{"id":5882,"date":"2018-03-07T09:26:58","date_gmt":"2018-03-07T09:26:58","guid":{"rendered":""},"modified":"2021-09-28T10:53:50","modified_gmt":"2021-09-28T10:53:50","slug":"pao-on-v-lau-yiu-long","status":"publish","type":"post","link":"https:\/\/www.lawteacher.net\/cases\/pao-on-v-lau-yiu-long.php","title":{"rendered":"Pao On v Lau Yiu Long – Past Consideration"},"content":{"rendered":"

Legal Case Summary<\/h2>\n

Pao On v Lau Yiu Long [1980] AC 614<\/strong><\/p>\n

Summary<\/strong>: When past consideration is good consideration.<\/p>\n

Facts<\/h3>\n

The plaintiffs (P) owned the shares of a private company which owned a building that the defendants (D) wanted to buy. The defendants were majority shareholders in a public company. P agreed to sell their shares in the private company to D so that D could acquire the building. In return P would get shares in the public company. Fearing a drop in share value of the public company would result, P and D made another agreement that P would not sell their shares for a while. However, P realized that D might profit from this agreement and demanded that this second agreement be replaced with one in which P was indemnified for any fall in share value but might also benefit from any rise in share value. Fearing that not agreeing to this would delay the main contract, D agreed. The share value did drop, and P sought to rely on the indemnity contract. D refused to comply with this, and the case reached the Privy Council.<\/p>\n

Issues<\/h3>\n

The defendants claimed that the consideration for the indemnity agreement was past consideration and had only been agreed to under duress.<\/p>\n

Decision\/Outcome<\/h3>\n

The court found for the plaintiffs. Applying the exception to the doctrine of past consideration in Lampleigh v Braithwaite<\/em><\/strong><\/a> (1615) Hob 105 <\/strong>Lord Scarman said that an act done before a promise was made was good consideration for that promise if it was done at the promisor\u2019s request and the parties understood the act was to be paid for at a later date, and the payment or benefit would have been enforceable had it been promised in advance.<\/p>\n","protected":false},"excerpt":{"rendered":"

The plaintiffs (P) owned the shares of a private company which owned a building that the defendants (D) wanted to buy. The defendants were majority shareholders in a public company. P agreed to sell their shares in the private company to D so that D could acquire the building<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[100],"class_list":["post-5882","post","type-post","status-publish","format-standard","hentry","category-cases","tag-hong-kong-law"],"yoast_head":"\nPao On v Lau Yiu Long - Past Consideration | LawTeacher.net<\/title>\n<meta name=\"description\" content=\"The plaintiffs (P) owned the shares of a private company which owned a building that the defendants (D) wanted to buy. The defendants were majority shareholders in a public company. 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