Benjamin Teo

Contract Essay
What purpose, if any, is served by the doctrine of consideration?
This essay will first briefly examine what the doctrine of consideration
entails. It will then argue that no purpose is uniquely served by the doctrine of
consideration, especially after the cases of Williams v Roffey Bros, Foakes v Beer
and In re Selectmove Ltd. It will then consider certain arguments for
consideration versus the enforceability of gratuitous promises. Ultimately, it will
conclude that while consideration may play some role in the maintenance of
private relations, in the world of commercial contracts, the purpose played by
the doctrine of consideration has become very close to negligible, a fact that
requires remedy.
The doctrine of consideration
In the case of Currie v Misa, Lush J defines what a valuable consideration
may consist of, namely some right, interest, profit or benefit accruing to the one
party, or some forbearance, detriment, loss or responsibility given, suffered, or
undertaken by the other. Some general characteristics of consideration can be
drawn out from this namely the idea of benefit and detriment. Consideration is
generally taken to be the exchange of something in return for a promise. This
something, in light of the above statement can be something that either accrues
benefit for the promisor (for example a cash payment in exchange for the
promise given), or brings detriment to the promisee (which is taken by some
academics to be the price of the promise, for example a forbearance to sue).
The idea of detriment as consideration could possibly be challenged, though it is
universally conceded (Anson) to be good consideraiton
In a unilateral contract, a promisees performance can be taken to be
consideration for the promise given by the promisor, while the promise can be
taken as consideration for the promise; consideration in a bilateral contract is
taken to be each partys promise to each other. This idea of reciprocity seems to
be a distinguishing, potentially even key feature the fact that there must be a
return to the promisor for the promise he gives, failing which there can be no
legal liability (and no contract). This unenforceability of informal gratuitous
promises can be said to be the practical effect of the doctrine of consideration.
The problem with Consideration
Chen-Wishart, in her article, In Defence of Consideration, highlights
three common erroneous claims about consideration it is clear that the large
amount of academic writing on the subject (by academics such as Treitel,
Burrows and OSullivan, as well as what was then known as the UK Law Revision
Committee) has led to a long debate about consideration. Indeed, in 1937 the UK
Law Revision Committee came close to recommending the abolition of the
doctrine itself. This stance has also been taken by many academics, such as
Atiyah and Burrows, where Burrows claims the law would be rendered more
intelligible and clear if the need for consideration were abolished. This essay will
not wade into the middle of the defence mounted by Chen-Wishart. Instead, it
will propose a view evidenced by case law, rather than the normative
philosophical arguments proposed by Chen-Wishart.

The biggest problem, this author would argue, is that the modern
approach in contract law requires very little to find the existence of
consideration. In Williams v Roffey Bros & Nicholls, where Russell LJ, in his
judgment, held that the courts nowadays should be more ready to find
(considerations) existence so as to reflect the intentions of the parties to the
contract where the bargaining powers are not equal. This suggests that the
courts would be willing to almost read in consideration where they find that it
would be just to do so, meaning that this finding would be almost arbitrary. This
idea of practical benefit suggests that courts could read in consideration
depending on their reading of the case.
This potential inconsistency can be seen to have manifested in the courts
inconsistent approaches to situations where it is sought to enforce a promise to
pay more Stilk v Myrick and Williams v Roffey Bros, against promises to take
less (Foakes v Beer and Re Selectmove). In Stilk, the courts held there was no
consideration for a new contract when there was already a previous duty to do
the same thing under a previous contract. However, the practical benefits that
Glidewell LJ envisaged as leaving the Stilk principle unscathed was actually
something that the Stilk principle would not have allowed, although it has been
argued that the Stilk principle (apart from being a case decided in the nineteenth
century, had public policy arguments behind it those of preventing captains
being blackmailed by their sailors). Foakes v Beer held that the promise to pay a
debt was deemed not to be sufficient consideration where there was no
additional benefit moving from Foakes to Beer, where it was suggested that
repaying the debt earlier might have constituted such consideration. Re
Selectmove chose to follow the decision in Foakes v Beer, holding themselves to
be bound to preclude any variation of the agreement to repay a debt without
good consideration, rather than following the Williams case. Peter Gibson LJ in
that case stated that (contrary to Williams), it is clear that a practical benefit
of that nature is not good consideration in law. It seems that courts would be
more amenable to hold parties to promises to pay more rather than to those to
pay less this could arguably be seen to be just. However, it should be noted
that the court in Re Selectmove felt that extending the principle of Williams to an
obligation to make payment would leave the principle in Foakes without
application.
Another thing to note from the case law is the combination of the effect of
Williams with the proposition that consideration must be sufficient but need not
be adequate (Chappell v Nestle). The combination of these two factors means
that it will, absent exceptional circumstances be too easy to locate some element
of consideration between contracting parties, rendering the requirement of
consideration ultimately redundant, after all, shown from the above cases, the
courts would be able to find factual benefit or detriment as they wished, or also
deny any such benefit where they felt it was not just.
If the courts were willing to find factual benefit or detriment or indeed
consideration in these cases, I would argue that consideration is redundant not
only because it can be found so easily, but because the law and perhaps justice
would be better served by relying on clearer and more useful doctrines, such as
the intention to form legal relations it has been argued that one of the purposes
of consideration is an evidentiary one one that signals that there has been

intention to form a binding contract. However, if indeed this consideration can be

read in by judges, that then gives them the power to read in intention to form
binding contract, or to also deny that consideration has been given given also
the fact that a lack of finding of consideration would then render what could have
been a contract merely gratuitous promise that is not enforceable by law, this
potentially gives the judiciary the ability to nullify contracts, which I would argue
is unsatisfactory. I would then argue for the replacement of consideration with a
perhaps augmented doctrine of intention to create legal relations, one which is
better able to objectively determine the partys intentions.
Consideration and Gratuitous Promises
However, I note the evidentiary role is not the only one that has been
ascribed to consideration. In this next section I will examine certain arguments
proposed by Chen-Wishart in her defence of consideration. Her arguments
defending consideration place consideration as the only thing preventing English
Common law as recognizing and enforcing the gratuitous promise in general. She
proposes her arguments from a starting baseline of what she deems a rich
positive conception of autonomy and recognition that other values are
important, looking at them with regard to what society requires. I would argue
that from the start her arguments lie at two ends of the spectrum where it is
either consideration, or enforced gratuitous promises. There is evidence even
within her own arguments that this would not and should not be the case, for
example her qualified example of how the Civil law deals with gratuitous
promises not a unqualified allowance of claim, but rather a qualified one that
would lie somewhere in the middle of a spectrum of contractual liability.
Chen-Wisharts stated four arguments lie on what can be summarized on
two levels social impact as well as administrability.
At the core of her argument of social impact is not the pro of consideration
as a doctrine, rather she espouses the dangers of allowing gratuitous promises to
be enforced. In the private sphere, she highlights the fact that such gratuitous
promises often take the guise of gifts, and that such gifts are an important part in
interpersonal relationships the building of trust, as well as societal fabric. If
claims were allowed for broken promises in this way, she claims, private lives of
giftees and giftors would degenerate into an atmosphere of distrust as persons
would be wary about making such promises, and gifts which she argues are
evidence of principles such as love, friendship and camaraderie will be
monetized, and therefore stripped of their value. While I would agree with the
concepts she raises here, I would note that she proposes no alternative, stating
that the contract law should stay out of this sphere altogether. However, I would
argue here that is unfair for the law to provide no solution whatsoever. While it is
understandable that concepts such as trust and loving relations should be
maintained and not hampered by the law, it is similarly damaging for a potential
claimant if reliance has been placed on these promises that can be made without
regard to liability and fear of being forced to perform. In these situations, that
relationship would already be damaged, and I would argue that litigation then
would be a means of justice for the claimant rather than another tear in the
social fabric.

It is her argument of administrability which is perhaps a strong proponent

for maintaining the requirement of consideration. Her question of administrability
is really a question of a workable alternative to that of consideration with regard
to gratuitous promises where a change in the law to recognize gratuitous
promises would require new proofs that such promises were made. Furthermore,
another pertinent question would then be the extent that gratuitous promises
should be enforced to. Chen-Wishart rightly points out that continental contract
law can be seen in some ways to be more negative on gratuitous promises. I
would argue however, that this harshness is required as a sort of filter of which
promises are claimable. Also, I would argue that while the issue of
administrability is an important one, and considering it shows that consideration
does show that consideration does serve a floodgate purpose, that does not
mean that consideration does not need to be relooked.
Conclusion
Thus, I would suggest that while consideration can be seen to fulfil the role
of floodgates in preventing large amount of private litigation on gratuitous
promises made, and perhaps in damages to social relations, I would argue that
the role played by consideration in commercial cases, as shown in Wiiliams and
other cases, is now possibly negligible. I would thus suggest that the doctrine of
consideration is in need of reform or abolition, given that, especially in the
commercial sector, there are viable doctrines available, such as those of undue
influence, economic duress, promissory estoppel or the requirement of the
intention to form legal relations.