1.0 INTRODUCTION
People every day make agreements and it is the aim of every party to an agreement that the terms
of an agreements are fulfilled. Even if we do ignore contract law, it is against the moral values and
principles of our society to be dishonest with our ‘neighbor’. In addition, societal ethics,
Christianity morals to be specific, tell us to love our neighbours as we love ourselves and do unto
others what we would like them do unto us. Contract law acts as a prophylactic against contractual
misconduct; prevents breach of contracts. From my own point of view, contract law defines the
limits and authority of the contractual justice system by informing society of what makes an
agreement enforceable and the consequences that may follow on the crossing of these limits. A
contract is an agreement which is enforceable by law. This shows that all contracts are agreement
but not all agreements are contracts. The main differentiating factor between a contract and other
non-contractual agreements is that, a contract has a ‘legal enforceability’ element. For an
agreement to be enforceable, it must have some properties or elements, namely; Agreement (offer
and acceptance), Consideration and Intention to create legal relations, among others.
This writing is going to discuss an element of a contract called Consideration in detail. Case laws
will be used to clearly show its nature not only in the theoretical but also in the practical context.
2.0 DEFINITION OF CONSIDERATION
Lush J in Currie v Misa (1875) stated that a valuable consideration in the eyes of the law may
consist either in some right, interest, profit or benefit to one party, or some forbearance, detriment,
loss or responsibility given, suffered or undertaken by the other. Consideration can also be defined
as an element of exchange in a contract or the price paid for a promise1. It is found when a person
receives whatever he requests in return for a promise whether or not it has an economic value,
provided it is not too vague2. It is mostly referred to as a ‘badge of enforceability3’. It is a principle
of English law that a contract, except where made by deed, must be supported by consideration if
it is to be legally binding. The rule is that unless something of value (price) is given is exchange
of a promise, then the promisor may not be held to it. This can be seen in Rann v Hughes (1778)
(KB), where the defendant (Hughes) was administrator of an estate and made a promise to pay a
debt owed by the deceased to the plaintiff (Rann). The court held that, as there was no
consideration given by the plaintiff for the promise made by the defendant, the contract was void.
3.0 TYPES OF CONSIDERATIONS
3.1 EXECUTORY AND EXCUTED CONSIDERATION
Executory consideration involves an exchange of promises which will be done in the future after
contract formation4. It is a type of consideration which is done in bilateral contracts. On the other
1
Cavendish Lawcards series, (2004), Contract Law 4th Edition, Cavendish Publishing Limited, Britain p.19
The case of White v Bluet (1953) held that a son’s promise to cease his complaints about the distribution of his
father’s estate was held to be too vague to form valid consideration.
3
Cavendish Lawcards Series, Contract Law 4th Edition p.19
4
Elliot C. & Quinn F. (2009), Contract Law 7th Edition, Great Britain p.90
2
hand, executed consideration is the one where at the formation of a contract, the consideration is
already performed. For example, the type of consideration in unilateral contracts.5
3.2 PAST CONSIDERATION
Something already completed before the promise is made – this is not valid consideration in the
eyes of the law. The ‘past consideration’ rule can be seen as an example of the fact that
consideration must be given in return for the promise.6
For example, in the case of Roscorla v Thomas (1892), the defendant sold the plaintiff a horse.
After the sale, the defendant told the plaintiff that the horse was ‘sound and free from any vice’, a
statement which was untrue. The plaintiff then sued the defendant. It was held that the promise
was unenforceable because it was done after the contract (past consideration). It was not done in
return for the promise.
Another good example is the case of Re McArdle (1951) where members of the McArdle family
made alterations to a house to accommodate an elderly relative. After the work was completed,
other members of the family visited and were so pleased with the alterations that they offered to
pay those who had done the work. Unfortunately the money had not been handed over, so those
who had done the work sued for the amount promised. It was held that they could not insist on
payment because the work had been done before the promise of the money was made. It was
therefore past consideration and not valid
There are some Exceptions to this rule. One of them is where consideration was done at promisor’s
request and it was understood that payment would be made in return. This can be seen in Lampleigh
v Brathwait (1615) where Thomas Brathwait had been convicted of killing a man and he asked
Anthony Lampleigh to obtain a pardon for him from the king. After a considerable trouble and
expenses, Lampleigh succeeded in finding the pardon. In the excitement of getting his pardon,
Brathwait promised to give Lampleigh £100 but later refused to hand over the money, so
Lampleigh sued him. It was held that despite, when literally looked at, the consideration being past
consideration, it was still valid because it was done at the promisor’s request (thereby carrying the
unspoken understanding that the service would be paid for).
Another example is in RE CASEY ‘S PATIENT (1892), the defendants owned some patent rights,
and the plaintiff worked for them. They wrote to him, saying that in consideration of his services
as manager in relation to the patents, they were going to give him a one-third interest in them.
They later claimed that as their promise was made in relation to services which the plaintiff had
already given, it was past consideration and therefore the promise was not binding. The court held,
however, that the plaintiff’s services were clearly always meant to be paid for, and the promise
was merely putting this expectation into the form of a specified amount.
5
6
See the case of Carllil v Carbolic Smoke ball Co.
Suff, M (1997)Essential Contract Law 2nd Edition, Cavendish Publishing Limited, London p.17
The second exception where the rule of past consideration does not apply are those dealing with
Bill of Exchange. This is found in section 27 of the Bills of Exchange Act 1882 which provides
that an antecedent debt or liability will support a bill of exchange.
4.0 RULES GOVERNING CONSIDERATION
4.1 Consideration must be sufficient but need not be adequate: Because of the old idea of
freedom to contract which required that the parties themselves should be allowed to make bargain
which suits them without interference from the court, the court will not inquire into the adequacy
of consideration, so long as there is some. The case of Thomas v Thomas is a good example where
the plaintiff was a widow whose husband had stated that if he died before his wife, the wife should
be allowed to live in his house for the rest of her life and pass to his sons thereafter. When the man
died, the defendant (his executor) agreed that the widow could continue to occupy the house in
return for a promise that she would pay £1 a year and keep the house in good repair. Later, the
defendant decided to evict the widow, so she sued for breach of contract. The defendant claimed
that there was no contract as the agreement lacked consideration. It was held that the widow’s
promise to pay £1 a year and keep the house in good repair was a sufficient consideration to make
the agreement binding.
4.2 Consideration must be of economic value: A valid consideration must have some physical
value rather than an emotional and sentimental one. In case of White v Bluet (1953), a father
promised not to make his son repay money he had borrowed, if the son promised not to keep boring
him with complaints. The court held that the son’s promise was not sufficient as it lacked economic
value.
4.3 Consideration can be a promise not to sue: This can be seen in the case of Alliance Bank ltd
v Broom (1864) where Broom had an overdraft of £22,000 with the bank, and they asked him to
provide some security quickly. Mr. Broom promised to do so, but never did, hence the bank sued
him. Mr. Broom argued that there was no consideration but the court held that the consideration
which the bank provided was the promise not to sue for a while, giving Mr. Broom time to provide
security.
In addition, in the case of Combe v Combe (1951), a husband and his wife were involved in divorce
proceedings, during which he promised to pay her an annual allowance. She later brought an action
to enforce this promise and argued, among other things, that she had given consideration for it by
not exercising her right to apply to the court for a maintenance order. It was held that this could
not be consideration because her husband had not asked her not to apply to the court, and therefore
his promise had not been made in return for her promising not to do so.
4.4 Consideration must move from a promisee: this is talking about the doctrine of Privity of
Contract where the general rule state that only parties to a contract can enforce it. This in simpler
terms means that only a person who has provided consideration for a promise can enforce a
promise. This tradition can be seen in the celebrated cases of Tweddle v Atkinson as well as Dunlop
v Selfridge.
In Dunlop Pneumatic Tyre Company Ltd v Selfridge (1915), Dunlop sold tyres to Day who resold
them to Selfridge. Day, on the request of Dunlop, inserted a term prohibiting Selfridge from reselling the tyres below list price. Selfridge broke the term. Dunlop sued for breach of contract. It
was held that even if Day had acted as agents for Dunlop, Dunlop could not enforce the contract
as they had not provided any consideration for the promise by Selfridge.
4.5 Consideration must be lawful: The consideration must not be illegal or unlawful and must
not involve a breach of civil law or public policy7. In Parkinson v College of Ambulance Ltd and
Harrison (1925) (KB), the plaintiff (Parkinson) gave the defendant charity (College) £3,000 in
return for a promise that he would receive a knighthood. The knighthood did not eventuate and the
plaintiff sued for the return of the money. The court refused to make the order. The consideration
was a promise to do something to promote public corruption and this was illegal as it was against
public policy
4.6 Consideration must not be a promise to perform an existing public duty: Where a person
is merely carrying out duties they are legally obliged to perform – such as a police officer
protecting citizens, or a juror listening to evidence – doing that alone will not be consideration8.
In Collins v Godefroy (1831) the plaintiff had been summoned to give evidence in a court action.
The defendant promised to give him six guineas for doing so, but later refused to pay. The plaintiff
tried to enforce the promise, but it was held that since he was legally obliged to give the evidence,
doing so could not be considered consideration for the promise. Clearly there are public policy
reasons, as well as technical legal ones, for this principle.
But the law is friendlier in circumstances where a person does, or promises to do, more than he is
required to do by law. In such cases, he is providing consideration. In Glasbrook v Glamorgan CC
(1925), the council, as police authority, sued on an agreement to pay for police protection during
a strike. In the opinion of the senior police officer, a garrison was unnecessary to preserve the
peace; a mobile force would have been adequate. On the insistence of the colliery manager, he
agreed to provide a garrison in return for a promise of payment. It was held that the decision as to
what measures were necessary to preserve the peace was the responsibility of the senior police
officer on the spot, and provided it was made in good faith and reasonable, the court would not
interfere with it. Thus, the police had done more than they were obliged to do and were entitled to
be paid for it.
CONCLUSION
In summary, the writing has defined consideration as an element of exchange in a contract or the
price paid for a promise. It also explained the three types of consideration, namely; executory,
executed and past consideration. It further elaborated the rules which govern consideration thereby
making sure that the nature of consideration is properly demystified.
7
8
Geoff Mohan(2001), Essential Contract Law 2nd Edition, Cavendish Law series, London/Sydney. p.24
Elliot C. & Quinn F. (2009), Contract Law 7th Edition, Great Britain p.96
BIBLIOGRAPHY
BOOKS
Cavendish Lawcards series, (2004), Contract Law 4th Edition, Cavendish Publishing Limited,
Britain
Charman, M (2007), Contract Law 4th Edition, Willian Publishers, USA & Canada.
Elliot C. & Quinn F. (2009), Contract Law 7th Edition, Great Britain
Monahan, C (2001), Essential Contract Law 2nd Edition, Cavendish Law series, Cavendish
Publishing Limited, London/Sydney.
Suff, M (1997)Essential Contract Law 2nd Edition, Cavendish Publishing Limited, London
CASES
Currie v Misa (1875)
Rann v Hughes (1778) (KB)
Collins v Godefroy (1831)
Roscorla v Thomas (1892)
Re McArdle (1951)
Glasbrook v Glamorgan CC (1925),
Lampleigh v Brathwait (1615)
RE CASEY ‘S PATIENT (1892)
Thomas v Thomas
Parkinson v College of Ambulance Ltd and Harrison (1925) (KB),
Dunlop Pneumatic Tyre Company Ltd v Selfridge (1915
Combe v Combe (1951)
White v Bluet (1953)
Alliance Bank ltd v Broom (1864)