CONSIDERATION is the price paid by promise for a promise which it seeks to enforce.
NUDUM PACTUM: bare promise, no consideration-unenforceable
Consideration has to be getting or giving up something of value (benefit or detriment) there has to be an exchange; does not require both a detriment and benefit (although often both present)
The courts will not look at whether there was an equitable exchange-just that there was a valuable one-not concerned with equity
Valuable consideration may be of some right, interest, profit, benefit, forbearance, detriment, loss or responsibility given, suffered or undertaken (Hamer)
A waiver of any legal right at the request of another party is sufficient consideration (Hamer)
Giving up something which you do not really have is not consideration (White)
Intention or motive is irrelevant-except to the extent that it is assessed objectively by the courts to determine if the parties were serious about the contract; can be measured by looking at the consideration (Thomas)
SEAL
The seal was used instead of a signature in medieval times.
Now we use stickers or a circle with an “LS” in the circle. There is controversy over the meaning of the “LS”. there are two hypothesized meanings:
‘LS’ means “locus siguilli” which literally means, “place where the seal would go”. If this is the correct interpretation then the document you see this on is not under seal.
If the ‘LS’ means Legal seal then there is a binding agreement and the document is under seal.
With a seal you can enforce a gratuitous contract. No seal means no gratuitous contract.
The seal is important for three reasons:
Evidentiary Perspective:
If the seal is paced on a document it was evidence that the parties had red the document and intended to be bound by it.
Cautionary Purpose:
A bit of a ceremony that was meant to advise people of the gravity of what they were doing.
Channeling Function:
Deemed intent that the parties intended to make a binding promise and how you could be sure of the other party’s intent was their placement of their seal on the deal.
Not all of this is relevant now. Often both parties do not have a contract each – sometimes there are not all signatures on one copy.
In a sealed contract only an agent and not the principal can be sued unless specifically binds the principal and the principal is disclosed.
Limitation period to sue under contract is 6 years if not under seal.
Limitation period to sue under contract is 20 years if under seal.
The limitation period starts at the time of knowledge or when reasonable knowledge of breach of contract can be assumed.
Limitations Act s.45 deals with sealed contracts.
Remax Garden City v. 828294 Ontario Ltd.
828 wants to sell property so hires Remax. Vendor signs Contract at time of listing that said when closing the lawyer is to pay off the commission, and all other disbursements. At the signing of direction there was no consideration passing between Remax and the vendor. There was a black blob and a statement “I have set my hand and seal”. The sale closes, Lawyer had the $. The vendor writes the lawyer and says not to pay commission. Lawyer concerned about his liability. The vendor says he will indemnify (pay him back) him for any problems. Remax sues both vendor and lawyer. Plaintiff brings a motion for summary judgement before the court.
Court finds that if you give irrevocable direction without seal you can revoke it despite its title since this was no consideration given. Here the black blob was a seal and rendered irrevocability binding.
Lawyer was obligated to pay agent but the vendor was liable to pay the lawyer since they had the indemnity agreement.
Even though the seal was not really a seal (just a black blob) it may be considered to be sufficient to be considered a seal.
Lawyer has the responsibility to point out the gravity of a seal on a document.
White v. Bluett
Estate issue-father in this case is deceased
Son argues that father agreed to tear up promissory note if the son would stop complaining. Father dies. Promissory note was not actually torn up. Executor of the will calls up the loan. Son argued consideration was son giving up his right to complain and therefore the contract was binding.
Court said there was not consideration because son had no right to complain. It was not enough to be viewed as consideration by the court.
Uncle promised his nephew $5000 if he would stop drinking, smoking, and gambling until age 21. Nephew lived up to bargain. A note was sent to the uncle and he acknowledged the promise. Uncle died before it was paid. Defendant (uncle’s estate) contends there was no consideration
Court upheld promise and said a valuable consideration may be of some right, interest, profit, benefit, forbearance, detriment, loss or responsibility given, suffered, or undertaken; court will not ask whether it is of substantial value
A waiver of any legal right at the request of another party is sufficient consideration
Thomas v. Thomas
Husband orally anted wife to have a certain life-estate of house, cash, etc. Executor did not recognize the oral agreement but let her live there so long as she maintained the home and paid the taxes.
The first executor dies and the second executor this was not consideration-so could therefore terminate tenancy of plaintiff
Court said was consideration because she paid small rent, maintained the property and paid the taxes on the property – there was something moving between parties - an exchange – therefore valid contract. In naming the terms of the contract the executors had created a new set of obligations outside of the will and they had a contract.
Court also distinguishes between motive and consideration (fulfilling wishes of testator was motive) courts do not care about motive
Why do We not Enforce Gratuitous Promises?
Evidentiary Problems:
Was the promise made or was it just an expression? How do you establish intent? May be just a hope or a wish.
