Question

Apply the legal principles to the facts given below and select the most appropriate answer.
Legal Principles:

1. Consideration is something that moves from the promisee to the promisor, at the implied or express request of the latter, in return for his promise. The item that moves can be a right, interest, profit, loss, responsibility given or suffered, forbearance, or a benefit which is of some value in the eyes of law.

2. An offer may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterward.

Factual Situation: MXM Co. is a building contractor who entered into an agreement with Star Heights Housing Association to refurbish a block of 27 flats. This contract was subject to a liquidated damages clause if they did not complete the contract on time. The MXM Co. engaged Hasan to do the carpentry work for an agreed price of Rs. 20,000. After six months of commencing the work, Hasan realized he had priced the job too low and would be unable to complete at the originally agreed price. He approached MXM Co. who recognized that the price was particularly low and was concerned about completing the contract on time. MXM Co. agreed to make additional payments to Hasan in return for his promise to carry out his existing obligations.
MXM Co. agreed to pay Hasan an additional f 575 per flat. Hasan continued work on the flats for a further period of 6 weeks but only received an additional f 5,000. He then ran out of money and refused to continue unless payment was made. MXM Co. engaged another carpenter to complete the contract and refused to pay Hasan any further sums. Hasan sued for payment under the original agreement and the subsequent agreement. MXM Co. argued that the agreement to make additional payments was unenforceable as Hasan has not provided any consideration to make this agreement a valid contract. Decide.

विकल्प

• The agreement to pay extra was unenforceable as Hasan had provided no consideration as he was already under an existing contractual duty to complete the work.

• Consideration was provided by Hasan in the form of conferring a benefit on the MXM Co. by helping them to avoid the penalty clause. Therefore, MXM Co. was liable to make the extra payments promised.

• There was no consideration provided by Hasan as to avoid the penalty clause was the main object of the contract. Therefore, MXM Co. was not liable to make the extra payments promised.

• MXM Co. is liable to pay compensation to Hasan as they have committed a breach of contract by employing another carpenter.

Answer 1

Consideration was provided by Hasan in the form of conferring a benefit on the MXM Co. by helping them to avoid the penalty clause. Therefore, MXM Co. was liable to make the extra payments promised.

Explanation:

The court in Currie v Misa declared consideration to be a "Right, Interest, Profit, Benefit, or forbearance, Detriment, Loss, Responsibility". Thus, consideration is a promise of something of value given by a promissory in exchange for something of value given by a promisee; and typically the thing of value is goods, money, or an act. The above case clarifies that the " benefit of avoiding penalty clause " will be regarded as consideration on behalf of Hasan and hence there exists a valid contract between MXM Co. and Hasan, which makes the co. liable for extra payments. Therefore option (b) is correct.