Transcript Forbearance as Consideration

Forbearance as Consideration
• A promise to restrain from doing
something will in many cases be as
valuable to the promise as a positive
action.
• Forbearance can be good consideration
for a
promise.
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Forbearance as Consideration
• Conroy v Fitzpatrick (Unreported, High
Court, December 18 2003)
• Here D undertook to negotiate to buy
property in joint names of D and P
• P argued (successfully) that consideration
for same was the giving up of acting for
himself – i.e. but for the promise, he would
have acted for himself!
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• Hamer v Sidway (1891) 124 NY 583
• Already looked at
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Forbearance as Consideration
• Most common form of forbearance is for a
promise not to enforce a legal remedy.
– Cook v Wright (1861) 1 B & S 559
• Parish trustees threatened house occupier with legal
proceedings unless he signed a promissory note (the trustees
were owed rates)
• Law suit was take on the notes
• Consideration held to be their forbearance in taking legal
proceedings to recover the rates
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• The context in which the promise was
made may assist the court in finding
consideration for a seemingly gratuitous
promise.
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Blandford & Houdret Ltd. v Bray Travel
Holdings Ltd. & Hopkins (Unreported, High
Court, November 11 1983).
• 2D guaranteed debts of 1D to P
• Problem – debts were past – so what
consideration did plaintiff provide for
guarantee?
• Gannon J held on facts P implied
promised to forbear from withdrawing
future services (which was entitled to
under under contract)
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O’Keefe v. Ryanair Holdings plc [2003] 1
ILRM 14
• Surrender of privacy
• Clarke calls it a “new form” of forbearance
consideration
• Not sure about that? Given up a right to
sue for breach of privacy?
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Forbearance as Consideration
• Undertakings given by a debtor to a
creditor whereby the debtor undertakes to
provide security for the debt is a source of
controversy in the context of forbearance
as consideration.
• Just seen this…
• Issues – promise to provide new security –
what is given to buy this promise? What is
the price of the promise?
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Re Montgomery (1876) 10 Ir Rep Eq 479
•Defendant promised to meet the debts of his
father
•Argued that consideration existed in form of
forbearance from bringing suit to recover
same.
•The price of the promise was forbearance in
suit
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Fullerton v Bank of Ireland [1903] AC 309
One Col. Stevenson’s bank account was o/d
Offered to provide title deeds as security
Consideration was the restraint and patience by
the bank in not calling in the overdraft
Even though there was no agreement not to
sue him?
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AG for England & Wales v R [2002] 2 NZLR 9
• R was a special forces soldier – given
document to prevent him talking about gulf
far- if didn’t sign it, told he’d be not be
back in the special forces
• He signed
• PC held consideration provided for the
promise not to publish – i.e. their
forbearance in not moving him…
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Contrast
• Debts – what is the price of the promise to
accept a lower sum for a higher?
– What did you give me for my promise?
Nothing you didn’t already owe me!
• Forbearance and Security – what is the
price of the promise to provide security?
– What did you give me for my promise? Your
forbearance!
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• Some cases are even more difficult to
reconcile with the orthodox doctrine of
consideration. Prof Atiyah argues in the
Rise and Fall of Freedom of Contract that
in certain types of transactions no
exchange exists but the courts have
nevertheless held that a promise is
enforceable under the concept of a
contract, largely because the promisee
has or may have relied on the promise.
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