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Consideration NotesConsideration

Contract law (University of London)

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CONSIDERATION
BABAR AFZAAL
The fundamental proposition of English law that not every promise is legally enforceable
requires the courts to establish problem-solving mechanisms to distinguish enforceable
from non-enforceable obligations. After largely rejecting formal requirements in English
law, consideration plays the principal role in deciding which agreements are given the
“badge of enforceability”
DEFINITION –
 Consideration is based on the idea of reciprocity: that a promisee can not
enforce a promise unless he has given/promised to give something in return. –
 The classic definition [in Currie v Misa] is that for consideration, the party
wishing to enforce the promise must have had some detriment (e.g. paid money)
or the other party must have had some benefit (e.g. receiving money) for the
promise. (Profit and Detriment Analysis will establish the Consideration).
 Currie v Misa (1875) “consideration, in the sense of the 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”
 Dunlop v Selfridge [1915] - An act or forbearance of the one party, or the
promise thereof, is the price for which the promise of the other is bought, and
the promise thus given for value is enforceable.” Pollock, Principles of Contract
Law (13th ed.,) p.133
 A one sided promise which is not supported by consideration is a gift. The law
does not enforce gifts unless they are made by deed.

IN ORDER TO DETERMINE WHETHER THE CONSIDERATION HAS BEEN

GIVEN OR NOT, YOU HAVE TO FOLLOW THE GIVEN RULES.
IF THE CONSIDERATION IS GIVEN, CONTRACT WILL BE ENFORCED.
IF THE CONSIDERATION IS NOT GIVEN, CONTRACT WILL NOT BE
ENFORCED.

Rules of consideration:

1) The consideration must be sufficient but need not be adequate.

2) Intangible returns do not constitute good consideration.
3) Dropping of valid claim is a good consideration for a new promise.
4) Dropping of invalid claim is not a good consideration for a new promise.
5) An existing contractual duty will not amount to valid consideration. If the
Claimant did extra duty/performed extra contractual work, then extra duty/extra
work will be a good consideration.
6) An existing public duty will not amount to valid consideration. If the person do
public duty extraordinarily, then it will be a good consideration.
7) Part payment of a debt is not valid consideration for a promise to forego the
balance.
8) The consideration must not be past.
9) The consideration must move from the promisee.

THE SCOPE OF THE DOCTRINE:

1) The consideration must be sufficient but need not be adequate.

It means consideration must be having some values, whether it

appropriates in order to meet the return of the agreement. The things
that they agree to make an agreement are not just simply in oral
promises but also in exchange of some value of the exchange. They
would probably not need to have the same value or equal value of the
exchange in an agreement but the law will take it as a consideration as
adequate if the parties are agreed to the exchange. The conditions of a
legally consideration is simply that the parties agree into an exchange
and respect to each other, the subjects exchanged or promised in
exchange.
@ Chappell & Co Ltd v Nestle Co Ltd.
@ Thomas v Thomas

2) Intangible Returns do not constitute good consideration.

Natural affection itself is not good consideration. Wish, Desire,

Expectation does not entitle the aggrieved party to claim for the
enforcement of the Contract.
@white versus Bluet.
@Thomas versus Thomas

3) Dropping of Claim

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CONSIDERATION
BABAR AFZAAL
Dropping of valid claim for a new Promise will be a good
consideration. Whereas dropping of invalid claim for a new promise
will not be a good consideration.
@ Cook v Wright

4) Performance of a contractual duty owed to the promisor

General Principle Performance of an existing

contractual duty owed to a
promisor is no consideration for a
fresh promise given by that
promisor.
@ Stilk versus Myrick

Exception: If the defendant obtains a practical

benefit as a result of the claimant’s
promise to complete the work on
time or discharge his obligations
while doing extra work and that
practical benefit is sufficient to
constitute consideration.
@ Hartley versus Ponsonby
@William versus Raffey Brothers

 Economic duress vitiates

the practical benefit.
 Performance of a duty
imposed by a contract
with a third party does
constitute consideration.
5) Performance of a duty imposed by law

General Principle Performance of an existing legal

owed to a promisor is not
consideration
@ Collins v Godefrey

Exception: Unless the promisor goes beyond

their duty and promisee received
the practical benefit.

@ Ward v Byham [1956]

@Glasbrook Bros v Glamorgan
County Council [1925]
@William versus Raffey Brothers
6) Part Payment of Debt
Part payment of a debt is not valid consideration for a promise to
release the debt in full.
@ Foakes versus Beer

If A has to pay amount of Rs. 5000/ to B.

A requests to B, for the less than amount of 3000/.
If A does not give 3000, B can claim the whole amount even through
agreed with A.

@ Pinnel’s Case
If A does give 3000, B can-not claim the whole amount on the basis of
pratcial benefit.

7) The consideration must not be past. Past consideration is not a good

consideration.
What is Past Consideration?
Act = 1st
Promise = 2nd
@Roscorla v Thomas
@Re McArdle

Exception:

If the Act is done by the Promisor on the request of the promisee, then
the Past consideration will be a good consideration.
@ Lampleigh v Braithwait (1615)
@Pao On Case

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CONSIDERATION
BABAR AFZAAL
8) Consideration must move from the Promisee to Promisor.

Consideration is always given by the Promisee to the Promisor, or its

agent.
@ Tweddle v Atkinson

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