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Formation

Consideration, intention to create legal relations and privity

  • 3 things to know
  • Component 4

Overview

Recall questions on consideration, including past consideration, sufficiency, existing duties and part payment of a debt, promissory estoppel, the presumptions on intention to create legal relations in commercial and domestic agreements, and privity and the Contracts (Rights of Third Parties) Act 1999.

What you need to know

Answer each one before you reveal it.

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Process

How does a collateral contract avoid privity, as in Shanklin Pier v Detel Products (1951)?

Process

How does agency operate as an exception to privity?

Process

What did Simpkins v Pays (1955) decide?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Define consideration in contract law.

    Model answer

    Something of value given in exchange for a promise.

  2. 2

    Is consideration always required for a valid contract?

    Model answer

    Yes, unless the contract is made by deed.

  3. 3

    What does it mean that consideration must move from the promisee?

    Model answer

    The person seeking to enforce the contract must have provided the consideration themselves.

  4. 4

    Why is past consideration not valid consideration?

    Model answer

    Because it was not given in exchange for the promise; it was provided before the promise was made.

  5. 5

    Explain the rule that consideration must be sufficient but need not be adequate.

    Model answer

    Consideration must have some recognisable value in the eyes of the law, but courts will not assess whether the bargain is fair or whether the exchange is of equal value.

  6. 6

    Is performance of an existing duty owed to the promisor good consideration?

    Model answer

    Generally no, unless a practical benefit is conferred on the promisor.

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