UNIVERSITY OF LUSAKA

FACULTY OF LAW
LAW OF CONTRACT – UNIT 4:
CONSIDERATION
George Mpundu Kanja
gmkanja@zamnet.zm
 STRUCTURE OF THE PRESENTATION
• Introduction
• Definition of Consideration
• Types of Consideration
• Rules Governing Consideration
 INTRODUCTION
• Consideration is based upon the idea of
‘reciprocity’; that a promisee should not be able
to enforce a promise unless he has given or
promised to give something in exchange for the
promise or unless the promisor has obtained or
been promised something in return.
• In short a promise, which is a starting point in the
process of the formation of the contract, is only
enforceable as a contract if it is supported by
consideration.
 DEFINITION OF CONSIDERATION
• Consideration is defined as something of value in the eyes
of the law, promised or given by one party to the contract
which makes the other party’s promise enforceable as a
contract.
• The standard definition of consideration was expressed in
the case of Currie v. Misa (1875) LR 10 Ex 153, where Lush j.
Stated that: “A valuable consideration, in the sense of the
law, may consist 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”.
• The benefit or detriment interchange represents the
traditional idea of contract as being an exchange based
upon reciprocal obligation.
 DEFINITION OF CONSIDERATION
• The definition of consideration was also
earlier considered in the case of Eleanor
Thomas v. Benjamin Thomas (1842) 2 Q.B.
851, where Patteson J. stated that
consideration meant “something which is of
some value in the eyes of the law, moving
from the plaintiff: it may be of some
detriment to the plaintiff or some benefit to
the defendant; but at all events it must be
moving from the plaintiff”.
 TYPES OF CONSIDERATION
(1) Executed Consideration
(2) Executory Consideration
(3) Past Consideration
 EXECUTED CONSIDERATION
• Where the act constituting the consideration is
completely performed, the consideration
executed.
• For example, Kaluba receives K500,000 from
chongo when he promises to deliver a computer
to Chongo.
• The money Kaluba recives constitutes an
executed promise by Chongo in return for
Kaluba’s promise to deliver the computer.
• Performance of the requested act in the case of
general offers is executed consideration.
 EXECUTORY CONSIDERATION
• Where the consideration takes the form of a promise
to be performed in future the consideration is said to
be executory.
• For instance, when consideration from one party to
the other is to pass subsequent to the conclusion of
the contract, the consideration is executory.
• The promise by Kaluba to deliver a computer to
Chongo, in the above example, is executory
consideration on the part of Chongo.
• Therefore consideration is executory when it relates to
the future.
 PAST CONSIDERATION
• If a person makes a promise subsequent to some act or
service rendered independent of any promise, the
previous act or service cannot be consideration for the
promise being made.
• Anything which has already been done before a promise
in return is given, is called past consideration.
• As a general rule, past consideration is not consideration
to make a promise legally binding.
• For example, if James provides assistance to George who
has been knocked down by a hit and run car, by taking him
to the hospital and paying all the medical expenses, James
cannot later on demand compensation from George.
 PAST CONSIDERATION
• There are however, some exceptions to the general
rule that past consideration is not consideration.
• One such notable exception is found under section
27 of the Bills of exchange Act 1882 which provides
that a valuable consideration for a bill may be
constituted by an antecedent debt or liability.
• Such a debt or liability is deemed “valuable
consideration”.
RULES GOVERNING CONSIDERATION
• Various rules governing consideration can be
summarised as follows:
• Consideration must move at the desire of the
Promisor
• Consideration must not be Past
• Consideration must move from the Promisee
• Consideration need not be Adequate but must
have some Value
• Consideration must be Legal
• Consideration must be Sufficiency
Consideration must move at the desire of
the Promisor
• An act constituting consideration must be
done at the desire or request of the
promisor.
• If an act or abstinence is done at the instance
of a third party and or without the desire of
the promisor, it will not be good
consideration.
 Consideration Must not be Past
• A party to the contract cannot use a past act
as a basis for consideration.
• Therefore, if one party performs an act for
another, and only receives a promise of
reward after the act is completed, the
general rule is that he cannot enforce the
promise because the consideration he has
provided is past.
 Consideration Must not be Past
• Past consideration is not recognised as good consideration
because the act or performance in question was not part of any
bargain or exchange, but is merely gratuitous.
• In Roscorla v. Thomas (1842) 3 QBD 234, the seller of a horse, after
the buyer had purchased it, promised the buyer that the horse “did
not exceed five years old” and “was sound and free from vice”. In
fact on the contrary it was found by the Court that the horse was
“vicious, restive, ungovernable and ferocious” and the buyer sued
for breach of the promise. The action failed.
• The court held that the consideration provided by the buyer was
already past when the promise by the seller that the horse was
“free from vice” was made. The warranty was not given in return
for the promise of payment made for the horse and, being made
after the sale, was gratuitous and therefore insufficient
consideration. The seller’s promise was therefore not enforceable
as it was not supported by new or fresh consideration.
 Consideration Must not be Past
• Similarly, in Eastwood v. Kenyon (1840) 11 A & E 438, the plaintiff
had become the guardian of Sarah, a young heirness, on the death
of Sarah’s father. He spent money on improving her estate, and on
her education, and he had to borrow 140 pounds in order to do so.
When she came of age, she promised to pay the plaintiff the
amount of the loan. After her marriage to the defendant (her
husband), he repeated this promise of reimbursement to the
plaintiff.
• The Court held that the plaintiff was unable to enforce this
promise because the consideration which he had provided, which
was bringing up and financing Sarah, was past. The plaintiff’s acts
were gratuitous in that they were not given in return for the
defendant’s or sarah’s promise. The court conceded that the
husband might have been under a moral obligation to pay, but
that moral obligation could not be converted into a legal
obligation because of the absence of consideration.
 Consideration Must not be Past
• A similar decision was also reached in the case of Re McArdle
[1951] Ch 669, [1951] 1 All ER 905: The five children of a family, by
their father’s will, were to inherit a house after their mother’s
death. During the mother’s life, one of the children and his wife
(Mrs Majorie McArdle) lived with her in the house.
• The wife made various improvements and alterations to the house,
which she paid for herself. She had not been asked to do this.
However, about a year later, all five children signed a document
addressed to her, in which they promised to repay 488 pounds
from the estate when it was eventually distributed.
• The document specifically stated that “in consideration of your
carrying out certain alterations and improvements to the property,
we hereby agree that the executors shall repay to you from the
estate, when distributed, the sum of 488 pounds in settlement of
the amount spent on such improvements”.
 Consideration Must not be Past
• When the mother died, the daughter-in-law tried to enforce the
promise made in this document. This action was held to be
unenforceable as all the work had been done before the promise
was made.
• The Court of Appeal held that as all the work on the house had in
fact been completed before the document was signed, the
undertaking by the children amounted to past consideration.
• Jenkins L.J. stated that “the work had in fact all been done and
nothing remained to be done by Mrs Marjorie McArdle at all, the
consideration was a wholly past consideration, and therefore the
beneficiaries’ agreement for the repayment to her of the 488
pounds out of the estate was a nudum panctum (a bare promise), a
promise with no consideration to support it (at p. 678).
 Exception to the Rule that
Consideration Must not be Past
• The first exception is where the work has been performed in
circumstances which carry an implication of a promise to pay.
• In Re casey’s patents, steward v. Casey [1892] 1 Ch 104: The joint
owners of a patent agreed with Casey that he should manage and
publicise their invention. Two years later joint owners wrote to
casey that, “In consideration of your services as practical manager
in working our patents, we hereby agree to give you one third share
of the patents”. When casey tried to enforce the agreement it was
argued for the joint owners that their promise was made only in
return for casey’s past services as manager and that there was
therefore no consideration to support it.
• The court founding in favour of casey rejected the view that this
promise was supported by past consideration from casey. The
request to him to render his services carried an implied promise to
pay for them. The promise of a third share was simply the fixing of
the price.
 Exception to the Rule that
Consideration Must not be Past
• Also in Lampleigh v. Brathwait (1615) Hob 105: Thomas Brathwait
had killed Patrick Mahume and then asked anthony Lampleigh to
do all he could to get a pardon for him from the king. Lampleigh did
as requested, which involved making journeys at his own expense,
and obtained a pardon for Brathwait. Afterwards, Brathwait
promised to pay him 100 pounds for his endeavours. He then failed
to pay Lampleigh and was sued by him. Brathwait’s defence was
that the act had been performed before the promise of a reward
was made.
• The Court found in favour of Lampleigh and rejected the argument
that the consideration was past. It stressed that the plaintiff’s
service was performed at the request of the defendant and his
promise to pay for it was binding. This is because the later promise
related to the earlier request for help; essentially it was all part of
the same transaction.
 Exception to the Rule that
Consideration Must not be Past
• In Pao On v. Lau Yiu Long [1979] 3 ALL ER 65 at p. 74;
[1980] AC 614 at p. 629: Lord Scarman in the Privy
Council decision summarised the position as follows:
• “An act done before the giving of a promise to make a
payment or to confer some other benefit can
sometimes be consideration for the promise. The act
must have been done at the promisor’s request, the
parties must have understood that the act was done
to be remunerated further by a payment or the
conferment of some other benefit, and payment, or
the conferment of a benefit must have been legally
enforceable had it been promised in advance”.
 Exception to the Rule that
Consideration Must not be Past
• In short the Privy Council’s requirements for an action completed
before a promise could be recognised as consideration can be
broken down into three namely:
(i) The service must have been rendered at the promisor’s request;
(ii) The parties must have understood that the act was to be paid for
or result in some benefit to the other party; and
(iii) The payment, or the conferment of a benefit, would have to have
been legally enforceable had it been promised in advance.
• If these conditions apply, a later promise to pay is enforceable if
rendered at the request of a party and on clear understanding that
payment would be given in due course so long as the payment
would be legally enforceable if it had been promised in advance.
 Exception to the Rule that
Consideration Must not be Past
• The second exception to the rule that consideration must
not be past 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.
• A Bill of Exchange contains a promise to pay a specific sum
of money.
• A cheque is a form of a bill of exchange and we all know
that cheques are often drawn to settle existing, that is, past
debts, for example, payment for the services rendered a
month ago, or goods supplied some days ago.
• This exception is necessary so that cheques and other bills
of exchange fulfil their function as a means of payment.
 Consideration must move from the Promisee

• The maxim that ‘consideration must move from the promisee’

simply means that a promise can only be enforced by a promisee
if there is consideration for the promise.
• Only parties to the agreement who have provided consideration
can sue on the contract.
• Thus a person who has not provided consideration does not have
the right to sue on the contract, for that person is not a party or
privy to the contract.
• If, for example, Mutale is promised some benefit by Mutinta, but
the consideration for the promise has been supplied by Makunka,
then Mutale will not normally enforce Mutinta’s promise because
consideration has not been provided by him.
• In short Mutale has given nothing in exchange for Mutinta’s
promise; he has not paid the price of it or suffered any detriment.
 Consideration must move from the Promisee

• In Tweddle v. Atkinson (1861) 1 B & S 393, John Tweddle and

William Guy agreed each to pay a sum of money to a couple on
their marriage. The couple in question were their son and daughter
respectively. The plaintiff, John Tweddle’s son, tried to enforce his
father-in-law’s promise, when William Guy failed to make the
agreed payment.
• The action failed as the son did not provide any consideration for
his father-in-law’s promise. In other words there was no privity of
contract between him and his father-in-law.  
• Crompton J. Stated that, at p. 398: 
• “The consideration must move from the party entitled to sue upon
the contract. It would be a monstrous proposition to say that a
person was a party to a contract for the purpose of suing upon it
for his own advantage, and not a party to it for the purpose of
being sued”.  
Consideration need not be Adequate but must have
some Value
• As already explained consideration is something given in
return for something.
• That something need not be the comparative value of the
promises made by the parties or what is received from
the other party.
• Thus the law will enforce only those promises for which
something is given in return; it will not enforce gratuitous
promises.
• Where consideration has been given the courts will not
normally judge the adequacy of consideration, that is,
whether adequate value has been given in exchange for a
promise or whether the parties to the contract in fact
made a fair bargain or exchange.
Consideration need not be Adequate but must have
some Value
• In Mountford v. Scott [1975] Ch 258: The defendant
made an agreement with the plaintiff, granting the
plaintiff an option to purchase the defendant’s house
for 10,000 pounds within six months. The plaintiff paid
1 pound for the option, and later sought to exercise it.
The value of the defendant’s property had risen by this
time and he refused to sell.
• The Court held that this option agreement was
enforceable against the defendant and that it was
irrelevant that the consideration provided by the
plaintiff could be described as a token payment.
Consideration need not be Adequate but must have
some Value
• Likewise in Chappell & Co v. Nestle Co [1960] AC 87:
The defendants, as part of the sales promotion,
offered a record at a reduced price if their chocolate
bar wrappers accompanied the payment. The plaintiffs
held the copyright in the record, and argued that the
royalties they were entitled to should be assessed on
the price of the record plus the value of the wrappers,
which the defendants in fact simply threw away when
they had been received.
• The House of Lords decided in favour of the plaintiff
holding that wrappers were part of consideration. It
was irrelevant that the wrappers were of no intrinsic
value to the company.
Consideration need not be Adequate but must have
some Value
• The adequacy is not determined solely by economic
criteria. It is enough, for example, that the promise is a
promise to refrain from doing something which the
promisor is legally entitled to do.
• In Pitt v. PHH Asset Management Ltd [1993]: The Court held
that a lock out agreement negotiated by a vendor and a
prospective purchaser of property constituted a binding
contract.
• The Court found that the contract was supported by
valuable consideration, namely the removal of the
purchaser’s threat to seek an injunction to prevent a sale to
another buyer and the purchaser’s further pressure to
exchange contracts on the purchaser of the property within
a two week period.
Consideration need not be Adequate but must
have some Value
• A further example to illustrate how courts will accept
as valuable consideration promises which cannot be
valued purely economically is shown in the case of
Shadwell v. Shadwell (1860) 9 C.B.N.S. 159
• An uncle promised to pay his nephew a yearly sum in
consideration of the nephew getting married. The
nephew married, but the annuity fell into arrears. On
his uncle’s death the nephew brought an action
against the executors of the estate. They were held
bound since, inter alia, the nephew’s marriage was
something of interest to the uncle.
 Consideration must be Legal
• If consideration is illegal the whole contract will be
invalidated.
• There are two classes of illegal contract, those existing
under the common law and those made illegal by
Parliament.
• Illegality at common law arises in cases where the
contract is considered as being contrary to public policy,
for instance, contracts involving sexual immorality,
contracts involving commission of crime and contracts
associated with corruption in public life.
• In these cases the courts consider the promises being
exchanged between the parties as unlawful and therefore
unenforceable.
Consideration must be Sufficiency
• Consideration is treated as insufficient and thus incapable of
supporting a contract when it involves the promisor undertaking
to do something that he is already obliged to do by law.
• The justification for this is that since the promisor is bound to
carry out the promise anyway, there can be no true bargain in
using performance of this promise to support another contract.
• Consideration is said to be insufficient in the following
circumstances, namely:
(1) Where a performance of a duty is imposed by law;
(2) Where a performance of contractual duty is owed to the
promisor;
(3) Where a performance of a duty is owed to a third party
(i) Performance of a Duty Imposed by Law
• Where a person performs what he is officially expected to do as
part of his public duty that would not constitute sufficient
consideration for a promise in respect of that service or act.
• In Collins v. Godefroy (1831) 1 AD 950 the plaintiff was subpoenaed
to give evidence on defendant’s behalf at a trial in which the
defendant was involved. The plaintiff claimed that the defendant
promised him 1.05 pounds per day for attending court.
• The court held that there was no consideration for this promise as
the plaintiff was under a legal duty to attend court and give
evidence.
• Lord tenterden stated that “if it be a duty imposed by law upon a
party regularly subpoenoed to attend from time to time to give his
evidence, when a promise to pay him any remuneration for loss of
time incurred in such attendance is a promise without
consideration”.
(i) Performance of a Duty Imposed by Law

• However, if the promisor performs some act beyond the

public duty or existing legal duty this will operate as valid
consideration.
• In Glasbrook Brothers Ltd v. Glamorgan County Council
[1925] AC 270: The mine-owners during a miners strike
were fearful of violence occurring. Their assessment of the
amount of police station that they needed differed from
assessment of the amount of police protection that they
needed from that of police whose job it was to provide it.
• Eventually, the police did agree to amount stationery
guard, which they did not think necessary, but they did so
on the basis that it would be paid for by the company.
(i) Performance of a Duty Imposed
by Law
• The company agreed to pay 2,200 pounds for this
more extensive police operation, but later refused to
make the payment, claiming that there was no
consideration given for their promise.
• The House of Lords held that the police were
entitled to recover the payment as they had done
more than perform their existing legal duty. The
extra service given was consideration for the
promise to pay.
 (i) Performance of a Duty Imposed by Law

• Similarly, in Harris v. Sheffield United Football Club Ltd

[1987] 2 All E.R. 838, where the football club
challenged its contractual liability to pay for the
policing of its football ground during home matches.
The Court of Appeal held that the contract between
itself and the Police authority was valid.
• The number of Police officers provided was in excess
of those who would have been provided had the Police
simply been fulfilling their public obligation to keep the
peace and prevent disorder.
• The football club was therefore liable to pay for the
services rendered by the Police authority.
 (ii) Performance of a Contractual Duty
Owed to the Promisor
• Consideration must not be something, which the promisee is
already bound to do.
• Where the promisee is already under a contractual obligation to
perform his part of the contract, an additional promise to reward
him for performing the contract is not binding for lack of
consideration.
• This is particularly the case if the promisee assumes no extra
obligations and the promisor gets no extra rights or benefits.
• In Stilk v. Myrick (1809) 2 Camp 317, 170 E.R. 1168, a promise by a
ships captain to pay sailors an additional sum for working the ship
on the return voyage was unenforceable, even though they had to
work harder due to the desertion of two crew members.
• The Court found that their existing contracts bound them to work
the ship home in circumstances, therefore they provided no new
consideration to support the promise of extra wages.
 (ii) Performance of a Contractual Duty
Owed to the Promisor
• However, the decision in Stilk v. Myrick was
reconsidered by the Court of Appeal in the case
of Williams v. Roffey Brothers & Nicholls
(Contractors) Ltd [1901] 1 All ER 512: The
defendants had a contract with a housing
association for the refurbishment of a number of
flats. They subcontracted the joinery work to the
plaintiff. After performing most of his obligations
under the contract the plaintiff found himself in
financial difficulties, for the agreed price of
20,000 pounds was too low.
 (ii) Performance of a Contractual
Duty Owed to the Promisor
• The defendants were anxious for their contract with the
housing association to be completed by the agreed date,
since the penalty clause they would suffer financially for late
completion. The defendants met the plaintiff and agreed to
pay him an additional 10,300 pounds for completion of the
joinery work. He then carried out most of the remaining work,
but refused to complete it when the defendants indicated
that they would not pay additional agreed sum.
• They argued that he was under a contractual obligation to
carry out the work arising from the original contract. He had
given no new consideration for the promise of extra payment.
(ii) Performance of a Contractual Duty Owed to
the Promisor
• The Court held that the new agreement was binding on the
defendants. By promising the extra money they had received a
benefit, namely the avoidance of a penalty payment, or
alternatively the need to employ another sub-contractor. This
benefit was consideration to support the new agreement even
though the plaintiff was not required to any more work than he
had originally undertaken.

• Also in Hartley v. Ponsonby (1857) 7 EL & BL 872, When almost half

of the crew of a ship disserted, the captain offered those remaining
40 pounds extra to complete the voyage. In this case, the ship was
so seriously under manned that the rest of the journey had become
extremely hazardous. It was held that this fact discharged the
sailors from their existing contract and left them free to enter into
a new contract for the rest of the voyage.
 (iii) Performance of a Duty Owed to a Third
Party
• Performance of a contractual duty owed to a third party is good
consideration.
• In Shadwell v. Shadwell (1860) 9 CB (NS) 159: The plaintiff, Lancey
Shadwell, who was engaged to be married to Ellen, received a letter from
his uncle, Charles Shadwell. The letter expressed Charles’ pleasure at
hearing of his nephew’s engagement, and continued: “... as I promised to
assist you at starting, I am happy to tell you that I will pay you 150 pounds
yearly during my life”. The plaintiff married Ellen, and his uncle did not
make all the payments that he promised. After his death, the Plaintiff sued
his uncle’s personal representatives for the arrears. The defendants
argued that the plaintiff had provided no consideration for his uncle’s
promise, as he was already bound to marry Ellen before the promise was
made.
• The Court held that the plaintiff had suffered a detriment because, in
reliance upon the promise, he might have incurred financial liabilities. It
was also held that a benefit was conferred on the uncle because his
nephew’s marriage was clearly a matter of some importance to him.
PART PAYMENT OF A DEBT IS NOT SUFFICIENT
CONSIDERATION
• A general rule at common law is that a promise
by a creditor to take less than is owed to them
by the debtor is not legally binding, as such a
promise lacks consideration.
• In other words, a promise to accept part
payment of a debt in discharge of the entire
debt is not supported by consideration.
• This is because the debtor is already
contractually obliged to repay the entire debt
and so provides no consideration for the
creditor’s promise to accept part payment.
 PART PAYMENT OF A DEBT IS NOT SUFFICIENT
CONSIDERATION
• In Couldery v. Bartrum (1881) 19 Ch. 394 at p. 399,
Jessel M.R. Stated that:
• “a creditor might accept anything in satisfaction of his
debt except a less amount of money. A creditor could
accept a horse, or a canary, or a tomtit if he chose.
That would be good consideration for the promise;
but, by a most extraordinary peculiarity of the English
Common Law, he could not take 19s.6d. in the pound;
that was nudum pactum (that is, a gratuitous promise).
Therefore, although the creditor might take a canary,
yet, if the debtor did not give him a canary together
with his 19s 6d, there was no accord and satisfaction; if
he did, there was accord and satisfaction”.
 PART PAYMENT OF A DEBT IS NOT SUFFICIENT
CONSIDERATION
• The classic example of the operation of this rule was demonstrated in the
case of Foakes v. Beer (1884) 9 App Cas. 605: The defendant John Weston
Foakes, owed Julia Beer a sum of 2,090 pounds on a judgment debt. Mrs
Beer agreed to accept 500 pounds immediately, with the remainder to be
paid in instalments, and promised that she would thereafter not take any
further proceedings against Foakes. Foakes paid the money as agreed, but
Mrs Beer went back on her word, and claimed interest on the judgment
debt, which Foakes refused to pay. Foakes claimed that he was not
obliged to pay interest as this was covered by the promise of Mrs Beer not
to sue. However, Mrs Beer argued that Foakes had not furnished
consideration for the promise not to sue on the judgment.
• The House of Lords found in favour of Mrs Beer and held that there was
no consideration for the agreement and that Foakes was still bound to
pay for the interest. Payment of part of the debt could not be good
consideration for Mrs Beer’s promise to forgo the interest.
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