Beaton v McDivitt
Court of Appeal of the Supreme Court of New South Wales
(1987) 13 NSWLR 162
Case details
Court
Supreme Court of New South Wales
Judges
Kirby P (dissenting in part)
McHugh JA
Mahoney JA
Appeal from
Young J
Issues
Consideration
Frustration
Overview
Considered theory of consideration - bargain theory.
Facts
The respondent (McDivitt) promised to transfer a portion of his land to the appellant (Beaton) when a proposed rezoning occurred if, in the meantime, the appellant worked the land in a specified way. Beaton moved onto the land and worked it as required (inc building a house). Seven years later a dispute arose and Beaton was ordered off the land.
Issue
Had Beaton provided valuable consideration?
Separately the Court considered whether the contract had been frustrated as a result of the re-zoning not taking place.
Court of Appeal (on consideration)
Beaton had provided consideration for the respondent’s promise to transfer the property by working on the land in the manner stipulated; this constituted a detriment sufficient for consideration.
Kirby P (dissenting on this point)
'The modern theory of consideration has arisen from the notion that a contract is a bargain struck between the parties by an exchange’ – it is not based on notions of reliance. The ‘price’ for a promise can be an act, forbearance or promise. Here there was no consideration – the promises given (in relation to the land transfer) were not provided as a ‘quid pro quo’ for anything provided by Beaton.
McHugh JA
Noted that the bargain theory of consideration applies in Australia (amounting to a rejection of the ‘reliance’ theory); in particular, that theory requires a ‘quid pro quo’ between the parties. In this case there was such consideration – consideration for the promise to transfer was the act of Beaton in coming and working on the block as requested. This constituted a ‘detriment’ suffered by Beaton and that is sufficient for consideration.
Mahoney JA
Agreed with McHugh JA on the issue of consideration.
Note
The appeal was dismissed because the contract was found to have been frustrated.