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F4 Consideration Notes

Corporate and Business Law (ENG) (F4) ACCA

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kalinovskaya
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35 views

F4 Consideration Notes

Corporate and Business Law (ENG) (F4) ACCA

Uploaded by

kalinovskaya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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F4​​-​​The​​

law​​
of​​
obligations
Consideration

DEFINITION​​
AND​​
BASIC​​
TERMS:

General​​definition:

Consideration - something of value which is given for a promise and is required in order to make a promise
enforceable​​as​​a​​contract:

- Some​​detriment​​
to​​
the​​promisee​​(in​​
that​​
he​​may​​give​​value)​​and/or,
- Some​​benefit​​to​​
the​​
promisor​​(in​​that​​he​​
may​​receive​​value).

Traditional​​definition​​(Currie​​
vs​​Misa):

A valuable consideration, in the sense of law, may consist either in some right, interest, profit or benefit accruing
to the one party, or some forbearance, detriment, loss of responsibility given, suffered or undertaken by the
other.

Doctrine​​of​​promissory​​Estoppel:

An equitable remedy that was developed by the courts to protect the rights and interests of persons who under a
promise relied upon the requirements of the promise to his or her detriment regardless of whether consideration
was​​provided.

Unilateral​​
contracts: Bilateral​​contracts:
- Obligation​​arises​​
once​​
acted​​by​​ another​​party; - Obligation​​to​​act​​has​​not​​yet​​fallen;
- Not​​executory​​because​​the​​act​​has​​
not​​been - Consideration​​is​​executory.
promised​​by​​promisee;
Example:​​Award​​notices.
RULES​​
OF​​
CONSIDERATION:

1) Consideration​​
must​​
be​​‘sufficient’​​but​​need​​not​​be​​‘adequate’:

2) Consideration​​
must​​
move​​from​​the​​
promisee:

a) Promisee​​can​​enforce​​
promise​​
if​​he​​has​​
provided​​consideration;
b) No​​right​​if​​consideration​​
moved​​from​​
third​​party.

3) Consideration​​
must​​
not​​
be​​
in​​
the​​
past:

a) Regarded​​as​​past​​if​​it​​
has​​already​​
been​​carried​​out;
b) No​​consideration​​=​​
No​​
contract.

Exceptions​​to​​past​​consideration:

- Previous​​request​​
-​​must​​
be​​
requested​​
by​​promisor;
- Business​​situations​​-​​if​​both​​parties​​
understood​​action​​in​​terms​​of​​business;
- The​​Bills​​of​​Exchange​​
Act​​1882​​-​​Section​​27​​(1);
- Deeds​​not​​require​​
consideration,​​given​​
their​​serious​​nature.

Deeds​​​-​​formal​​agreements​​that​​are​​signed​​under​​seal.

TERMINATION​​
OF​​
OFFER:

Revocation​​by​​the​​
offeror Rejection​​by​​the​​offeree
Revocation​​​-​​formal​​withdrawal​​of​​the​​offer​​by​​the - Communication​​required.
offeror: - Once​​rejected​​it​​cannot​​be​​accepted.
- Once​​the​​offer​​is​​
accepted​​it​​cannot​​
be​​revoked. - Altering​​terms​​result​​in​​counter​​offer.
- Unilateral​​
contracts​​revocation​​cannot​​take
place.
Circumstances​​under​​which​​
the​​
offer​​
lapses:

At​​the​​end​​of​​the​​
stated​​
period After​​a​​reasonable​​time The​​offeror​​dies​​and​​the
contract​​was​​of​​a​​personal
nature

Option​​contract​​​-​​separate​​
contract​​which​​binds​​an​​offeror​​to​​keep​​an​​offer​​open:

a) Offeree​​must​​provide​​
consideration;
b) No​​consideration​​=​​
offeror’s​​
liberty​​to​​withdraw​​an​​offer.

Communication of rejection by the third party (must be from reliable source) - offeree can no longer accept
the​​offer.

In​​case​​of​​offeror’s​​
death:

- If​​offeree​​was​​not​​
notified​​-​​offer​​
is​​still​​valid;
- If​​offeree​​was​​notified​​-​​offer​​is​​
not​​valid;
- A​​representative​​cannot​​accept​​
the​​offer.

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