consideration under EL ,because at the time of forming the
contract, Uncle did not make any promise and A made a promise in return for a
consideration that has done in the past.
Eastwood v. Kenyon (1840)
ACCORD AND SATISFACTION
A debt obligation
Payment of a lesser sum in satisfaction of a greater amount,cannot be any
satisfaction for the whole -Pinnel’s Rule
Pinnel’s case (1602)
Facts: Debt of £8 10s
Repaid £5 2s and creditor accepted it as a whole repayment
Sir Edward Coke : A part payment of a debt could not extinguish the obligation to
pay the whole
Promissory Estoppel -exception to Pinnel’s Rule
If the creditor agreed to accept a lesser amount in full satisfaction of the debt, later
he cannot change his mind and go back to the previous position:Now,owing to the
promissory estoppel ,creditor prohibited from institute a legal action against the
debtor
Hughes v. Metropolitan Railway (1877)
Appellant leased his property to Metropolitan Railway Co.
On 22nd of October 1874 ,Hughes gave a notice to Company stating that they
need to repair the building within next 6 months
Railways agreed
On 28th of November , Company manifested their preference to buy the building
and initiated negotiations
But they haven’t come to an agreement regarding the sale of the building
6 months period lapsed
Hughes initiated a legal action against Company
Held : When Hughes showed interest towards selling the building,his previous
promise / condition with regard to the repair of the building within 6 months will
be called off.
Central London Property Trust Ltd v. High Trees House Ltd (1947)
High Trees Doctrine
High Trees /D ,leased a block from the Central London Property/P
The property suffered from falling occupancy rates due to the outbreak of WWII in
1940
Parties agreed to reduce the rent by half ; However it was not expressly agreed how
long this would last for
By 1945 war had ended and the flats were at full occupancy
P sued D for the full rent from 1945 onwards
Held : followed Hughes v .Metropolitan Railway Co.
Denning J. stated that the cases showed that a promise which the promiser
knew was going to be acted on by the person to whom it was made was
enforceable despite of lack of consideration
Justa Causa – Reasonable cause /justifiable cause
A requirement under RDL
One party can establish the contract while the other party is not contributing to the
contract ,if that other party has a reasonable cause to do so.
EX : A promise to give a property to her parents since they look after her since she
was a child. –
A made a deliberate promise to do something due to a reasonable cause
-legally valid contract
Lipton v. Buchanan (1904)
Muttu Carpen Chetty v. Capper (1888)
Jayawickrama v. Amarasooriya (1918)
Public Trustee v. Udurawana (1949)