contract law - consideration

• Consideration

  An exchange between the parties in a contract
• Consideration

  This is considered after offer and acceptance
• Currie v Misa (1875): 'Consideration is "some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other"'
• Dunlop v Selfridge Ltd (1915): 'Sir Fredrick Pollock: "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"'
• Executed consideration


  When consideration has been performed
• Executory consideration


  When consideration is yet to be performed
• Consideration

  An exchange between the parties. Consideration must move from the promisee to the promisor. The value of the exchange is agreed by both parties.
• Consideration Rules

  • Consideration Need Not Be Adequate But Must Be Sufficient
  • Past Consideration Is No Consideration
  • Consideration Must Move From the Promisee
  • Performing a Pre-Existing Duty Cannot Be The Consideration for a New Contract
  • A Promise to Accept Part Payment of an Existing Debt in Place of the Whole Debt is Not Consideration
• Consideration Need Not Be Adequate, But Must Be Sufficient


  The law is concerned with 'bargains' and not 'gifts'. Whether something is 'adequate' is based on what the parties to the contract themselves agree if the value of the things being exchanged. If both parties are happy with the value being exchanged, then that is all that matters.
• Consideration Need Not Be Adequate, But Must Be Sufficient

  • Thomas v Thomas (1842)
  • Chappell v Nestle Co. Ltd (1960)
• Sufficiency means the consideration must be real (meaning it must exist) and have some value (it needs to be worth some nominal amount). There has been inconsistency in the way this has been applied.
• Consideration Need Not Be Adequate, But Must Be Sufficient


  • White v Bluett (1853)
  • Ward v Byham (1956)
• Past Consideration is No Consideration


  Actions already completed before the time of agreement has no value when it comes to consideration.
• Past Consideration is No Consideration


  • Re McArdle (1951)
• There are exceptions to the rule that past consideration is no consideration.
• Past Consideration is No Consideration


  • Re Casey's Patent (1892)
  • Lampleigh v Braithwait (1615)
• Exceptions to past consideration being no consideration


  • The promisor has an expressed or implied request for a task
  • There is usually an implied understanding that the task should be paid for
• Consideration Must Move From the Promisee


  A person cannot sue or be sued if there is no consideration. In a bilateral contract, both parties act as promisor and promisee and consideration is exchanged. In a unilateral contract, the offeror is the promisor and the person who could fulfil the promise will performance is the promisee.
• Consideration Must Move From the Promisee

  • Tweedle v Atkinson (1861)
• Performing a Pre-Existing Duty Cannot be the Consideration for a New Contract


  A pre-existing duty is something you are already legally required to do.
• Performing a Pre-Existing Duty Cannot be the Consideration for a New Contract

  • Collins v Godefroy (1831)
  • Stilk v Myrick (1809)
• Pre-existing duty

  • A Promise to make payment of an already existing debt, such as repaying a loan.
  • A duty imposed under a public duty to act, such as the police doing what they are required to do under their public duty (Collins v Godefroy)
  • A duty imposed under an existing contract with the promisor, such as in a contract of employment. (Stilk v Myrick)
• A promise to accept Part Payment of an existing debt in place of the whole debt is not consideration.

  
  

  Part payment of a debt is not valid consideration. (Pinnel's case)
• Part payment cases

  • Pinnel's Case (1605)
  • Foakes v Beer (1884)
• Exceptions to a promise to accept part payment of an existing debt in place of the whole debt- developed from the Pinnel's case.


  1. The principle of accord and satisfaction - where an agreement is made to end the contract through other means of consideration.
  2. The doctrine of Promissory Estoppel - If one party agrees to vary the contract and the other party relies on this, the promisor cannot go back on this, and they will be prevented from breaking the promise
• Promissory estoppel cases

  • Central London Property Trust Ltd v High Trees House Ltd (1947)
  • Re Selectmove Ltd (1947)