Exam (elaborations)
Contract Law exam problem question
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- Liverpool Hope University (LHU)
This document is a contract law problem question that was used for an exam. Great for revision and note taking.
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In this scenario the issue is centered on the area of contract law falling underconsideration. In the case of Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915]
AC 847, Lord Dunedin cited Pollock’s classical definition of consideration as ‘An act or
forbearance of one party, or the promise thereof, is the price for which the promise of
the other is bought, and the promise, thus given for value, is enforceable.’ This simply
meant that every promise is legally enforceable and that consideration is when the
Promisor promises to do something for the other party, called the Promisee, the
promisee must also provide something of value in the eyes of the law. In this scenario
the promisee is Johnson & Co and the promiser is Hale Homes. On the other hand, the
Promisor is the person who promises, so virtually the person whose promise to the
other party seeks to enforce.
Following this, Johnson & Co (who is the promisee) have the right to enforce the
contract because they have the right enforce the contract because they have provided
consideration for the promise, (for building family homes). For consideration must move
from the promise, as demonstrated in Tweedle v Atkinson [1861] EWHC J57, that it is
the only party involved with the right to enforce a contract. Furthermore, in this scenario
there has been a modification of the original contract, between the two parties Hale
Homes and Johnson & Co. It is necessary to determine whether the modified
agreement is enforceable, based on the issue of Johnson& Co having abided by the
new rules and terms of the modified agreement to build houses for Hole Homes. Earlier
February 2020, than the original date April 2020 and receiving an additional £500,000 a
guarantee for the completed work. This also shows that there is good consideration
(any value given at the counterparty’s request) to enforce for Johnson & Co under
, Promissory Estoppel. The doctrine of Promissory Estoppel prevents one party from
withdrawing a promise made to a second party, this is if the latter has reasonably relied
on that promise. Furthermore Johnson & Co relied on the promise of receiving
additional £500 000, hence why they employed additional contractors and worked
around the clock to get the houses completed, upon the new agreed date. This showed
that Johnson & Co honored their contract and that they were completing their tasks out
of good faith as well, this also showed sufficient consideration. Also following this, under
Primary Estoppel it will be unconscionable or inequitable for the court not to be enable
Johnson & Co, to recall the full amount. This is because the doctrine of Promissory
Estoppel applies to validate the modified agreement in relation Hale Homes.
In addition, the next issue is when Johnson & Co gave Homes a choice and suggested
Homes to pay them £400 000 in one or to pay the whole 500 in installments, once again
this would have to be demonstrated whether it is good consideration to enforce the
modified agreement. As established in Re selectmove 1995 2 W4R 1 474, as it states
that ‘A practical benefit does not constitute consideration, for an agreement to accept
“Less for the sum”. This generally states that if the modified agreement is an agreement
to less at the same, then the practical benefit of Johnson & Co receiving the full
payment by virtue of the monthly installments. Rather than reviving less, will not
constitute good consideration. This is given that Holmes agreed to paying the
installments for the date and for Johnson. However, for Johnson & Co threatening legal
proceedings and calling for immediate payment, shows hostility on their side and a
misunderstanding. Holmes might also seek for Promissory Estoppel to prevent Johnson
from recovering the full some of £500 000.
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