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consideration

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › consideration

  • This topic has 5 replies, 2 voices, and was last updated 4 years ago by Vijay.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • August 17, 2020 at 3:40 pm #580919
    lchen
    Member
    • Topics: 17
    • Replies: 15
    • ☆

    Good afternoon sir, may I ask a question from BPP exercise book 4.11. I think there is a typo of that answer. Would you mind checking it?

    Many thanks!

    August 17, 2020 at 11:38 pm #580967
    Vijay
    Member
    • Topics: 0
    • Replies: 258
    • ☆☆☆

    Hi Ichen,

    What is your question?

    Kind regards

    Vijay

    August 18, 2020 at 3:16 am #580978
    lchen
    Member
    • Topics: 17
    • Replies: 15
    • ☆

    Hello Sir, it is on the BPP exercise book section 4 question 11. The question asked which statement regards to consideration is correct and the answer chose “Performance of an existing contractual duty to a third party is sufficient consideration for the promise of additional reward.” I felt it is not correct and the option I selected is “performance of an extra service in addition to an existing contractual duty is not sufficient consideration for the promise of additional reward.”

    August 19, 2020 at 9:19 pm #581233
    Vijay
    Member
    • Topics: 0
    • Replies: 258
    • ☆☆☆

    Hi Ichen

    Generally speaking performing an existing obligation is not sufficient so you’d be right here. However, an exception to the rule is where the performance is to a third party it becomes sufficient and valid. So this is the correct answer.

    Performance of an existing contractual duty is as I stated above generally not sufficient. However, another exception is where you go “over and above” i.e. you perform an “extra service” as per the case of Hartley v Ponsonby. If this happens then performance of an existing duty is sufficient and valid. You chose a statement which said it is not sufficient which is incorrect.

    I hope that helps clarifies?

    Kind regards

    Vijay

    August 20, 2020 at 5:14 pm #581318
    lchen
    Member
    • Topics: 17
    • Replies: 15
    • ☆

    Hi Sir,

    Thank you so much for your explanation. May I ask could you give me a example that states the rule where the performance is to a third party it becomes sufficient and valid? Because I am not sure of what this actually applied to.

    Man thanks!

    Regards

    Chen

    August 20, 2020 at 10:21 pm #581333
    Vijay
    Member
    • Topics: 0
    • Replies: 258
    • ☆☆☆

    Hi Chen,

    So if for example I have a contract with you to design and landscape my garden by the end of August for £5,000. But then my mum promises to pay you an extra £500 to make sure you actually finish my garden by end of August then at first sight this looks to be performance of an existing obligation and you would not be entitled to the extra payment of £500. But because the promise is made by a third party i.e. my mum then this becomes valid and you would be entitled to the extra £500.

    I hope this helps clarifies.

    Kind regards

    Vijay

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