Consideration

• consideration rules

  -> in order for contract to be valid, there must be some form of consideration.

  -> where parties of a contract give each other something of value, now or in the future

  • usually the price of goods/ services
  • contracts can be formed without a cash transaction so consideration can take other forms

  currie v mirza -> consideration defined in terms of benefit (gain) and detriment (loss)

  -> both must receive benefit/suffer detriment
• 1. consideration must have some value

  -> must have real value but doesn't have to be an exact match in worth

  -> court won't intervene even if its not a great deal/value isn't perfectly equal- courts value freedoms of parties to make their agreements

  -> once agreed upon court expects both sides to stick to it even if one party has a more favourable outcome
• 1. consideration must have some value

  -> chappel v nestle - even seemingly insignificant things like chocolate wrappers can be considered as part of the payments in a deal

  -> thomas v thomas - involves the concept that even a small payment, like £1 rent a year can be consideration in a contract
• 1. consideration must have some value

  
  

  • sufficiency means that consideration must be real and have some inherent value, even if value is nominal

  -> white v bluett - no consideration as he had no legal right to complain and natural love and affection were not consideration so he still had to pay the debt

  ->ward v bytham - no legal obligation to keep the child happy so it was consideration
• 2. consideration must not be past

  -> past consideration is unenforceable- has no value where it has already been done at the time of the agreement-- promise to pay after the agreement = past consideration

  -> roscarla v thomas - sold a horse and later promised it was free from vice- horse was violent -> post sale promise lacked consideration as nothing was given in return

  -> re McArdle - rented a house and performed improvements and defendants promised to pay a sum towards the cost- made promise after the work and had no legal contract
• past consideration exceptions

  ->where there is an express or implied promise to pay for a particular task

  -> implied understanding the task should be paid for, particularly in commercial agreements

  Re Casey's Patent - claimant worked on patents and was promised a 1/3 share on the patents -> court held the claimant was entitled to the share because it was implied that when he worked on the patent, he would receive some form of payment
• past consideration exceptions 2 - lampleigh v braithwaite 


  -> after gaining a pardon, promised £100 -> then refused as it was past consideration

  -> court ruled in favour of lampleigh - did a job at request and fee must have been implied

  certain conditions

  • must be a clear request, express or implied to perform a task
  • inherent in the request, must be an implied promise that the promisor will pay the promisee a reasonable sum for completing the task
  • promisee must actually perform the task
  • promisor must then pay promisee for completed performance
• 3. performing a pre-existing duty cant be consideration for a new contract 


  • They cant use pre existing obligation as consideration for a new agreement as they are already under legal obligation to perform that duty

  stilk v mynch -> existing duties don't count as new consideration
• 3. performing pre-existing duty cant be consideration for a new contract

  • if an extra element is required for the new payment, there is consideration

  hartley v ponsonby -> promise was enforceable because the increased danger added a new element making it good consideration. glasbrock v glamorgan county council -> ruled in favour of police as they provided more men and a different duty than their normal one, making it good consideration
• 3. performing a pre-existing duty cant be consideration for a new contract

  • courts will give commercial effect to arrangements that might appear to have no consideration
  • williams v roffley bros and nichols ltd -> paid extra for williams to complete on time but then refused to pay as it was a pre existing duty -> if a party to a contract promises an extra benefit and receives a practical benefit in return, its binding even if the party was already obligated to do the original work
• 3. performing a pre-exisitng duty cant be consideration for a new contract

  • pre-exisitng duty can't be consideration for a new contract where an act is carried out by someone who is already under legal obligation to do so

  collins v godfrey - fulfilling an exisitng duty like testifying as a witness doesn't count as valid consideration for a new promise
• 4. consideration may be found where contractual duties are owed to a 3rd person


  • when someone is under contractual duties to a 3rd person, performance of that duty may be good consideration

  shadwell v shadwell - fulfilling an existing duty to a 3rd party can be valid consideration

  scotson v pegg - if someone is already under a contractual duty to a 3rd party, their performance of that duty is valid consideration
• 5. consideration must move from the promisee

  • promisee and not another party must carry out their part of the agreement -> privity of contract

  tweedle v atkinson- privity of contract, only the person to whom the promise is made can enforce the contract
• 6. promise to accept part payment of an existing debt in place of the whole debt is not consideration

  • promise to accept less is not consideration in the eyes of the law
  • according to Pinnels case-> the person you owe money to can come back later and demand the rest of money even if they initially agreed to accept less
  • foakes v beer -> a promise to accept part payment of a debt is not legally binding- beer could still demand interest after agreeing to a payment plan
• 6. part payment of existing debt is not consideration (EXCEPTIONS)

  1. debtor agrees to pay smaller amount on an earlier date, or agrees to pay in a different form--> accord and satisfaction- even if what's offered is less/ paying earlier if both agreed = fair
  2. if someone promises to change deal/ contact and the other person relies on the promise and is negatively affected because of it-> person who made the promise can't change their mind

  promissory estoppel -> Central London property Trust v high trees House
• 6. part payment of existing debt is not consideration (EXCEPTIONS)

  promissory estoppel

  -> courts reluctant to follow as it suggests consideration is not an essential part of commercial contracts

  • Re selectmove -> promissory estoppel couldn't be applied against a government body seeking the whole debt
  • D + C builders V Rees -> is there is economic duress and the offer isn't fair, it might not be considered a valid compromise