#4598 - Consideration - GDL Contract Law

• Classic definition of valuable consideration in Currie v Misa

• Pollock’s definition: ‘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’: adopted by HL in Dunlop v Selfridge

• Executory consideration: parties make promises to do something in the future after the contract is formed: a bilateral contract usually involves executory consideration, e.g. sale of goods

• Executed consideration: Where consideration has already been performed at the time of the formation of the contract

Rules

1. Consideration must not be past

• Consideration generally cannot happen prior to the promise to pay: Eastwood v Kenyon

• Roscorla v Thomas: C bought a horse and after the purchase the D promised the C that the horse was ‘sound and free from vice’ – the horse turned out to be vicious but D was not bound as there had been no consideration to support the promise: the sale itself was not valuable consideration as it was completed prior to the promise being given

• Exceptions: Where past consideration was given at the promisor’s request and it was understood that payment would be made –

  • Lampleigh v Braithwait: B had killed a man and asked L to go to King to obtain a pardon: L went to great lengths to do so and then B promised to pay 100. Held: that L’s actions were good consideration as there was an implied understanding that payment would be made and the later promise was simply an express confirmation to fix the price

  • Implication that there was an understanding that payment would be made it more likely in commercial contexts: Re Casey’s patents – past service raises implication that at the time it was rendered it was to be paid for

  • Pao On v Lau Yiu Long: PC – an act done before the giving of promise can be consideration IF:

1. Done at promisor’s request

2. Parties understood act would be rewarded

3. Payment must have been legally enforceable had it been promised in advance

2. Consideration must move from the promisee

• A party who has not provided consideration may not being an action to enforce a contract (distinct from privity of contract)

• Tweddle v Atkinson: Two fathers were going to pay 200 and 100 for the C’s wedding: the bridegroom couldn’t enforce the contract as he had not himself given consideration

3. Consideration need not be adequate

• Inadequacy of the price paid is irrelevant: Chappell & Co v Nestle Co Ltd: chocolate wrappers formed part of consideration despite having no further value once received by the company

4. Consideration must be sufficient

• Must have some value “in the eyes of the law”

• White v Bluett: Consideration given was ‘refraining from complaining’ – this was not sufficient as he was not giving anything up (father had every legal right to distribute his property as he liked and the son had no legal right to complain)

  • Contrast: American case – Hamer v Sidway – nephew HAD provided consideration when he restrained his lawful freedom of action – he promised to refrain from past actions (drinking, smoking etc.)

  • Where an individual refrains from an action which he never intended to pursue, no consideration will stem from the promise – Arrale v Costain Civil Engineering

Existing obligations as good consideration

• Question is whether a party claiming to have given consideration has given more than he was bound to under the previous contract:

  • Stilk v Myrick: Seamen were already contract to do any extra work necessary to complete the voyage – so there was no consideration

  • Hartley v Ponsonby: same situation but ship was so undermanned that it was dangerous – here the seamen were not obliged to carry out the work so there WAS consideration (approved in North Ocean Shipping v Hyundai (The Atlantic Baron))

  • Williams v Roffey: As a result of his promise to pay more, Roffey received practical benefits so there was EXTRA CONSIDERATION: radical judgement as no longer any reason not to enforce re-negotiations

    • Re Selectmove Ltd: extended to enforce promise to accept less than amount owed

Obligations under a public duty

• Merely carrying out a public duty imposed by law is NOT CONSIDERATION

  • Collins v Godefroy – Acting as a witness is not consideration

  • England v Davidson: Policeman’s public obligation is to prevent crime and not to provide information, thus the provision of information WAS valuable consideration

• Harris v Sheffield United FC: police were not obliged to provide the large amount of police presence that was necessary to maintain law and order at the stadium: attendance went beyond the maintenance of law and order for which the club should pay (police had given consideration)

• Desire of the court to find...