In common law, consideration is concernedwith the arrangement of the contract. A contract is based on an exchange ofpromises. Each party to a contract must be both a promisee and a promisor. Theymust each receive a gain and each suffer a loss.
Consideration must be of worththat can be accurately determined, but the courts have the constantly refuse tolook at its adequacy. The promise of service in the future is just as suitablea consideration of the service. So, that, the promisee has to give something inreturn for the promise of promisor in order to change a bare assurance made inhis favors into a binding contract.
A definition by Sir Fredrick pollockadopted by Lord Dunedin in DunlopPneumatic Tyre Co., Ltd. v. Selfridge & Co., Ltd.: ” An act orforbearance of the one party, or the promise thereof, is the price for whichthe promise of the other is bought, and the promise thus given for value isenforceable.”1 This definition involves the idea that theact or forbearance is something of value, something to which the law, in amaterialistic or practical sense, can attach value.
The definition alsoinvolves that the act or forbearance is bought, that it is done or suffered bythe one party at the request of the other; it is a matter of mutuality, not amotive or emotion of affection, benevolence, bounty or charity which from theirnature must be personal to the promisor2 It wasexplained in Currie v Misa(1875) A valuable consideration, in the senseof the law, may consist either in some right, interest, profit or benefit,accruing to the one party, or some forbearance, detriment, loss orresponsibility, given, suffered or undertaken by the other.’3Consideration must be sufficientbut need not be adequate might feel likean unfair method of determining a judgement but the ruling that was brought tolight in the case of Chappel v. Nestle 1960 whereNestle ran a competition whereby if you sent in 3 chocolate bar wrappers alongwith 1 shilling 6d then they would send you out a record, Chappel whodistributed these records felt that this de-valued the records and took a caseto prevent Nestle from running this, they were granted the injunction as it wassaid that the 3 chocolate wrappers did not prove to be sufficient as Nestle didnot comply with s.8 of the Copyright Act of 1956.
This was held as the wrappersdid provide a value despite them being thrown away they boosted sales whichmeant under s.8 Nestle were required to inform consumers of the regular retailprice. If they were a mere token then they would have no value and Nestle wouldbe eligible to sell these records at the reduced price. This shows that noteverything has to be valued in terms of money.4In the case of Hartley v Ponsonby (1857) 5thecourt said this promise was enforceable: the crew was so reduced that it wasdangerous to sail on and the captain would have had no right to demand it. Theoriginal contract had come to an end, and the seaman were free to make a newcontract on whatever terms might be agreed.6 Past Consideration is NotGood Consideration something promised afterwards cannot count as consideration.In Roscorla v Thomas1842 An agreement forthe purchase of a horse had been completed between buyer and seller.
Followingthe completion of the contract, the seller made a warranty that the horse was”free from vice”. Upon delivery, it was discovered by the buyer thatthe horse was vicious in behaviour. LordDenman CJ delivered the judgement of the Court.
“It may be taken as a general rule, subject to exceptions notapplicable to this case, that the promise must be coextensive with theconsideration… a consideration past and executed will support no otherpromise than such as would be implied by law.” The Court found for the defendant because his promise was unsupported byconsideration. The consideration for the soundness warranty had already beenmade through the original contract of sale, and so new consideration would havehad to be provided for the warranty to have legal effect.
This decisiondemonstrates the rule in English contract law that consideration contracted forin the past does not amount to good consideration for a present agreement.7Performance of a duty enforced by law does notconstitute good consideration. In Collinsv Godefrey ,Godefrey promised to pay Collins for his giving of evidence. Itwas held that Collins could not enforce the promise as he was under a statutoryduty to give evidence in any event.8However, where the individual does more thanlegally required this can be sufficient consideration.
In Ward v Byham a mother was under a statutory duty to look after herchild. The ex-husband promised to pay her £1 a week if she ensured that thechild was well looked after and happy. It was held that notwithstanding thestatutory duty imposed on the mother, she could enforce the promise since theact of keeping the baby ‘happy’ provided additional consideration.9Part-payment of a debt is not goodconsideration, but part-performance of an existing contractual duty is goodconsideration. If a person pays less than the initial amount which was agreed upon thennew consideration is required. This may also come in the form of additionalconsideration along with the original agreement.
If this is not adhered to thenthe contract will be voided regardless of a creditors agreement to acceptless than the initial settlement unless something new has been given asconsideration to the agreement.In Pinnel’s Case it was held paying a smallersum of an entire debt was not good consideration since the debtor was onlydoing what he was already legally entitled to do. Pinnel’s case16 where Cole owed Pinnel £8 10s.Pinnel requested that Cole paid £5 2s 6d. a month before the full payment wasdue. It was then claimed by Cole that it was agreed upon that the rest of thepayment was cleared as he had paid the advance to Pinnel. The court held thatPinnel could not claim the rest of the debt. While they admitted that partpayment of a debt of the original debt was not good consideration and didn’tconstitute a waiving of the balance.
However, Pinnel did benefit from theadvance of the payment which the courts did deem to be good consideration. Thecourt stated:”Payment of a lesser sum on the day insatisfaction of a greater sum cannot be any satisfaction for the whole, becauseit appears to the Judges that by no possibility, a lesser sum can be asatisfaction to the claimant for a greater sum…”10If,whatever a man’s real intention may be, he so conducts himself that areasonable man would believe that he was assenting to the terms proposed by theother party, and that other party upon that belief enters into the contractwith him, the man thus conducting himself would be equally bound as if he hadintended to agree to the other party’s terms111 POLLOCK, F. and Winfield, P. (1950).
Pollock’s Principles ofContract. Thirteenth edition by Sir Percy H. Winfield, etc. Pp. xliii.
610.Stevens & Sons: London, p.145.2 Harvard Law Review, Vol. 49, No. 8 (Jun.
, 1936), pp. 1225-12533 Currie v. Misa 1875 LR 10 Ex 1534 Chappel v Nestle 1960AC 87 House of Lords5 Hartley v Ponsonby 1857 EngR 605; 119 ER 1471; (1857) 7 E & B872.6 Finch, E.
and Fafinsky, S. (2015). Law express. 4th ed. Pearson,p.44.7 Roscorla v Thomas 1842 EWHC J74, (1842) 3 QB 234.8 Collins v Godefroy 1831 EWHC J18, (1831) 1B & Ad 951; 109 ER1040.
9 Ward v Byham 1956 EWCA 1, 1956 1 WLR 496.10 Pinnel’s Case 1602 5 Co. Rep. 117a11 Smith v Hughes (1871) LR 6 QB 597