Law of Contract
Consideration
Is agreement enforceable?

Doctrine of Consideration !
White V Bluett(1853)
Held : Sons promise too vague and would
not constitute a valid consideration.
Thus no agreement (no contract) as there was
no consideration.
Definition
The traditional “benefit and detriment”
definition based on reciprocity.
Currie V Misa (1875) as per Lush J,
“ A valuable consideration, in the eyes of the
law, may consist of either in some right,
interest, profit or benefit accruing to one party,
or some forbearance, detriment, loss or
responsibility given, suffered or undertaken by
the other”.
Definition
Simplified Definition of Consideration.
“ Consideration, is the detriment incurred by the
promisee or the
benefit given to the promisor, in return for the
promisor’s promise “
Definition
Academic arguments
Professor Atiyah : Argues that there is no
doctrine of consideration laid down by the
law…when the courts found sufficient reason to
enforce the promise,..they did so.
Professor Treitel : Says that courts do see if the
parties have suffered detriment and the other has
derived benefit.
Rules of consideration

1) Past consideration is not good
consideration.

2) Consideration must move from the
promisee.

3) Consideration must be sufficient but
need not be adequate.
Past consideration
A promise, which is made after an act has been
performed is generally not enforceable.
Roscorla V Thomas (1842)
Facts : D promised the plaintiff that the horse
which had been bought by him was sound and free from
vice.
It was held that since the “promise” was made after the
sale there was no consideration for it.
Held : Defendant’s promise was unenforceable because
the only consideration, which the claimant had
provided was his “entry into the original
contract”,..and that consideration is past.
Past consideration
Courts look at sequence of events and not at the
wordings used in contract.
Re McAdle (1951)
Facts : words “In consideration of your carrying
out certain alterations and improvements to the
house….we hereby agree to pay you…”
Held : Words by themselves do not make a
consideration valid if it is past.
Past consideration
Eastwood V Kenyon (1840) QB
Facts : Guardian of young girl raised a loan
to educate the girl and to improve her
marriage prospects. After her marriage, her
husband promised to pay off the loan.
Held : Guardian’s consideration was past.
Although husband had a moral obligation
it is not “legally enforceable”
Past consideration
Exception to the rule :
1) Previous request
2)
Business situations
3)
Bills of Exchange Act 1882
(statutory intervention)
Past consideration/Previous request
“Doctrine of Implied assumpsit”
Lampleigh V Brathwait (1615)
Facts : Braithwait killed someone and then
asked L, to get him a pardon. L got him the
pardon and gave it to B, who promised to pay
L, £100 for his trouble.
Held : Although L’s consideration was past,
B’s promise to pay could be linked to the
earlier request.
Doctrine of Implied Assumpsit
Where the act of the promisee was performed
at the request of the promisor, and subsequent
to the performance of the act by the promisee,
the promisor promises to pay for it, then such
a promise may be enforceable.
Doctrine of Implied Assumpsit
Pau On V Lau Yiu Long (1980) as per Lord
Scarman. Privy Council
03 conditions must be satisfied by a promisee who
wishes to invoke the doctrine.
1)
He must have performed the original act at
the request of the promisor.
2)
It must have been clearly understood or
implied between the parties when the act was
originally requested that the promisee would be
rewarded for doing the act.
3)
The eventual promise of payment after the act was
completed must be one which, had it been made prior to or
at the time of the act, would have been enforceable.
Business Situations
If something is done in a business context and it is
clearly understood by both sides that it will be paid
for, then past consideration will be valid.
Re Casey’s Patent (1892)
Facts : A and B owned a patent that C a
manager worked on. A and B then promised C a
one-third share in the invention.
Held: C could rely on agreement and promise as
C’s consideration was done in a business situation,
at the request of A&B and it was understood by
both that C would be paid.
Bills of Exchange Act 1882
S27 (1) (b) Bills of Exchange Act 1882
: an antecedent (previous) debt or liability is
valid consideration for a bill of exchange
(an unconditional order in writing , requiring a person to
pay a sum of money to a specified person or to bearer).
S27(5) Limitation Act 1980
: A written acknowledgement of a debt by a debtor
shall be deemed to have accrued on and not before
the date of acknowledgement.
Consideration must move from the
promisee
Price V Easton (1833)
Facts : Easton made a contract with X, that in
return for X doing work for him,
Easton would pay Price. X did the work..
but Easton did not pay, so price sued.
Held : Price’s claim must fail as he had not
provided the consideration.
Maxim : A person to whom a promise is made can only
enforce the promise if he himself provides the
consideration for the promise.
Consideration must move from the
promisee
Bolton V Madden (1873)
Held : Consideration can move from the
promisee to a 3rd party, at the request of the
promisor.
Consideration must be sufficient
Chappell & Co Ltd V The Nestle Co Ltd
(1959)
Held : Records obtained for three chocolate
wrappers.
Value of the wrappers is irrelevant,..if it was
meant as consideration, its sufficient.
Consideration must be sufficient
Midland Bank V Green (1981)
Facts : Husband conveyed an estate to his wife at
a very low price, to avoid the operation of an
option to purchase.
Held : Adequacy is not relevant.
Consideration must be sufficient
Midland Bank V Green (1981)
Facts : Husband conveyed an estate to his wife at a very
low price, to avoid the operation of an option to
purchase.
Held : Adequacy is not relevant
Thomas V Thomas (1842)
Mrs. Thomas was allowed to stay in her husband’s house
because, the husband wished so, and secondly for a
promise that she would pay £1 per year.
Held : £1 was consideration but not the husband’s wish.
No consideration - some situations
1)
Performance of an existing public duty
2)
Performance of an existing contractual
duty
3)
Performance of an existing contractual
duty owed to a third party.
4)
Acts of Forbearance
Performance of public duty
A promise to perform a duty already imposed
by law does not constitute good consideration
Collins V Godefroy (1831)
Facts : Plaintiff had attended a subpoena to give
evidence on the Defendant’s behalf, in a case where D
was the litigant. Plaintiff alleged that D agreed to pay
him for the attendance.
Held : Performance of public duty is not valid
consideration, for the “promise to pay”.
He had a duty to attend by law.
Performance of public duty
England V Davidson (1840)
Facts : D offered a reward to anyone who gave
information to the conviction of a felony. The
Plaintiff a police constable gave such evidence.
Held : It was P’s public duty to provide information
to convict felon. Held no consideration.
.
Performance of public duty
Exception to Public duty : not valid
consideration rule.
1)
Police doing duty beyond their public duty,..held sufficient
consideration
Glasbrook Bros V Glamorgan County Council
2)
If promissor derives a practical benefit… “if a party to an
existing contract later agrees to pay an extra bonus in order to
ensure that the other party performs his obligations under the
contract, then that agreement is binding, if the party agreeing to
pay the bonus has obtained some new practical advantage or
avoided a disadvantage.
Performance of existing contractual duty
Stilk V Myrick (1809)
Facts : 02 out of 11 sailors deserted a ship. The capt
promised to pay the remaining crew extra money if
they sailed the ship back but later refused to pay.
Held : It was held that as the sailors were already
bound by their contract to sail back,..which includes
emergency contingencies..there is no new contract
as consideration is not valid.
The Atlantic Baron (1979) : follows above case
but see Harley V Ponsonby (1857)
Performance of existing contractual duty
Hartley V Ponsonby (1857)
Facts : Similar facts except that ship was seriously
undermanned that the rest of the journey had
become extremely hazardous….thus.
Held : Sailing the ship back under such dangerous
conditions was over and above their normal
contracted duties.
Performance of existing contractual duty
Williams v Roffey Bros (1990)
Facts : Roffey had a contract to refurbish a block of flats and
had sub contracted the carpentry work to williams. After the
work had begun, it became apparent that Williams had
underestimated the costs of the work and was also in
financial difficulties. Roffey, aware of this and also
concerned that the work would not be completed on time,
agreed to pay an extra bonus. Williams completed the work
but Roffey refused to pay saying that Williams was doing
what he was contractually bound to do, and so had not
provided consideration.
Held : Agreement is binding if party agreeing to pay
bonus/extra, obtained some new practical advantage or
avoided a disadvantage.
Performance of existing contractual duty
to a 3rd party
Scotson V Pegg (1861)
Facts : S contracted to deliver coal to X.,.or rather to X’s order. X
sold the coal to Pegg, and ordered to deliver the coal to Pegg.
Then Pegg promised Scotson that he would unload it at a fixed
rate. In an action by Scotson to enforce Pegg’s promise, Pegg
argued that the promise was not binding because Scotson had not
provided the consideration.
Held : Scotsons delivery of coal (the performance of an existing
contrct to a 3rd party) was a benefit to Pegg and thus valid
consideration.
New Zealand Shipping V Satterthwaite (1975) P/C
Privy council, followed the above decision.
Acts of forebearance
If one person has a valid claim against
another, in contract or tort, but if he promises
to forbear from enforcing it, that will
constitute a valid consideration, if made in
return for a promise by the other to settle the
claim.
Alliance Bank V Broom(1864)