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Chapter 2: Consideration

1. Definition of consideration:

a. Lush J, in Currie v Misa (1875) defines it as–”a valuable consideration, in the

sense of the law, may consist either in some right, interest, profit or benefit
accruing to the one party, or some forbearance, detriment, loss of responsibility
given, suffered or undertaken by the other.”

b. Lord Dunedin, in Dunlop Pneumatic Tyres v Selfridge (1915) states that

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consideration is–”An act or forbearance of the 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.”

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c. Consideration works upon the concept of reciprocity; in a wholly executory
contract, the making of the promise by each side is consideration for the promise
made by the other side (thus both promises enforceable)

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Essay shit

d. Problem 1: A promise cannot be a detriment to the person making it (or a benefit

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to whom it is made) unless it is enforceable. But it will only be enforceable if it
constitutes a detriment/benefit. (Academics like Treitel define consideration as
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‘something of value’ and agrees with the above view)

e. Thus the argument that it is perhaps better to regard the doctrine of consideration
as simply requiring ‘mutuality’ rather than trying to analyse it strictly in terms of
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‘benefits’ and ‘detriments’. (Professor Atiyah on the other hand, suggests that the
question of enforceability is at the court’s discretion.)
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f. Another principle of consideration is that it must be proven that the promisee has
provided consideration for that promise to be enforceable.

g. Russel LJ, in Williams v Roffey Bros. [1991] stated that–”In the late 20th
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century, i do not believe that the rigid approach to the concept of consideration to
be found in the 19th century case of Stilk v Myrick is either necessary or
desirable. Consideration there must still be but, in my judgement, the courts
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nowadays should be more ready to find its existence so as to reflect the intention
of the parties to the contract, where the bargaining powers are not unequal and
where the finding of consideration reflects the true intention of the parties.”

h. NOTE: consideration must still be distinguished from motive; In Thomas v

Thomas (1842) although the testator’s desire was the motive for the transaction,
that desire was not the consideration, it was the widow’s payment of £1 that was
the consideration.

2. Purpose of consideration:
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a. It distinguishes between a bare promise and a bargain.

b. McKendrick states in his textbook that it gives an agreement a “badge of

enforceability”.

c. This is important for promises that stretch into the future (where one must prove
that it is supported by executory consideration)

3. Forms of consideration:
a. Executory (promises for an act to be fulfilled in the future)

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○ English law treats promises as sufficient to be consideration.

○ Both promises are to be carried out in the future (wholly executory)

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○ One promise is consideration for the other (both are enforceable)

b. Executed (regular transactions)

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c. Past (promise which is made after the “act/service”) – BAD THING!!! >:(

4. Requirements to prove valuable consideration:

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a. Consideration mustn’t be past!
> General rule:
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○ Re McArdle (1951);
○ Consideration must be given after the promise is made;
○ The fatal objection is that there is no reciprocity; the promisee
does not give anything in return for the promise of the promisor.
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○ The point isn’t on the distinction between legal and practical

benefits.
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○ The focus is on the bargaining process, without which there would

be no consideration.

○ Roscorla v Thomas (1842);

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○ If two parties had already made a binding contract and one of

them subsequently promises to confer an additional benefit on the
other party to the contract, that promise is not binding because of
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the promisee’s consideration, which is his entry into the original

contract.

○ Classic Maritime Inc. v Lion Diversified Holdings Berhad [2009];

○ There may be cases where new promise and the act of the
promisee which is alleged to be past consideration are, in fact,
part of the same overall transaction.
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> Exception (Legal assumpsit):
○ This doctrine in regards to past consideration is harsh; Eastwood v
Kenyon (1840).
○ Lampleigh v Braithwaite (1615); past consideration accepted.
○ Note: implied assumpsit operates within narrow confines.
○ The Privy Council (Lord Scarman), in Pao On v Lau Yiu Long [1980]
held that 3 conditions must be satisfied by a promisee who wishes to
invoke the doctrine:
○ He must have performed the original act at the request of the

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promisor–Lampleigh v Braithwaite (1615)

○ There must have been clear or implied mutual understanding or

between the parties when the act was originally requested that the

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promisee would be rewarded for doing the act–Re Casey’s
Patents (1892) *it is difficult to determine this point. An objective
approach must be taken and it must be decided what reasonable
parties in this situation would have expected.

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○ The eventual promise of payment after the act was completed
must be one which, had it been made prior to or at the time of the
act, would have been enforceable.
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○ Parliament has also intervened to mitigate hardships, by providing that an
antecedent debt or liability is good consideration for a bill of exchange
(Bill of Exchange Act 1882) and by providing that a written
acknowledgement of a debt by a debtor shall be deemed to have accrued
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on and not before the date of acknowledgement. (Limitation Act 1980,

S27(5)).
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b. Consideration must be sufficient but need not be adequate

○ ‘Sufficient’ means that what is being put forward must be something which
the courts will recognise, or have recognised as legally capable of
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constituting consideration. (Courts will not enforce a promise unless

something of value is given in return for that promise)

○ ‘Adequate’ indicates that the courts are not generally interested in

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whether there is a match in value between what is being offered by each

party, so there is no need for proportionality. (Chappell v Nestle,
Thomas v Thomas)

○ £1 is “adequate” in the eyes of the law as amounting to consideration for

a house rental (Thomas v Thomas).

○ It is clear that the courts adopt an inconsistent approach to the

identification of a benefit or detriment–in many cases, the courts have, in
the words of Prof. Treitel, ‘invented’ consideration
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○ In some instances, consideration needs to have ‘economic value’ if it is to
be sufficient (White v Bluett)

○ Trivial acts:
➢ The doctrine has resulted in trivial acts being held to
constitute consideration.

➢ Chappell & Co. v Nestle [1960]–House of Lords held that

chocolate wrappers, although of very trivial economic
value, were nevertheless part of the consideration.

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➢ Lord Somervell: ‘A contracting party can stipulate for what
consideration he chooses. A peppercorn does not cease to
be a good consideration if it is established that the

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promisee does not like pepper and will throw away the
corn.’

➢ Atiyah argues that this case does not fit within the

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‘benefit/detriment’ analysis because it would be ‘ridiculous
to assert that the sending or the receipt of the wrappers
n necessarily involved an actual detriment to the sender or a
benefit to the defendants’.
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➢ He argues that the receipt was not a benefit but was the
motive which inspired the promise and that therefore this
was a case in which a court would have enforced a
promise despite the lack of benefit to the promisee.
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➢ Treitel replied (1976) by asserting that Atiyah has failed to

take account of the principle that the courts will not
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investigate the adequacy of the consideration and that,

once it is realised the consideration need only be of some
value, ‘there is no doctrinal difficulty in holding that a piece
of paper or some act of forbearance of very small value
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can constitute consideration’.

➢ What then, does the law recognise as ‘value’? The courts

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have not adopted a consistent approach to the

identification of ‘value’ or ‘benefit’. In Foakes v Beer
(1884), the factual benefit obtained by the promisor was
ignored because as a matter of law, promisor has not
benefited. In Cook v Wright (1861), the courts have found
existence of consideration despite the apparent lack of
either benefit to the promisor or detriment to the promisee.

➢ Some cases have adopted an extremely subjective

interpretation of benefit–Brainbridge v Firmstone (1838),
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but in other cases, the courts have adopted an objective
interpretation–White v Bluett (1853).

➢ The CA in Williams emphasised the need to identity

‘practical benefit’ to the promisor rather than ‘a benefit in
the eyes of the law’ but this approach has not been carried
through in later cases such as Re Selectmove [1995]

○ Intangible returns:
➢ It is sometimes suggested that consideration will not be

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sufficient if it has no economic value; in Bret v JS (1600),
‘natural affection of itself is not a sufficient consideration’.

➢ In White v Bluett (1853), a son’s promise not to bore his

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father with complaints was held not to be good
consideration for the father’s promise not to sue the son of
a debt owed to him.

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➢ This decision is open to attack on 2 grounds:

i. The ‘practical benefit’ which the father obtained in

being freed from his son’s complaints is ignored.
n The case of Williams suggests that White may be
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open to criticism. In Pitt v PHH Asset
Management [1994], consideration was identified
when (1) the defendant was freed from the
‘nuisance value’ of having to defend a litigation
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claim, (2) the other bidder was spared from trouble

from the claimant and (3) the promise of the
claimant to proceed to exchange within 2 weeks
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amounted to valid consideration.

ii. The son did act to his detriment in refraining from

making complaints. He had a right to complain and
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had provided consideration by giving up said ‘right’.

In Hamer v Sidway (1891), the nephew, who gave
up drinking, smoking and swearing etc. was entitled
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to enforce the promise which the uncle made.

Hamer does not fit within the detriment/benefit
analysis. According to Atiyah, the court
nevertheless found it just to enforce the promise.
Detriment was found in that the nephew had
‘restricted his lawful freedom of action…’ Hamer is
not an easy case to reconcile with White. The
following arguments seek to do so: (1) the son’s
promise in White was too uncertain to constitute
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consideration, (2) there was no intention to create
legal relations and (3) the activities of the son was
less socially valuable than the one in Hamer. Still, if
the nephew in Hamer did already intend to refrain
from such activities, he cannot seek to enforce his
uncle’s promise. (It is not consideration to refrain
from a course of conduct which it was never
intended to pursue–Arrale v Costain Civil
Engineering [1976])

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○ Compromise and forbearance to sue:
➢ A promise not to enforce a valid consideration is good
consideration for a promise given in return, as is a promise

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not to enforce a claim which is doubtful in law.

➢ On the other hand, a promise not to enforce a claim which

is known to be invalid is not good consideration for a
promise given in return–Wade v Simeon (1846)

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➢ In Cook v Wright (1861), the claimants thought that the
defendant was under a statutory obligation to reimburse
n their expenses.
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➢ Defendant denied this obligation but nevertheless, agreed
to pay a lesser sum when threatened with litigation.

➢ Defendant then refused to pay when he found out there

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was no such obligation, and it was argued that he received

no consideration from the claimants. They had given up an
invalid claim and in doing so, they had suffered no
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detriment and the defendant was not benefited in any way

by their promise to accept the reduced sum in full
satisfaction of their invalid claim.
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➢ The court held that the promise was supported by

consideration. The claimants’ honest belief in the validity of
their claim, provided the consideration.
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➢ BUT, consideration must actually be of value in the eyes of

the law, not merely something believed to be of value by
the parties.

➢ Anor argument is that the defendant benefited because he

escaped the vexation which is inherent in litigation. This
rationale is bad as it could be applied equally to a situation
where a claim is known to be bad (Unless we confine
Wade v Simeon on public policy grounds, that
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proceedings should not be instituted where the claim is
known to be a bad one.)

➢ Otherwise, Cook v Wright is a case which is very difficult

to accommodate within the ‘benefit/detriment’ analysis.

c. Consideration must move from the promisee

○ The promisee himself must provide consideration either by incurring some
detriment or conferring a practical benefit on the promisor or third party.

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○ Consideration need not move to promisor; can move to third party as
well–Bolton v Madden (1873).

○ In South Caribbean Trading v Trafigura Beheer [2004], Colman J

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criticised the decision in Williams on the ground that it was inconsistent
with the long-standing view that consideration must move from the
promisee.

○ His criticism however, could be answered by pointing out that the

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promisee did provide consideration for the promise of additional payment
by continuing with the performance of the contract and not breaching it.
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○ While the consideration did not take the form of the assumption of an
additional legal liability, the central point of Williams was to mark a shift in
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emphasis from the existence or otherwise of a legal benefit or detriment.

○ Viewed through the lens of practical benefit and detriment, consideration

did move from the promisee in Williams.
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○ But what about 3rd party situations? Can C sue A if A fails to confer a
benefit, contained in a promise with B?
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○ Traditionally, C shouldn’t be able to sue (Tweedle v Atkinson),

but as a result of the Contracts (Rights of Third Parties) Act
1999, English law now confers on 3rd parties a much wider right to
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sue to enforce a term of a contract.

○ S.1 of the Act expressly states that the 3rd party, C, ‘may in his
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own right enforce a term of the contract’, meaning he can sue to

enforce a contractual term, even when no consideration has
moved from him.

○ The rule seemingly has been reformed. Technically however, it

can be argued that the rule remains the same; C is not made a
party of the contract, he is simply given a right to sue to enforce a
contractual term. Promisee remains B and he must provide
consideration for A’s promise before C can acquire a right to sue.
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○ 1999 Act revised the rule, such that 3rd party no longer needs to
prove that he had provided consideration before he is allowed to
enforce a contractual term.

5. Obligations owed under contract with third party

● Promise (to 3rd party) to do something which one is already contractually obliged
to do for anor, can amount to valid consideration.
● The ‘detriment’ of being open to claims by both parties for breach is sufficient in
the eyes of the law as consideration.
● (e.g. Shadwell v Shadwell; The Eurymedon, Pao On v Lau Yiu Long)

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6. Modifications of an existing agreement:
a. Performance of an existing duty (Positive modification)

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○ Performance of legal duty
General rule:
○ Performance of an existing duty imposed by law does not
constitute consideration–Collins v Godefroy (1831).

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○ Leeds UFC v CC of West Yorkshire; the provision of police
n services in public areas adjacent to the club could not be charged
for.
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Justification:
○ The rule was generally supported on the ground that it prevented
public officials extorting money in return for the performance of
their existing legal duty.
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○ It could however, give rise to hardship because it ignored real

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benefits obtained by the promisor or real detriments incurred by

the promisee,

Exception:
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○ s.25(1) Police Act 1996 provides that a “chief officer of

police”may provide special police services at the request of any
person, subject to the payment to the local policing body.
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○ “There is an obligation on the police to afford efficient protection,

but if an individual asks for special protection in a particular form,
for the special protection so asked for in that particular form, the
individual must pay.” Harris v Sheffield United FC

Non-police situations:
○ Ward v Byham [1956];
➢ Mother was under legal duty to look after the child.
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➢ Mother sued father when he stopped making payments.
➢ Father argued that she had not provided consideration for
her promise to pay, and that she was merely carrying out
her legal duty as a parent to support the child.
➢ Lord Denning rejected this argument by directly assaulting
the general rule. Held, the father would have been
benefited by mother’s promise just as he would if by a
neighbour’s.
➢ He returned to this theme in Williams v Williams [1957]

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where he said, ‘a promise to perform an existing duty is, I
think, sufficient consideration to support a promise, so long
as there is nothing in this transaction which is contrary to
the public interest.’

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○ Contractual duty to the promisor
○ General rule: performance of an existing contractual duty was no
consideration for a fresh promise given (Stilk v Myrick (1809)).

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➢ Espinasse's report–Stilk was unsuccessful on the grounds
n of policy; it would open up the prospect of sailors making
unreasonable and extortionate demands upon the masters
for bringing their ship back home.
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➢ Campbell’s report–claim failed because Stilk had provided
no consideration for the master’s promise as he had only
done what he was contractually obliged to do.
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➢ If the former report is correct, it is possible to confine the

rule to cases where there is a possibility of duress being
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exercised. Where such fear is absent, there is no objection

to the enforcement of the promise.

➢ However, Espinasse is not highly regarded as a law

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reporter and it was the second, wider rule derived from

Campbell’s report which was later accepted into English
law–North Ocean Shipping Co. v Hyundai Construction
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[1979]

○ Exceptions:
i. Where the promisee has done, or has promised to
do more than he was obliged to do under his
contract–Hanson v Royden (1867), where the
claimant, having been promoted, had done more
than what he used to do, justifying the enforcement
of a higher pay.
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ii. Where before the new promise was made,
circumstances had arisen which entitled the
promisee to refuse to carry out his obligations
under the contract–Hartley v Ponsonby (1857).

○ Willians v Roffey Bros; gave consideration a wider meaning,

than previously thought appropriate. Glidewell LJ pointed to
‘practical benefits’ that would be likely to accrue to the defendants
from their promise to pay extra, such as:
➢ Ensuring that the plaintiffs continued to work and did not

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leave the contract uncompleted.

➢ Avoiding a penalty clause the defendants would have had

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to pay under their contract with the flat-owners.

➢ Avoiding the trouble and expense of finding other

carpenters to complete the work.

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➢ A ‘rather haphazard method of payment’ was replaced by
a ‘more formalised scheme involving the payment of a
n specified sum on the completion of each flat’.

➢ Finally, by directing the claimant to complete one flat at a

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time, the defendants ‘were able to direct their other trades
to do work in the completed flats which otherwise would
have been held up until the claimant had completed his
work’.
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○ It could be argued that very similar benefits could have accrued to

the master of the ship in Stilk. The main point of distinction thus
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becomes the fact that there was no economic pressure put on the
defendants in Williams to make the offer of additional payment.

○ The effect is such that it becomes easier in the future for those
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who act in response to a promise of extra payment, or some other

benefit, by simply doing what they are already contracted to do, to
enforce that promise.
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○ NOTE: Glidewell LJ summarises the circumstances where

‘practical benefit’ approach will apply as such:

➢ There was a contract for supply of goods and services

➢ A was unable to perform as promised

➢ B agreed to pay more

➢ B obtained a practical benefit from that promise

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➢ There was no fraud or duress by A to obtain that promise

➢ If the above are satisfied, then consideration is found.

○ Duress:
➢ Protests or the absence thereof is indicative of duress;
Atlas Express v Kafco.
➢ The lack of other practical choices is indicative of duress;
The Atlantic Baron [1979].

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○ It was previously thought that Williams had not affected the related
rule that part payment of a debt can never discharge the debtor
from the obligation to pay the balance–Re Selectmove (1995).

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○ But in MWB Business Exchange v Rock Advertising [2016],
the COA held that a property owner was bound by an oral
agreement with the occupier who had failed to make payments as
provided by the parties’ original written agreement to accept a late

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payment and a revised schedule of further payments.

○ Essentially, a promise to do less than originally stipulated can

n constitute good consideration where the promise confers a
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practical benefit upon the other party.

○ The “practical benefit” in question was keeping Rock as a tenant,

and that the property is not left vacant where no rent would be
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derived.

○ The question was left unanswered when it went on appeal to the

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UKSC in 2018, as the modification was ineffective due to a NOM

clause.
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b. Part payment of a debt (negative modification)

General rule:
○ Foakes v Beer; partial payment of total debt is insufficient to discharge
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the debtor of the debt.

○ No consideration was provided for the creditor’s promise to forgo the

debt.

○ The rule can prove harsh; even though C may have paid the principal
debt in full, any accrued interests are still payable.

○ But in MWB Business Exchange v Rock Advertising [2016], the COA

held that a property owner was bound by an oral agreement with the
occupier who had failed to make payments as provided by the parties’
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original written agreement to accept a late payment and a revised
schedule of further payments.

○ Essentially, a promise to do less than originally stipulated can constitute

good consideration where the promise confers a practical benefit upon
the other party.

○ The “practical benefit” in question was keeping Rock as a tenant, and that
the property is not left vacant where no rent would be derived.

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○ The question was left unanswered when it went on appeal to the UKSC in
2018, as the modification was ineffective due to a NOM clause.

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○ Note: Lord Sumption of the UKSC in Rock Advertising v MWB
Business Exchange [2018] noted that the case of Foakes was “probably
ripe for re-examination”.

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○ Though, this was not done, as an enlarged panel of the court was
required.

Exception:
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○ Pinnel’s Case (1602)–something extra can be done and that will amount
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to a valid consideration for a promise to forgive the debt.

○ The following can be provided:

(a) Chattel
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(b) Payment on earlier date

(c) Payment at different place or currency (if requested by creditor)
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7. Equitable remedy – Promissory Estoppel

● Common law approach to modification of contracts:
- Either give consideration for the other party’s promise to do more; or
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- Terminate old contract and enter a new one with new terms; both sides
give up rights, thus amounting to “mutuality”.
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● PE allows parties to be bound by promises to accept modified contract even in

the absence of consideration.

● Traces back to Hughes v Metropolitan Railways, or as revived by Lord

Denning in Central London Property v High Trees House.

● ‘A promise intended to be binding, intended to be acted on, and in fact acted on,
is binding so far as its terms properly apply.’
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● Common law recognises ‘estoppel by representation’ which arises when a
statement of existing fact was made (Jorden v Money) but it does not include
promise of future action.

Requirements:
(a) Existing legal relationship between the parties
○ Evenden v Guildford City FC
○ Durham Fancy Goods v Michael Jackson

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(b) Clear and unequivocal promise
○ Promise may be express (High Trees) or by conduct (Hughes)
○ It must be clear and unambiguous.
○ Where there is ambiguity, the representee must have sought and

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obtained clarification for the statement (Kim v Chasewood Park;
Closegate Hotel v McLean).

(c) Reliance

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○ The promisee must have acted/paid in reliance on promise.
○ Need not be ‘detrimental’ (Alan & Co. v El Nasr)
○ Reliance is sufficient when it would be inequitable to allow promisor to go
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back on promise (The Post Chaser (1982))
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(d) ‘Shield not a sword’
○ Cannot be used as cause of action.
○ Only as a defence against a claim.
○ (Combe v Combe, Baird Textile Holdings v M&S)
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(e) He who comes to equity must come with clean hands

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○ Party seeking to rely on the doctrine must not have acted unfairly.
○ The court will not allow parties to use the doctrine to make unjust
enrichment.
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(f) Must be inequitable for promisor to go back on promise

○ The remedy is discretionary; it is highly fact-dependent.
○ Where promisee extracted promise from promisor unfairly, or has taken
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advantage of the situation, it may be equitable for promisor to go back on

promise (D & C Builders v Rees (1966))
○ Though, it may not be that inequitable if the promise is withdrawn so
quickly that the other side suffers no real disadvantage (The Post
Chaser)

(g) Doctrine is generally suspensory in effect

○ Some promises are time limited.
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○ Once the stipulated time period comes to an end, promise may be
withdrawn with due notice (Tool Metal Manufacturing v Tungsten
Electric)
○ Though, PE may also extinguish rights rather than delay enforcement.
○ It was said in Tool Metal that the promisor cannot recover balance that
would have been due under original contract terms.
○ A creditor accepting part payment by instalments will not necessarily
result in ‘extinction’ of creditor’s right to claim balance of any instalment in
respect of which part payment has been made (MWB Business

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Exchange v Rock Advertising)

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