Consideration

'some right, interest or benefit accruing to one party, or some forbearance, detriment,loss or responsibility given, suffered by the other'

There is no easy definition of consideration, it has been a problem to define and remains one still.

The nineteenth century brought a definition in terms of benefit gained and detriment suffered.

Currie v Misa (1875) was a key case in defining consideration and states “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.”

One problem with the benefit/detriment relationship is that often, at the time of the promise, there is no apparent detriment. A more recent definition in Dunlop v Selfridge (1915) relates to exchange and shows the negotiating aspect of a contract. 'An act of 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'.

Consideration must be sufficient but does not have to be adequate Thomas v Thomas (1842). Consideration is considered sufficient if it is real (White v Bluett (1853)),if it is tangible (Ward v Byham (1956)) and if it has some discernible value (Chappel v Nestle (1960)).

Consideration must be legal.

Consideration can not be past, it can be present or future, but past consideration is no consideration (Roscorla v Thomas (1842)). There is an exception to this in the case of Lampleigh v Braithwaite (1615) and applies where the service was originally requested by one party and then carried out by another. Consideration was provided despite the agreement to pay coming after the service was completed.

Consideration must move from the promissee. In order to sue or be sued a party must give consideration. (Tweddle v Atkinson (1861)). Shanklin Pier Ltd v Detel Products Lts (1951) is an exception and allowed a third party to seek to enforce a collateral warranty which they had relied upon.

A promise to perform an existing obligation is not good consideration (Stilk v Myrick (1809)). Exceptions occur if, as in (Hartley v Ponsonby (1857)), the plaintiff has done above and beyond what his contractual duties should be, or as in Williams v Roffey Bros: & Nicholls Contractors Ltd (1990) the other party gains an extra benefit.

A public obligation is not good consideration, a public duty will not be considered consideration unless it involves an excess of legal duty.

Part payment of a debt is not good consideration and an agreement to accept only part payment can not be enforced. Pinnel's rule. The exception is if the payment is made earlier or in a different form (D C Builders v Rees (1965), or if the other party is unable to revoke the promise through estoppel (Central London Properties Trust v High Trees House (1947).

The two types of consideration are Executory and Executed. If goods and services are ordered and an agreement is made to pay for these items the contract becomes binding at the point of the agreement and not when payment is made. The consideration is executory, it is in the process of being performed, and is bilateral. If the act has been carried out or the goods have been exchanged for money this is referred to as executed and is unilateral.

 


 








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