Contract consideration

Rules and understanding

 Introduction
• In contract law consideration is concerned with the bargain of the
contract. A contract is based on an exchange of promises. Each
party to a contract must be both a promisor and a promisee. They
must each receive a benefit and each suffer a detriment. This
benefit or detriment is referred to as consideration.
• Consideration must be something of value in the eyes of the law -
(Thomas v Thomas) (1842) 2 QB 851. This excludes promises of
love and affection, gaming and betting etc. A one sided promise
which is not supported by consideration is a gift. The law does not
enforce gifts unless they are made by deed.
• Whilst the common law strictly adheres to the requirement of
consideration (although in some instances the courts seem to go to
some lengths to invent consideration eg Ward v Byham [1956] 1
WLR 496, Williams v Roffey Bros [1990] 2 WLR 1153) equity will, in
some instances, uphold promises which are not supported by
consideration through the doctrine of promissory estoppel
 Rules of consideration
There are various rules governing the law of consideration:
1. The consideration must not be past.
2. The consideration must be sufficient but need not be
adequate.
3. The consideration must move from the promisee.
4. An existing public duty will not amount to valid
consideration.
5. An existing contractual duty will not amount to valid
consideration.
6. Part payment of a debt is not valid consideration for a
promise to forego the balance.
 Consideration must not be past
• Re McArdle (1951) Ch 669 Court of Appeal
Majorie McArdle carried out certain improvements and
repairs on a bungalow. The bungalow formed part of the
estate of her husband's father who had died leaving the
property to his wife for life and then on trust for Majorie's
husband and his four siblings. After the work had been
carried out the brothers and sisters signed a document
stating in consideration of you carrying out the repairs
we agree that the executors pay you £480 from the
proceeds of sale. However, the payment was never
made.
 Held
• The promise to make payment came after
the consideration had been performed
therefore the promise to make payment
was not binding.
• Past consideration is not valid.
• Past consideration may be valid where it
was proceeded by a request
 Lampleigh v Braithwaite [1615]
EWHC KB J17
• The defendant had killed a man and was due to
be hung for murder. He asked the claimant to do
everything in his power to obtain a pardon from
the King. The claimant went to great efforts and
managed to get the pardon requested. The
defendant then promised to pay him £100 for his
efforts but never paid up.
 Held
• Whilst the promise to make payment came
after the performance and was thus past
consideration, the consideration was
proceeded by a request from the
defendant which meant the consideration
was valid. The defendant was obliged to
pay the claimant £100.
Consideration must be sufficient
but need not be adequate
• There is no requirement that the
consideration must be market value,
providing something of value is given eg
£1 given in exchange for a house would
be valid. The courts are not concerned
with whether the parties have made a
good or bad bargain:
 Consideration must move from
the promisee
• If a person other than the promisee is to
provide the consideration, the promisee
can not enforce the agreement
Tweddle v Atkinson [1861] EWHC QB J57
Queen's Bench Division

• A couple were getting married. The father of the

bride entered an agreement with the father of
the groom that they would each pay the couple a
sum of money. The father of the bride died
without having paid. The father of the son also
died so was unable to sue on the agreement.
The groom made a claim against the executor of
the will.
 Held
• The claim failed: The groom was not party
to the agreement and the consideration
did not move from him. Therefore he was
not entitled to enforce the contract.
 An existing public duty will not
amount to valid consideration
• Where a party has a public duty to act, this
can not be used as consideration for a
new promise:
 Collins v Godefrey (1831) 1 B &
Ad 950 King's Bench Division
• The claimant, Collins, had been subpoenaed to attend
court as a witness in separate court case involving the
defendant, Godefrey. Godefrey had sued his attorney for
malpractice and Collins was required by the court to
attend as an expert witness. In fact Collins never gave
evidence but was required to be on standby for six days
in case he was called. After the trial Collins gave
Godefrey an invoice to cover his time spent at court and
demanded payment by the next day. Without giving him
the full day to pay, Collins commenced an action to
enforce payment.
 Held
• Collins was under a public duty to attend
court due to the subpoena. Where there
exists an existing public duty this can not
be used as consideration for a new
promise. Godefrey was not required to pay
him.
• Unless the promisor goes beyond their
duty
 Glasbrook Bros v Glamorgan County
Council [1925] AC 270 House of Lords

• The defendant owners of a colliery asked the police to

provide protection during a miner’s strike. The police
provided the protection as requested and provided the
man power as directed by the defendants although they
disputed the level of protection required to keep the
peace. At the end of the strike the police submitted an
invoice to cover the extra costs of providing the
protection. The defendants refused to pay arguing that
the police were under an existing public duty to provide
protection and keep the peace.
 Held
• In providing additional officers to that
required, the police had gone beyond their
existing duty. They were therefore entitled
to payment.
An existing contractual duty will not amount to
valid consideration

• If a party has an existing contractual duty

to do an act, this act can not be used as
consideration for a new promise
 Hartley v Ponsonby [1857] 7 EB
872
• Half of a ship's crew deserted on a trip.
The captain promised the remaining crew
members extra money if they worked the
ship and completed the trip. The captain
then refused to pay up.
 Held
• The crew were entitled to the extra
payment promised on the grounds that
either they had gone beyond their existing
contractual duty or that the trip had
become too dangerous frustrating the
original contract and leaving the crew free
to negotiate a new contract.
• or if they confer a practical advantage:
 Part payment of a Debt
• Part payment of a debt is not valid
consideration for a promise to release the
debt in full
Pinnel's Case 1602 5 Rep, 117 Court of Common
Pleas
• The claimant was owed £8 10 shillings. The defendant
paid £5 2 shillings and 2p. The claimant sued for the
amount outstanding.

Held:

The claimant was entitled to the full amount even if they

agreed to accept less. Part payment of a debt is not valid
consideration for a promise to forebear the balance
unless at the promisor's request part payment is made
either:
continued…….
 Continued…..
• a). before the due date or
b). with a chattel or
c). to a different destination
• Part payment of a debt is not valid consideration
for a promise to forebear the balance unless at
the promisor's request part payment is made:

a). before the due date

b). with a chattel
c). to a different destination