CONSIDERATION

By
Shivangelie Ramoutar
What is consideration?
Currie and Others v Misa (1875) EC
per Lush J

“A valuable consideration, in the sense of

the law, may consist either in some right,
interest, profit, or benefit accruing to one
party [the promisor], or some forbearance,
detriment, loss, or responsibility, given,
suffered, or undertaken by the other [the
promise]. In short, consideration is either a
benefit to the promisor or a detriment to
the promisee or in Pollock’s words, ‘the
price for which the promise of the other is
bought, and the promise thus given for
value is enforceable.”
What do we mean?
u Consideration is the price paid by the plaintiff for the defendant’s promise

u It is the price of a promise ie, what one contracting party is getting in return
for his promise to the other contracting party
Dunlop Pneumatic Tyre Co Ltd v Selfridge
& Co Ltd (1915) HL
• The plaintiffs made an agreement with Dew & Co that Dew & Co could buy the tyres made by the
plaintiffs at a discount in return for a promise not to sell them on for less than the plaintiffs’ list prices.
Dew & Co were allowed to give a discount to certain customers, including the defendants, but only if
they obtained from the customer the same promise as to maintaining the list price as they had made
themselves. Dew & Co sold some tyres to the defendants at a discount and they obtained from the
defendants the promise as to list price. When the defendants broke that promise by selling the tyres
for less than the list price, the plaintiffs sued them.

Held the plaintiffs could not sue the defendants as there was no agreement between them. The
plaintiffs argued that Dew & Co had contracted with the defendants as agents for the plaintiffs. Their
lordships were divided as to whether that argument could succeed, but were unanimous in holding
that in any case the plaintiffs had given no consideration for the defendants’ promise. All the
consideration was from Dew & Co, so only they could sue the defendants.
• Per Lord Dunedin:
“I am content to adopt from a work of Sir Frederick Pollock…the following words as to consideration:
‘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.”
 Nature and rationale for the
doctrine of consideration
u Chitty on Contracts 28th edn, Vol. 1, Ch. 3:
“The basic feature of the doctrine is that ‘something of value in the eye
of the law’ must be given for a promise in order to make it enforceable
as a contract. It follows that an informal gratuitous promise does not
amount to a contract. A person or body to whom a promise of a gift is
made from purely charitable or sentimental motives gives nothing to
the promisee and the claims of such a promisee are regarded as less
compelling than those of a person who has provided (or promised)
some return for the promise. The invalidity of informal gratuitous
promises of this kind can also be supported on the ground that their
enforcement could prejudice third parties such as creditors of the
promisor. Such promises, too, may be rashly made; and the
requirements of executing a deed or giving value provide at least
some protection against this danger.”
Difference between executed and
executory consideration
u Executory consideration: where D’s promise is made in return for a counter-
promise from C.
eg: D promises to deliver a quantity of goods under a contract for sale of
goods in return for C’s promise to pay an agreed price for the goods .
u Executed consideration: where D’s promise is made in return for the
performance of an act and where C makes no promise to perform the act
but in fact goes ahead and does the act. Here, the performance of the act
constitutes both the acceptance of D’s offer and consideration necessary
to support an action by C.
eg: in an ad by D to pay a reward to anyone who finds and returns his
dog, C’s act of finding and returning the dog is executed consideration
 The doctrine of consideration: 3
core principles
1. Consideration must move from the promisee.
2. Consideration must be sufficient but need not be adequate.
3. Past consideration is not good consideration.
 Consideration must flow from
promisee
u Price v Easton: D promised X that if X did certain work for him, he
would pay a sum of money to P. X did the work, but D did not pay
the money.

The Court held that the P could not sue D because P could not show
any consideration for the promise moving between P and D.
alternatively, ‘no privity is shown between P and D’.
Consideration must be ‘Sufficient’
but need not be ‘Adequate’
• A promise cannot be enforced unless the promisee has given some
value for it, whether the value consists of a benefit to the promisor or a
detriment to the promisee; but the court will not question whether
adequate or fair value was given. In the absence of fraud or undue
influence, the court will not interfere with the bargain struck by the parties,
and it is no defence to an action on the contract for the promisor to
plead that the consideration provided by the promisee was ‘too small’ or
‘inadequate’.
• Chappell v Nestle (1960) per Lord Somervell– “A contracting party can
stipulate for what consideration he chooses’. Since there is Freedom of
Contract, the court will not interfere just because it seems like a party
made a bad bargain as the person may have undisclosed reasons for
accepting consideration that seems inadequate. [This is to be
distinguished from Unfair Contract Terms and Illegal Contracts]
Consideration must be ‘Sufficient’
but need not be ‘Adequate’
Tweddle v Atkinson (1861)
The plaintiff was T’s son who had married G’s daughter. T and G had
made a written agreement that T would pay the plaintiff £100 and G
would pay him £200. They also agreed that the plaintiff ‘has full power
to sue the said parties…for the aforesaid sums’. G did not pay the £200
and, since G had died, the plaintiff sued G’s executor.
Held the plaintiff could not sue as he was not a party to the contract.
Per Wightman J: ‘ …it is now established that no stranger to the
consideration can take advantage of a contract, although made for
his benefit.’
Sufficiency of consideration
Thomas v Thomas: The Court found that the promise to pay £1 per annum was
clearly sufficient to support the promise of a right to live in a house as the
payment of, or promise to pay, money is treated as being within the category
of valid consideration. The fact that £1 per annum was not commercial rent
was irrelevant because the courts do not concern themselves with issues of
adequacy.

White v Bluett: A son’s promise to stop complaining to his father about the
distribution of the father’s property was held to be incapable of amounting to
consideration. The court held that there was no consideration given by the son
which would absolve him of having to repay the debt to his father’s estate. The
court also believed that the son had no right to complain as the father was free
to distribute his property as he wished. As a result, ceasing from complaining
was not consideration and was ultimately an intangible promise.
But see the American case of Hamer v. Sidway (1891)
In this case an uncle promised his nephew that if he nephew would refrain from
drinking liquor , using tobacco, swearing and playing cards of billiards for money’ until
reaching 21, the uncle would pay him money in return. The nephew fully performed his
side of the bargain and the uncle refused to pay asserting that there was no
consideration to support the promise since the nephew suffered no detriment but
actually benefited from leading a clean life in his youth. While the uncle himself
obtained no benefit from the nephew’s performance, the court ruled in favour of the
nephew. The Court said that:
“It is sufficient that that he restricted his lawful freedom of action within certain prescribed limits
upon the faith of his uncle’s agreement, and now, having fully performed the condition, it is of
no moment whether such performance actually proved a benefit to the promisor and the
court will not inquire into it.”

• Agreeing to drop or compromise a legal claim will amount to good consideration,

even where the claim is a hopeless or worthless one, provided the party making the
claim is acting in good faith and believes the claim to be valid. See: Cook v. Wright
(1861) 1 B&S 559
• Contrast with: Wade v. Simeon (1846) 2 CB 548
• Forbearance need not only involve legal proceedings: see R v. Her Majesty’s Attorney
General (2003)
 PAST CONSIDERATION
The consideration for a promise must be given in return for that promise. E.g.
Where Joe gives a car to Jean and 5 minutes later Jeans promised to pay Joe
$100,000.00 for the car, there is no consideration for his promises because Joe did
not give his car to Jean in return for a promise to pay. Harry’s provision of value in
these circumstances is said to amount to Past Consideration.
Re McArdle: A number of children, by their father’s will, were entitled to a house
after their mother’s death. During the mother’s life, one of the children and his
wife lived with her in the house. The wife made various improvements to the
house, and at a later date all the children signed a document addressed to her,
stating 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 £48 in settlement of the amount
spent on such improvements”.
The COA held that as the work had been completed before the document
signed, the consideration was past consideration and could not be supported as
a binding contract.
 PAST CONSIDERATION

The exception to the general rule lies in instances in which services

were performed in the way of business and not as an act of friendship.
As per Re Cassey’s Patents, Steward v. Cassey [1891] an act done
before a promise can constitute consideration provided the following
conditions are satisfied:
➢The act must have been done at the request of the promisor:
Lampleigh v. Brathwait (1615)
➢It was made in circumstances that it was understood that the act
was to be remunerated either by a payment of the conferment of
some other benefit.
➢Payment must be of the kind that would be legally enforceable had
it been promised in advanced.