Consideration
The courts would be overworked if EVERY breach
of contract was enforceable through the courts –
so ‘RULES’ were needed to determine which
promises were enforceable. The main 2 rules of
enforceability centre on:
i. the doctrine of consideration and
ii. the presence of an Intention to create legal
relations with the other party.
Approaches to Consideration
Traditional view
CURRIE v MISA 1875 – per Lush J who stated:
‘A valuable consideration, in the sense of law,
may consist either in some right, interest, profit
or benefit accruing to the one party, or some
forbearance, detriment, loss or responsibility,
given, suffered, or undertaken by the other’..
Approaches to Consideration
The more modern view
As stated by Sir Frederick Pollack in ‘Pollack’s
Principles of contract’ – that consideration is
‘An act or forbearance of one party, or the
promise thereof, being THE PRICE for which
the promise of the other party is BOUGHT’.
The ‘Sufficiency’ of
consideration
‘What does it mean to say that consideration must
be ‘sufficient’? Who decides whether or not the
consideration is sufficient? … In answering these
questions it is useful to distinguish the case where
the alleged consideration takes the form of
a promise to pay money for a service or product,
from the case where the promise takes the form of
a promise to provide some non-monetary benefit.’
Some key cases on the
sufficiency of consideration
THOMAS v THOMAS 1842
CHAPELL & Co Ltd v NESTLE CO LTD
1960
ALLIANCE BANK v BROOM 1864
Forbearance as consideration
Intangible things like love and affection,
morals and so forth, do not normally amount
to consideration, but see:
White v Bluett 1853
Pitt v PHH Asset Management Ltd 1994
Hamer v Sidway 1891
Sometimes the 19th century courts
‘ATTEMPTED TO SQUEEZE CASES INTO
THE CATEGORY OF CONTRACT’
DE LA BERE v PEARSON 1908
The ‘doctrine of consideration’ has faults and
some people have questioned its role in the
modern law of contract.
Past consideration
ROSCORLA v THOMAS 1842
LAMPLEIGH v BRATHWAITE 1615
RE McARDLE 1951
PAO ON v LAU YIU LONG 1980
Can consideration be multiapplicable?
We can look at this under the traditional 3 headings
used in the text books – is there SUFFICIENT
CONSIDERATION to make ANOTHER contract in the:
i. performance of a PUBLIC or STATUTORY duty?
ii. performance of a contractual duty ALREADY
OWED to a 3rd party?
iii. performance of an ALTERATION to an existing
contractual duty?
PERFORMANCE OF A
PUBLIC/STATUTORY DUTY
COLINS v GODEFROY 1831
GLASBROOK BROS LTD v GLAMORGAN
COUNTY COUNCIL 1925
HARRIS v SHEFFIELD UTD FOOTBALL CLUB
LTD 1987
Police Act 1964, section 15 (1)
PERFORMANCE OF A
STATUTORY DUTY
WARD v BYHAM 1956
In the Court of Appeal it was held by the majority that
although the mother was under a STATUTORY
DUTY TO LOOK AFTER THE CHILD, because she
had parental responsibility for the child, she HAD
provided EXTRA CONSIDERATION for the £1 a
week from the father by promising to keep the child
happy and by allowing her the choice of where to
live.
PERFORMANCE OF CONTRACTUAL
DUTY ‘ALREADY’ OWED TO A THIRD
PARTY
In these situations the general rule is AVOIDED so
that performance of a duty to a third party can be
consideration for a NEW PROMISE.
SCOTSON v PEGG 1861
NEW ZEALAND SHIPPING CO LTD v
SATTERTHWAITE – THE EURYMEDON 1975
The Eurymedon 1975
The Privy Council (per Lord Wilberforce who delivered the
opinion of the majority) held that the relationship between the
shippers and the stevedores could be put to contractual
analysis by regarding the bill of lading as a UNILATERAL
OFFER that was accepted by the stevedores when they
PERFORMED THE ACT of unloading the drill.
The CONSIDERATION by the stevedores in this contract was
the unloading of the drill and it MADE NO DIFFERENCE that
the stevedores WERE ALREADY CONTRACTED TO
UNLOAD THE DRILL BY THE CARRIER.