University of Technology, Jamaica

Law of Contract I
Unit 5
October 27-28, 2010
 Consideration
• What is consideration? A few definitions…
– “A promised action, or omission of action, that the
promisee did not already have a pre-existing duty to
abide by.”
– “An act or forbearance of 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.”
– **“A valuable consideration in the sense of the law,
may consist either in some right, interest, profit or
benefit accruing to the other party, or some
forbearance, detriment, loss of responsibility given,
suffered or undertaken by the other.”
 Consideration
• Forms of consideration:
– Executory consideration
• The promise of a monetary payment or a service to be
provided in the future
– Executed consideration
• Consideration that has been performed by a party
• Eg, unilateral Ks (promisor only becomes liable once
performance has been completed by the promisee)
 Rules Governing Consideration
• 1. Past consideration is not consideration: 
– Past consideration is a benefit or service
previously rendered to the promisor
• ie, if one party voluntarily performs an act, and the
other party then makes a promise, the consideration
for the promise is said to be in the past, and thus
insufficient and cannot be used to sue on a contract.
 Past consideration, ctd
• Roscorla v Thomas (1842) 3 Q.B. 234
– Claimant purchased Defendant’s horse for 30
pounds. After the completion of the sale, the
defendant promised that the horse was “sound
and free from vice.” The horse ended up being a
vicious one. Claimant brought an action for
breach of K, but it failed because the
consideration was considered past consideration.
 Rules Governing Consideration
• 2. Consideration Must be Sufficient, but Need not
be Adequate
– Provided that the consideration has some value, the
courts will not investigate its adequacy. Where the law
recognizes consideration as having some value, it is
described as “real” or “sufficient” consideration. The
courts will not investigate contracts to see if the
parties have received equal value.
– If a contract is a bad bargain for one or both parties, it
is still valid. (eg “peppercorn” rent, or selling property
for significantly below its value)
– To be sufficient, consideration must have some value
 Rules Governing Consideration
• 3. Consideration Must Move From the
Promisee
–   The person who wishes to enforce the Contract
must show that he or she provided consideration;
it is not enough to show that someone else
provided consideration. The promisee must show
that consideration was provided by him.
– Price v Easton (1833) 4 B. & Ad. 433.
 Rules Governing Consideration
• 4. Forbearance to Sue
–   If one person has a valid claim against another,
but promises to forebear from pursuing it, this will
constitute valid consideration if made in return for
a promise by the other to settle the claim.
• A promise not to pursue an invalid (one that would fail)
may also constitute consideration
 Rules Governing Consideration
• 5. Existing Public Duty
– If someone is under a public duty to do a
particular task, then agreeing to perform that task
(or performing it) is not sufficient consideration
for a contract.
• See Collins v Godefroy (1831) 1 B & Ad. 950 – D
promised to pay the claimant for giving evidence in
court. D had been served a subpoena and had a legal
duty to attend the trial. Held: no consideration.
 Rules Governing Consideration
• 6. Existing Contractual Duty
– If someone promises to do something that they
are already bound to do under an existing
contract, that is not valid consideration.
• 7. Existing Contractual Duty Owed to a Third
Party
– If a party promises to do something for a second
party, but is already bound by a contract to do this
for a third party, valid consideration exists.
 Rules Governing Consideration
• 8. Part payment of a Debt
– If one party owes a sum of money to another and
agrees to pay part of this in full settlement, the
rule at Common law is that part payment of a debt
is not good consideration for a promise to forego
the balance.