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: