Treitel On The Law Of Contract

The issue in this case is if Jack has an enforceable agreement when Jane made a promise to give her sports car to Jack. The issue in this case deals with the need for consideration to support a promise made in an agreement. In contract law, consideration has been described as the exchange of something that has some value with the other. In a contract there are six elements that have to be present so that a contract can be termed as legally enforceable and consideration is one of them. The effect of this situation is that without the presence of consideration, a contract is not valid and as a result, it cannot be enforced in a court of law (Atiyah, 2000). The requirement is that the consideration should be legally sufficient and the party receiving it should have bargained for it. Consideration can be in the form of money or in the form of a promise to do or refrain from doing something. Past consideration is not valid (Re McArdle, 1951). In the present case, although Jane had made to promise to give her sports car to Jack but Jack has not provided any consideration in return of this promise. Hence it can be said that consideration is not present in this agreement and consequently, it is not enforceable by Jack

In this question, it has to be seen if a valid contract has been created between Jack and Jane and if the promise made by Jane is legally enforceable. For this purpose, it has to be considered if the basic requirements that are necessary for creating a valid contract are present in this case or not. It needs to be noted in this context that a contract is much more than simply an agreement between two parties. In this regard, the law of contract provides that an agreement becomes a contract and is therefore legally enforceable only if the six elements that are treated as necessary for the formation of a valid contract are present (Beatson, Burrows and Cartwright, 2010). Therefore if the following elements are present in an agreement, namely offer, acceptance, consideration, intention of the parties to enter into legal relationship, capacity of the parties and the legality of the terms and conditions of the agreement. In this case, according to the agreement between Jane and Jack, Jane is going to give her sports car to Jack for $25,000. This is also the actual market value of the car. The offer is accepted by Jack. Under these circumstances, it can be said that the elements required for creating a legally enforceable contract are present in this case. Jean made an offer, which was accepted by Jack and consideration is also present. Therefore, Jack has an enforceable agreement.

In this question, an offer has been made by Jane to sell her sports car for $2500 to Jack. This offer is accepted by Jack. However, the market value of the car is merely $25,000. Under the circumstances, it has to be considered if a legal agreement is present between the parties, particularly keeping in view the extremely low price of the car decided by the parties. It has to be seen if adequate consideration is present or if the lack of adequate consideration will have any impact on the validity of the agreement between Jane and Jack. In this case, one of the basic principles of the law contract related with consideration has to be applied. Therefore in order to deal with such a situation, it has been provided by the law contract that consideration needs to be sufficient but the law does not require that the consideration should also be adequate (Collins, 2003). The law does not require the consideration supplied by the parties to support the promise should be the same as the market value of the thing. The law only requires that the consideration should be something real or in other words it should be something of value (Chappell v Nestle, 1960). The result is that even the price of $1 can be considered as adequate for a large house. In this way, it has been clearly provided that the courts do not go into the question if a good or a bad bargain has been made by the parties under the contract.

Although generally, the words adequacy and sufficiency are considered as having the same meaning but under the law contract, adequacy is the term that is used for referring to the circumstances where the price paid by a party to the contract is disproportionate to the value of the thing that has been received by the party in return. It is up to the parties to decide what they considered as the adequate consideration for the promise made by them. As a result, the inadequacy of the consideration does not have an impact on the validity of the contract made by the parties. Therefore it a bona fide consideration is present in a contract, the court will not minute please scrutinize it for the purpose of seeing if full and ample consideration has been provided or not. Therefore, the general rule provides that it is not necessary that the consideration should be adequate and the only requirement is that the consideration should be sufficient. A sufficient consideration is the consideration that has some value in the eyes of law. The result is that the things like natural love and affection and morality are not considered as sufficient consideration.

In this case, although adequate consideration is not present but there is sufficient consideration present to support the promise made by Jane. The result is that Jack has an enforceable agreement.

In this question, it has to be seen if the promise made by the buyer to pay extra US $3 million is legally enforceable or if the buyer can recover this amount from the shipbuilder. For this purpose, the rules of the law contract with even consideration have to be applied. As mentioned above, consideration can be described as an exchange of something for creating a valid contract. The effect of this requirement is that the gratuitous promises not enforceable under the law. The traditional rule was that the performance of an existing duty did not amount to a good consideration for the new promise to pay any extra benefits (McKendrick, 2009). But with the president time, this rule has gone under certain changes. According to the existing duty rule, the performance of pre-existing duty is not a good consideration for any variation in the contract, to provide an extra benefit. When the promisee is only performing its legal duty under pre-existing contract, such a performance cannot be considered as a good consideration. When the parties to the contract have already agreed to do something under contract, the law provides that the terms of the contract cannot be changed without providing a new consideration. Or in other words, it can be said that when the promisee has already done something under a contractual duty, the promisee cannot be allowed to demand an additional benefit (Peel and Treitel, 2011).

This rule has been based on the decision given by the court in Stilk v Myrick (1809). This case represents the traditional approach towards the existing duty rule. In this case, the plaintiff Stilk was an employee of the shipowner Myrick to work on the ship in accordance with the contract. According to this contract, Stilk was to be paid 5 pounds per month by Myrick for the time the ship remained in sea. However, during the voyage two of the crew members deserted the ship. As the replacement for these two crewmembers could not be found, a promise was made by Myrick that the remaining crew members will be given the wages of the two deserters if they also fulfill the duties of the two deserting crewmembers along with their own duties. But after arriving at the London port, Myrick refused to pay the extra wages to the remaining crew members. Under these circumstances, Stilk sued Myrick for this amount.

Therefore the issue that had to be decided by the court in this case was if the rest of the crew members of the ship would enforce the promise that the wages of the two deserters will be paid to them. On behalf of the plaintiff, it was argued that the defendant had made the promise to pay the extra wages to them in return of the additional labor. But in reply, it was stated by the defendant that the crew had not provided any consideration in return of the new promise as the crew members are already under a duty to ensure that the ship makes it back to the home port in accordance with the original contract. It has been mentioned by the pre-existing rule that once the parties to the contract had agreed to do something, the terms of such a contract cannot be altered without providing a fresh consideration. In this case, it was stated by the court that the remaining crew members were not entitled get the wages of the two deserters and the promise was not enforceable.

But the situation was changed significantly with the decision given by the court in Williams v Roffey Bros & Nicholls (1990). In this case, the practical benefit rule was developed by the court. At the same time, this case also shows that a new approach has been adopted by the course regarding the existing duty rule. The brief facts of this case are that there was an agreement between building contractors and the house owner according to which, 37 flats. The contractor made another sub-contract with the carpenter Williams. According to this contract, the dependent contractors have made a promise to pay the amount of £20,000 in installments. However, after some work has been done, Williams was paid by the defendant a sum of £16,200. But at this time, Williams started to face financial problems and could not complete the work on time. According to them, the price agreed individual contract was too low. The defendant made a promise that there will pay an extra amount of £575 for each lap completed on time in order to avoid the breach of contract with the house owner. But later on, the defendants refused to pay this extra money to Williams. As a result, the issue in this case was if by performing an existing duty, it can be said that a valid consideration has been supplied.

The decision of the court in this case was that the defendants were under a legal obligation to pay the extra amount to Williams as good consideration has been supplied by the plaintiff. The court noted the fact that as a result of the new promise, the defendants were going to enjoy the practical benefits. Firstly, the defendants will not have to spend their time and money on finding another carpenter complete the job. At the same time, the defendants will be able to avoid the payment of a penalty for delay as mentioned in the contract with the house owner. Therefore the court stated that entry of these benefits, it can be said that good consideration has been provided regarding the new promise. As it has been agreed between the parties that the previous price was too low, therefore the price was raised to a reasonable level. Hence the new promise was legally enforceable.

When the above mentioned in your position is applied to the facts of these case, it can be said that the shipbuilders had entered into a contract for building a tanker for North Ocean Tankers. However as a result of the devaluation of the US currency by 10 percent, the shipbuilder is going to suffer a loss under the contract. As a result, the shipbuilders demanded the payment of an additional amount of US $3 million otherwise they will not complete the work. On the other hand, the buyer already had a charter for the tanker. Therefore it was very important that the tanker was delivered on time. In order to avoid the loss, the buyer reluctantly agreed to pay this extra amount. However, now the buyer wants to know if action can be initiated for recovering this extra amount. On the basis of the above mentioned rules of law, it can be said that the promise made by the buyer to pay extra money for the completion of the tanker on time was supported by the consideration supplied by the shipbuilders in the form of the delivery of the ship on time and the benefit that the buyer was going to achieve due to the timely delivery of the tanker.

Under these circumstances, the promise to pay extra US $3 million was the enforceable and as a result, this one cannot be recovered by the buyer later on.

Atiyah, P.S. 2000 An Introduction to the Law of Contract, Clarendon

Beatson, J.  Burrows A. and Cartwright, J. 2010 Anson’s Law of Contract, 29th edn OUP

Collins, H. 2003, Contract Law in Context 4th edn CUP  

McKendrick, E. 2009 Contract Law 8th edn Palgrave

Peel E and Treitel, G.H. 2011, Treitel on the Law of Contract, 13th edn Sweet and Maxwell

Chappell v Nestle [1960] AC 87

Pinnel’s Case [1602] 5 Co. Rep. 117

Re McArdle (1951) Ch 669

Stilk v Myrick [1809] EWHC KB J58

Williams v Roffey Bros and Nicholls Contractors) Ltd (1990) 1 All ER 512