Consideration

• gifts

  • law relates to bargains and not gifts and therefore a free gift attached to a contract does not form part of the consideration
  • but most people would expect for the free gift to be provided as it was promised
• No review since 1937

  • in 1937, the law commission published a report with suggested reforms, but no changes were made
  • One proposed reform was to abolish the concept of consideration and allow gifts to be legally actionable
• Issues with sufficiency

  • courts willingness to validate some agreements has led to ridiculous outcome such as that in Chapel v Nestle, an ordinary member of society would not see the value in chocolate wrappers
  • the courts will always attempt to allow an agreement to be enforced if one party wants to give something another, this allows for gross underselling of a products value
• Issues with past consideration

  • conflicting decisions in Re McArdle and Lampleigh v Braithwait
  • there is an argument for not allowing past consideration as this would open the floodgates, but this is unlikely as few minor cases actually go to court and bigger cases are resolved on the basis of commercial reality and the expectation of a reasonable sum
• Issues with performing an existing duty cannot be consideration

  • In Stilk v Myrick the crew members were not entitled to extra paymet because the court decided they were carrying out an exisiting duty
  • but in Hartley v Ponosby the courts decided that the crew were entilted to extra payment as they had carried out extra duties
• Issues with part payment of debt

  • it is a commercial reality that some people are not able to pay off their full debt when it is due and they then must go through bankruptcy, this can take a long time and the creditors may end up with less
  • this means many businesses may take part payment as full settlement
  • but they can also claim the remaining amount at a later date,
  • conflict between breaking a promise and the strict rules of consideration