Law Of Contract: Formation Of A Valid Contract: Consideration: Nature And Function; Sufficiency/adequacy; Past; Performance Of Existing Duties; Part Payment Of Debt; Promissory Estoppel (Copy)
Consideration: Nature And Function; Sufficiency/Adequacy; Past; Performance Of Existing Duties; Part Payment Of Debt; Promissory Estoppel
Meaning Of Consideration
- Consideration
- One of the essential requirements for a valid simple contract in the law of England and Wales.
- Refers to something of value exchanged between the parties.
- Each party must normally give something or promise something in return for the other party’s promise.
- Shows that the agreement is a bargain rather than a mere gift.
- Simple idea
- A promise is not normally enforceable unless something is given in return.
- The law usually enforces bargains, not bare promises.
- Basic formula
- Promise + consideration = enforceable contractual promise
- Example
- A promises to sell a phone to B for £300.
- A’s consideration:
- Promise to provide the phone.
- B’s consideration:
- Promise to pay £300.
Function Of Consideration
- Consideration performs several important functions:
Identifies Bargains
- Shows that the agreement is an exchange.
- Helps separate enforceable contracts from gifts.
- Confirms that both sides have contributed something.
Prevents Enforcement Of Bare Promises
- A bare promise is a promise without consideration.
- Bare promises are generally not enforceable as simple contracts.
- Example
- A says:
- “I will give you £500 next week.”
- B gives nothing in return.
- Usually no enforceable contract.
- A says:
Shows Seriousness
- Consideration helps show the parties intended a serious legal bargain.
- It supports the idea that the parties voluntarily undertook obligations.
Provides Evidence Of Exchange
- Helps courts identify what each party promised or gave.
- Makes it easier to determine whether a contract exists.
Limits Contractual Liability
- Stops every casual promise becoming enforceable.
- Works together with intention to create legal relations.
Types Of Consideration
Executed Consideration
- Executed consideration
- Consideration already performed at the time the promise becomes enforceable.
- Common in unilateral contracts.
- Example
- Reward offered for finding lost dog.
- Person returns dog.
- Act of returning dog is executed consideration.
- Case link
- Carlill v Carbolic Smoke Ball Co
- Mrs Carlill’s use of the smoke ball was consideration for the company’s promise to pay.
- Carlill v Carbolic Smoke Ball Co
Executory Consideration
- Executory consideration
- A promise to do something in the future.
- Common in bilateral contracts.
- Example
- A promises to deliver goods next week.
- B promises to pay when goods arrive.
- Both promises are executory consideration.
Past Consideration
- Past consideration
- An act done before the promise is made.
- Generally not valid consideration.
- Simple rule
- Consideration must be given in return for the promise.
- If the act happened before the promise, it was not done in exchange for that promise.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course
Nature Of Consideration
Traditional Definition
Case: Currie v Misa (1875)
- Facts
- Case concerned whether value had been given in a commercial transaction.
- Legal principle
- Consideration may consist of:
- A benefit to one party.
- A detriment to the other party.
- Consideration may consist of:
- Famous definition
- Consideration is some:
- Right
- Interest
- Profit
- Benefit
- Forbearance
- Detriment
- Loss
- Responsibility
- Consideration is some:
- Importance
- Classic definition of consideration.
- Shows consideration can be either benefit or detriment.
Benefit And Detriment
Benefit To Promisor
- Promisor receives something valuable.
- Example
- A promises to pay B £100 for cleaning A’s garden.
- A receives clean garden.
- This is a benefit to A.
Detriment To Promisee
- Promisee gives up something or takes responsibility.
- Example
- B spends time and effort cleaning garden.
- This is a detriment to B.
Consideration Must Move From The Promisee
- Rule
- The person seeking to enforce the promise must have provided consideration.
- Meaning
- A claimant cannot sue on a promise unless they gave something in return.
- Case: Tweddle v Atkinson (1861)
Facts
- Two fathers agreed to pay money to a couple after marriage.
- The groom tried to enforce the promise.
- He had provided no consideration.
Decision
- Groom could not enforce the promise.
Principle
- Consideration must move from the promisee.
- A person who gives no consideration cannot enforce the contract.
Significance
- Important case linking consideration with privity.
- Shows third parties traditionally could not enforce contracts if they gave no consideration.
Evaluation
- Strength
- Maintains bargain theory.
- Prevents strangers enforcing promises.
- Weakness
- Can be unfair where contract was clearly intended to benefit a third party.
- Modern law has partly reduced harshness through the Contracts (Rights of Third Parties) Act 1999.
Contracts (Rights Of Third Parties) Act 1999
- Main relevance
- Allows a third party to enforce a contractual term in certain situations.
- Third party may enforce where:
- Contract expressly says they may enforce it.
- Term purports to confer a benefit on them, unless parties did not intend enforcement.
- Link with consideration
- Reduces harshness of the old rule.
- Third party may enforce even though they did not provide consideration.
- Does not abolish consideration generally between original contracting parties.
Sufficiency And Adequacy Of Consideration
Main Rule
- Consideration must be sufficient but need not be adequate.
- Meaning
- Consideration must have some legal value.
- It does not need to be equal in economic value to the promise received.
Sufficiency
- Sufficient consideration
- Something recognised by law as having value.
- Need not be valuable in ordinary financial terms.
- Must be real and not vague.
- Examples of sufficient consideration:
- Money
- Goods
- Services
- Promise to perform work
- Promise not to sue
- Giving up a legal right
- Taking on responsibility
- Performing an act requested by the promisor
Adequacy
- Adequacy
- Refers to whether the exchange is fair or equal in value.
- Rule
- Courts do not normally examine whether consideration is adequate.
- Courts do not usually protect parties from bad bargains.
- Reason
- Freedom of contract.
- Parties decide the value of their bargain.
- Courts avoid interfering with commercial choices.
Case: Thomas v Thomas (1842)
Facts
- Husband expressed wish that wife should live in house after his death.
- Executors allowed widow to live in house for £1 per year.
- Issue was whether £1 rent was valid consideration.
Decision
- £1 rent was sufficient consideration.
Principle
- Consideration need not be adequate.
- Small value may still be legally sufficient.
Significance
- Key authority for sufficiency and adequacy.
- Shows courts do not measure economic fairness.
Case: Chappell & Co Ltd v Nestle Co Ltd (1960)
Facts
- Nestle offered records in exchange for money plus chocolate wrappers.
- Wrappers were thrown away after receipt.
- Issue was whether wrappers were part of consideration.
Decision
- Wrappers were valid consideration.
Principle
- Consideration need not be adequate.
- Even items of little economic value can be sufficient if requested as part of bargain.
Significance
- Very important authority.
- Shows consideration can be commercially artificial but legally valid.
Evaluation
- Strength
- Respects parties’ bargain.
- Allows flexible commercial arrangements.
- Weakness
- Can make consideration seem artificial.
- Courts may enforce exchanges with minimal real value.
Case: White v Bluett (1853)
Facts
- Son promised not to complain about father’s distribution of property.
- Father allegedly promised not to enforce debt.
- Son argued his promise not to complain was consideration.
Decision
- No sufficient consideration.
Principle
- Promise not to complain was too vague and had no legal value.
Significance
- Shows consideration must be legally sufficient.
- Vague emotional promises may not count.
Case: Hamer v Sidway
- Note
- This is a US case and should not be used as authority for England and Wales.
- For A Level Law based on England and Wales, focus on English authorities such as:
- Thomas v Thomas
- Chappell v Nestle
- White v Bluett
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course
Past Consideration
General Rule
- Past consideration is not valid consideration.
- Meaning
- If a person performs an act first and only later receives a promise of payment, that earlier act is generally not good consideration.
- Reason
- The act was not done in exchange for the later promise.
- There is no bargain at the time the act was performed.
Case: Re McArdle (1951)
Facts
- Family members had interest in a house.
- One family member carried out improvements to the house.
- After work was completed, other family members promised to pay.
- They later refused.
Decision
- Promise was not enforceable.
Principle
- Past consideration is not valid consideration.
Reasoning
- The improvements were completed before the promise to pay was made.
- The work was not done in exchange for the later promise.
Significance
- Leading modern case on past consideration.
- Important for exam answers.
Case: Roscorla v Thomas (1842)
Facts
- Buyer purchased a horse.
- After sale, seller promised horse was sound and free from vice.
- Horse was not sound.
- Buyer sued on later promise.
Decision
- Promise was unenforceable.
Principle
- Past consideration is not valid.
- Consideration for sale did not support later promise.
Significance
- Classic authority for past consideration.
- Shows consideration must be linked to the promise being enforced.
Exception To Past Consideration Rule
General Exception
- Past act may be valid consideration if:
- The act was done at the promisor’s request.
- Both parties understood payment or reward would be made.
- Later promise fixes or confirms payment.
Case: Lampleigh v Braithwaite (1615)
Facts
- Braithwaite killed a man.
- He asked Lampleigh to obtain a royal pardon.
- Lampleigh did so.
- Braithwaite later promised to pay £100.
- He refused to pay.
Decision
- Promise enforceable.
Principle
- Past act can be consideration where it was done at the promisor’s request and payment was expected.
Significance
- Important exception to past consideration.
- Shows request plus later promise may form one transaction.
Case: Re Casey’s Patents (1892)
Facts
- Casey managed patents for joint owners.
- After his work, owners promised him one-third share.
- They later refused.
Decision
- Promise enforceable.
Principle
- Past services may be valid consideration if:
- Services were requested.
- Payment was expected.
- Later promise simply confirmed expected reward.
Significance
- Clearer modern explanation of Lampleigh v Braithwaite exception.
Case: Pao On v Lau Yiu Long (1980)
Facts
- Commercial share transaction.
- Promise was made after earlier action.
- Issue involved whether consideration was past.
Decision
- Consideration was valid.
Legal Principle
- Past consideration may be valid if:
- Act was done at promisor’s request.
- Parties understood act would be paid for or rewarded.
- Later promise would have been enforceable if made in advance.
Significance
- Leading modern authority on the exception.
- Very important for exam use.
Exam Rule For Past Consideration
- Past consideration is normally invalid.
- Re McArdle
- Roscorla v Thomas
- Exception applies where:
- Request by promisor.
- Understanding of payment.
- Later promise confirms expected payment.
- Pao On v Lau Yiu Long
- Lampleigh v Braithwaite
- Re Casey’s Patents
Performance Of Existing Duties
Overview
- Consideration issues arise where one party promises to do something they are already required to do.
- Existing duties may be:
- Public duties
- Contractual duties owed to the promisor
- Contractual duties owed to a third party
Performance Of Existing Public Duties
General Rule
- Performing an existing public duty is not usually good consideration.
- Reason
- Person is already legally required to perform the duty.
- No extra value is given.
- Examples:
- Police officer performing normal police duty.
- Witness attending court when legally required.
- Public official performing required duties.
Case: Collins v Godefroy (1831)
Facts
- Witness was required by subpoena to attend court.
- Party promised to pay him for attending.
- Witness tried to enforce payment.
Decision
- Promise not enforceable.
Principle
- Performance of an existing public duty is not good consideration.
Significance
- Leading case on public duty rule.
Exception: Going Beyond Existing Public Duty
- If the person does more than their public duty requires, this can be good consideration.
Case: Glasbrook Bros Ltd v Glamorgan County Council (1925)
Facts
- Mine owners requested police protection during strike.
- Police believed mobile protection was enough.
- Mine owners requested police stationed on site.
- Police provided extra protection.
- Mine owners refused to pay.
Decision
- Payment enforceable.
Principle
- Performing more than existing public duty can be good consideration.
Significance
- Important exception to Collins v Godefroy.
Case: Ward v Byham (1956)
Facts
- Father promised mother payment if she kept child well looked after and happy.
- Mother already had legal duty to care for child.
- Issue was whether her actions were consideration.
Decision
- Consideration existed.
Principle
- Doing more than a basic legal duty may be sufficient consideration.
Significance
- Shows courts may interpret extra practical benefit as sufficient.
Performance Of Existing Contractual Duty Owed To The Promisor
General Rule
- Performing an existing contractual duty owed to the same promisor is traditionally not good consideration.
- Reason
- Promisee gives nothing extra.
- Promisee is already bound to do it.
Case: Stilk v Myrick (1809)
Facts
- Sailors contracted to work on voyage.
- Two sailors deserted.
- Captain promised remaining sailors extra wages to sail ship home.
- Captain later refused to pay extra wages.
Decision
- Extra wages not enforceable.
Principle
- Performance of an existing contractual duty is not good consideration.
Reasoning
- Sailors were already contractually bound to sail the ship.
- They gave no fresh consideration for extra pay.
Significance
- Traditional rule on existing contractual duties.
- Important for part-performance and variation cases.
Evaluation
- Strength
- Prevents economic pressure.
- Prevents parties demanding more money for same work.
- Protects contract certainty.
- Weakness
- Can be harsh where circumstances change.
- Does not reflect modern commercial renegotiation.
Exception: Doing More Than Existing Contractual Duty
Case: Hartley v Ponsonby (1857)
Facts
- Many sailors deserted.
- Remaining crew became seriously undermanned.
- Remaining sailors promised extra pay to complete voyage.
Decision
- Extra pay enforceable.
Principle
- If party does more than existing contractual duty, extra promise may be supported by consideration.
Reasoning
- The voyage became significantly more dangerous.
- Remaining sailors were not merely doing what they had originally promised.
Significance
- Contrast with Stilk v Myrick.
- Shows extra risk or extra burden may count as fresh consideration.
Practical Benefit Rule
Modern Development
- Courts have moved away from strict traditional approach in some commercial cases.
- A promise to perform an existing contractual duty may be good consideration if the promisor receives a practical benefit.
Case: Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991)
Facts
- Roffey had contract to refurbish flats.
- Williams was subcontracted for carpentry work.
- Williams got into financial difficulty.
- Roffey promised extra payment to ensure work completed on time.
- Roffey later refused full extra payment.
Decision
- Extra payment was enforceable.
Legal Principle
- Performance of an existing contractual duty can be good consideration where the promisor obtains a practical benefit.
Practical Benefits To Roffey
- Avoided penalty clause under main contract.
- Avoided delay.
- Avoided need to find another carpenter.
- Ensured work was completed.
- Maintained business reputation.
Conditions Suggested
- Existing contract between parties.
- Promisor doubts promisee will complete obligations.
- Promisor promises extra payment.
- Promisor obtains practical benefit.
- No economic duress or fraud.
- Promise becomes enforceable.
Significance
- Major modern case on consideration.
- Softens strict rule in Stilk v Myrick.
- Recognises commercial reality.
Evaluation
- Strengths:
- Reflects modern business practice.
- Supports renegotiation where both parties benefit.
- Avoids unfairness where extra payment is promised seriously.
- Reduces artificiality of consideration.
- Weaknesses:
- Creates tension with Stilk v Myrick.
- Makes consideration easier to prove.
- May weaken the doctrine of consideration.
- Risk of enforcing promises without real fresh consideration.
- May overlap with economic duress.
Economic Duress Safeguard
- Williams v Roffey does not protect improper pressure.
- If extra payment was obtained through threats or pressure:
- Contract variation may be voidable for economic duress.
- Link case:
- The Siboen and The Sibotre
- Universe Tankships v ITWF
- DSND Subsea Ltd v Petroleum Geo Services
- Exam point
- If party demands extra payment unfairly, discuss economic duress as a limitation.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course
Performance Of Existing Contractual Duty Owed To A Third Party
General Rule
- Performing an existing contractual duty owed to a third party can be good consideration.
- Reason
- The promisor receives a benefit from performance.
- The promisee is doing something valuable for the promisor, even if already owed to someone else.
Case: Shadwell v Shadwell (1860)
Facts
- Nephew was engaged to marry.
- Uncle promised to pay him £150 per year if he married.
- Nephew was already contractually bound to marry his fiancée.
- Uncle later failed to pay.
Decision
- Promise enforceable.
Principle
- Performance of duty owed to a third party can be valid consideration.
Significance
- Important authority for third-party duty rule.
Case: Scotson v Pegg (1861)
Facts
- Claimant had contracted with a third party to deliver coal.
- Defendant promised to unload coal if claimant delivered it.
- Claimant delivered coal.
- Defendant argued claimant had only done existing duty owed to third party.
Decision
- Consideration was valid.
Principle
- Performance of existing duty owed to third party can be good consideration.
Significance
- Clear authority supporting third-party duty rule.
Case: Pao On v Lau Yiu Long (1980)
Relevance
- Confirms that performance of an existing contractual duty owed to a third party can amount to good consideration.
Significance
- Modern Privy Council authority.
- Often cited in consideration questions.
Part Payment Of Debt
General Rule
- Part payment of a debt is not good consideration for a promise to discharge the whole debt.
- Meaning
- If debtor owes £1000 and creditor agrees to accept £700 in full settlement, creditor may still sue for remaining £300 unless fresh consideration exists.
Case: Pinnel’s Case (1602)
Facts
- Debtor owed money.
- Creditor accepted lesser amount.
- Issue was whether lesser payment discharged full debt.
Decision
- Part payment alone did not satisfy whole debt.
Principle
- Payment of a smaller sum on the due date is not satisfaction of a larger sum.
Important Exceptions From Pinnel’s Case
- Part payment may be good consideration if:
- Paid earlier than due date.
- Paid at a different place at creditor’s request.
- Paid with something extra.
- Paid by a third party.
- Composition agreement with creditors exists.
Case: Foakes v Beer (1884)
Facts
- Dr Foakes owed Mrs Beer judgment debt.
- Mrs Beer agreed he could pay by instalments.
- Dr Foakes paid the principal sum.
- Mrs Beer later claimed interest.
Decision
- Mrs Beer could claim interest.
Principle
- Part payment of debt is not good consideration for promise to waive the balance or interest.
Significance
- Leading authority confirming Pinnel’s Case.
- Important in all debt and consideration questions.
Evaluation
- Strength
- Protects creditors.
- Prevents debtors pressuring creditors to accept less.
- Maintains certainty.
- Weakness
- Commercially harsh.
- Ignores practical benefit of receiving part payment.
- In tension with Williams v Roffey.
- Can allow creditors to go back on promises.
Exceptions To Part Payment Rule
Payment Earlier Than Due Date
- If debtor pays earlier than required, this may be good consideration.
- Reason
- Creditor receives benefit of early payment.
Payment At Different Place
- If creditor requests payment at a different place, this may be sufficient.
- Reason
- Creditor receives practical convenience.
Payment With Something Extra
- If debtor gives additional item or service, this may be valid consideration.
- Example
- Debtor owes £1000.
- Creditor accepts £700 plus a laptop.
- Extra item may be fresh consideration.
Payment By Third Party
Case: Hirachand Punamchand v Temple (1911)
Facts
- Father paid part of son’s debt to creditor.
- Creditor accepted payment in full settlement.
- Creditor later tried to recover balance from son.
Decision
- Creditor could not recover balance.
Principle
- Part payment by third party can discharge whole debt if accepted in full settlement.
Reason
- It would be fraud on the third party to accept payment as full settlement and then sue debtor.
Composition Agreements
- Composition agreement
- Arrangement where creditors agree to accept partial payment from debtor.
- Rule
- Individual creditor cannot usually sue for the balance after agreeing to composition.
- Reason
- It would be unfair to other creditors.
- Mutual promises between creditors provide consideration.
Promissory Estoppel
Meaning
- Promissory estoppel
- An equitable doctrine that may prevent a party from going back on a promise.
- Applies where one party promises not to enforce strict legal rights.
- If the other party relies on that promise, it may be unfair to allow the first party to go back.
- Simple idea
- A person may be stopped from insisting on full legal rights if they promised not to and the other party relied on that promise.
Purpose
- Promissory estoppel softens harshness of common law consideration rules.
- Especially important for:
- Part payment of debt.
- Contract variations.
- Promises to suspend rights.
- Situations where strict enforcement would be unfair.
Origin: Hughes v Metropolitan Railway Co (1877)
Facts
- Landlord gave tenant six months to repair property.
- During that period, parties negotiated possible sale of lease.
- Tenant delayed repairs during negotiations.
- Negotiations failed.
- Landlord tried to enforce original deadline.
Decision
- Landlord could not enforce strict deadline during negotiation period.
Principle
- If one party leads another to believe strict rights will not be enforced, they may be prevented from enforcing them where it would be inequitable.
Significance
- Foundation of promissory estoppel.
- Later revived in High Trees.
Leading Case: Central London Property Trust Ltd v High Trees House Ltd (1947)
Facts
- Landlord leased flats to tenant.
- During World War II, occupancy was low.
- Landlord agreed to reduce rent by half.
- After war, flats became fully occupied.
- Landlord claimed full rent for later period.
Decision
- Full rent payable after wartime conditions ended.
- Landlord likely could not claim arrears for wartime reduced period.
Principle
- A promise intended to be binding, intended to be acted upon, and actually acted upon may be enforceable even without consideration.
Significance
- Modern foundation of promissory estoppel.
- Denning J revived equitable principle from Hughes.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course
Requirements Of Promissory Estoppel
Existing Legal Relationship
- There must usually be an existing legal relationship between parties.
- Common examples:
- Existing contract.
- Existing debt relationship.
- Lease agreement.
- Ongoing commercial relationship.
Clear And Unequivocal Promise
- Promisor must clearly promise not to enforce strict rights.
- Promise can be:
- Express
- Implied from conduct
- Must not be vague.
Reliance By Promisee
- Promisee must rely on the promise.
- Reliance may involve:
- Changing position.
- Acting differently.
- Not taking protective steps.
- Paying reduced amount.
- Delaying performance.
Inequitable To Go Back
- It must be unfair or inequitable for promisor to return to strict rights.
- Court considers:
- Conduct of parties.
- Whether promisee relied.
- Whether promisor gave reasonable notice.
- Whether promisee acted unfairly.
- Whether circumstances changed.
Used As A Shield Not A Sword
- Promissory estoppel can usually be used as a defence, not as a new cause of action.
Case: Combe v Combe (1951)
Facts
- Husband promised to pay maintenance to wife.
- Wife provided no consideration.
- Wife attempted to sue using promissory estoppel.
Decision
- Claim failed.
Principle
- Promissory estoppel is a shield, not a sword.
Significance
- Limits use of promissory estoppel.
- Prevents doctrine replacing consideration entirely.
Case: Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd (1955)
Facts
- Patent owners agreed to suspend compensation payments during wartime.
- Later sought to resume rights.
Decision
- Rights could be resumed after reasonable notice.
Principle
- Promissory estoppel may suspend rights rather than permanently extinguish them.
Significance
- Shows estoppel may be temporary.
- Rights can revive with notice where fair.
Case: D & C Builders Ltd v Rees (1966)
Facts
- Builders were owed money.
- Debtor knew builders were in financial difficulty.
- Debtor offered less than owed and pressured them to accept.
- Builders later claimed balance.
Decision
- Builders could recover balance.
Principle
- Promissory estoppel will not assist a party acting inequitably.
Significance
- Important limitation.
- Estoppel requires clean hands and fairness.
Case: The Post Chaser (1982)
Principle
- Reliance alone may not be enough.
- It must be inequitable for promisor to go back on promise.
Effect Of Promissory Estoppel
- May suspend legal rights.
- May sometimes extinguish rights where justice requires.
- Often prevents arrears being claimed for the period of reliance.
- Usually does not create a new claim.
- Operates only where equity demands fairness.
Promissory Estoppel And Part Payment Of Debt
Relationship With Foakes v Beer
- Common law rule:
- Part payment is not good consideration for full discharge.
- Foakes v Beer.
- Equity:
- Promissory estoppel may prevent creditor from claiming balance where debtor relied on promise to accept less.
Case: High Trees
- Shows a promise to accept reduced payment may be binding in equity.
- However, rights may resume when circumstances change.
Case: D & C Builders v Rees
- Shows promissory estoppel will not apply where debtor pressures creditor unfairly.
Practical Exam Example
- A owes B £10,000.
- B promises to accept £7,000 in full settlement.
- A pays £7,000 relying on promise.
- B later sues for £3,000.
- Common law:
- B may sue for balance under Foakes v Beer.
- Promissory estoppel:
- A may argue B is prevented from claiming balance.
- Success depends on:
- Clear promise.
- Reliance.
- Inequitable to go back.
- No unfair pressure.
Evaluation Of Consideration
Strengths
- Provides evidence of bargain.
- Separates contracts from gifts.
- Limits legal enforcement to serious exchanges.
- Supports certainty.
- Protects parties from casual promises becoming binding.
- Fits traditional bargain theory of contract.
Weaknesses
- Can be artificial.
- Courts often find nominal consideration.
- Adequacy rule means unfair bargains may be enforced.
- Past consideration rule can be harsh.
- Existing duty rules are inconsistent.
- Williams v Roffey creates tension with Foakes v Beer.
- Promissory estoppel creates uncertainty because it depends on fairness.
- Consideration may be less important because intention and reliance often do similar work.
Criticism: Artificiality
- Courts may accept very small or symbolic value.
- Example:
- £1 rent in Thomas v Thomas.
- Chocolate wrappers in Chappell v Nestle.
- Criticism:
- If almost anything can count, doctrine may lose practical value.
Criticism: Harshness Of Past Consideration Rule
- Re McArdle shows work done before promise may not be enforceable.
- This can be unfair where real benefit was received.
- Exception in Pao On helps but does not remove all unfairness.
Criticism: Existing Duty Confusion
- Stilk v Myrick suggests existing duty is not good consideration.
- Williams v Roffey allows practical benefit to count.
- This creates uncertainty.
Criticism: Part Payment Rule
- Foakes v Beer is often criticised.
- Creditor may receive practical benefit from part payment.
- Rule appears inconsistent with Williams v Roffey.
- Promissory estoppel partly reduces harshness but is limited.
Defence Of Consideration
- Provides clear structure.
- Prevents enforcement of gifts.
- Preserves bargain-based contract law.
- Reduces excessive litigation.
- Works with intention to create legal relations.
Comparison Table
| Issue | Rule | Case |
|---|---|---|
| Definition | Benefit or detriment | Currie v Misa |
| Need not be adequate | Small value enough | Thomas v Thomas |
| Wrappers valid | Commercially requested item sufficient | Chappell v Nestle |
| Vague promise insufficient | No legal value | White v Bluett |
| Past consideration invalid | Later promise unenforceable | Re McArdle |
| Sale followed by promise | Past consideration invalid | Roscorla v Thomas |
| Requested past act exception | Later promise enforceable | Lampleigh v Braithwaite |
| Modern past act exception | Request, expectation, later promise | Pao On |
| Public duty not enough | Already legally required | Collins v Godefroy |
| Extra public duty enough | Beyond duty | Glasbrook Bros |
| Existing contractual duty not enough | No fresh consideration | Stilk v Myrick |
| Extra risk enough | Fresh consideration | Hartley v Ponsonby |
| Practical benefit enough | Existing duty may count | Williams v Roffey |
| Third-party duty enough | Valid consideration | Scotson v Pegg |
| Part payment not enough | Balance still recoverable | Pinnel’s Case / Foakes v Beer |
| Third-party part payment | Creditor cannot sue balance | Hirachand Punamchand |
| Estoppel foundation | Strict rights suspended | Hughes |
| Modern estoppel | Promise relied upon may bind | High Trees |
| Shield not sword | Defence only | Combe v Combe |
| Inequitable conduct blocks estoppel | Pressure prevents defence | D & C Builders v Rees |
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course
Exam Method For Consideration
Step 1: Identify The Promise
- What promise is being enforced?
- Who made the promise?
- Who is trying to enforce it?
Step 2: Identify Consideration
- What did the claimant give in return?
- Was it:
- Money?
- Goods?
- Services?
- Promise?
- Forbearance?
- Performance?
- Practical benefit?
Step 3: Apply Sufficiency Rule
- Is consideration legally sufficient?
- It does not need to be adequate.
- Cases:
- Thomas v Thomas
- Chappell v Nestle
- White v Bluett
Step 4: Check If Consideration Is Past
- Was the act done before the promise?
- If yes:
- Usually invalid.
- Re McArdle
- Roscorla v Thomas
- Check exception:
- Promisor requested act.
- Payment expected.
- Later promise confirms payment.
- Pao On
- Lampleigh
Step 5: Check Existing Duty Problem
- Is the claimant only doing what they already had to do?
- Public duty:
- Collins v Godefroy
- Glasbrook Bros
- Existing contractual duty to promisor:
- Stilk v Myrick
- Hartley v Ponsonby
- Williams v Roffey
- Existing duty to third party:
- Shadwell v Shadwell
- Scotson v Pegg
- Pao On
Step 6: Check Part Payment Of Debt
- Is debtor paying less than owed?
- Apply:
- Pinnel’s Case
- Foakes v Beer
- Check exceptions:
- Early payment
- Different place
- Something extra
- Third-party payment
- Composition agreement
Step 7: Consider Promissory Estoppel
- Is there:
- Existing legal relationship?
- Clear promise not to enforce strict rights?
- Reliance?
- Inequitable to go back?
- Used as defence?
- Cases:
- Hughes
- High Trees
- Combe v Combe
- Tool Metal
- D & C Builders v Rees
Final Evaluation Points
- Consideration is central to English contract law because it shows a bargain.
- Consideration must be sufficient but need not be adequate.
- Courts do not usually examine fairness of exchange.
- Past consideration is generally invalid unless the Pao On exception applies.
- Performance of an existing public duty is not consideration unless extra duty is performed.
- Performance of an existing contractual duty traditionally is not consideration.
- Williams v Roffey introduced practical benefit as consideration.
- Part payment of debt is not good consideration for full discharge under Foakes v Beer.
- Promissory estoppel can reduce unfairness where a promise to accept less has been relied upon.
- Promissory estoppel is limited because it is generally a shield, not a sword.
- The doctrine of consideration remains important but is often criticised as artificial, inconsistent and sometimes unfair.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course