CONSIDERATION AND PROMISSORY ESTOPPEL
Lecture Notes
Elements of Contract Law
Law - Year One
,Consideration and Promissory Estoppel - Lecture Notes
PART I: CONSIDERATION
_______________________________________________________________________________________
INTRODUCTION
1. What is consideration?
• The classic definition of consideration comes from Currie v Misa (1875) (Lush J): “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 or responsibility given, suffered or undertaken by the other."
• Essentially, something of value must be exchanged between the parties.
• This is a formal requirement / general rule: without consideration, the contract will not be valid. However,
contracts structured in the form of a deed are an exception: deeds indicate the seriousness of a promise, and do
not require consideration. To structure a document as a deed: “this document is executed and delivered as a
deed” must be written at the top; the signatures to the document must be witnessed.
2. Why do we have consideration? History:
• We have consideration because contract law cares • Consideration started with the ‘Statute
about ensuring people keep their promises. Only of Frauds’ 1677 – this indicated that
certain types of promises are enforced: certain types of contracts have to be
formalised. Its traditional provisions
The law only wants to enforce promises for which have since been repealed.
the promisee performs/ gives something to the
promisor in return. Thus, it does not want to enforce • Deeds were used in the Middle Ages
gratuitous promises: in which the promisor (makes and were referred to as ‘promises
the promise) performs/ gives something to the under seal’ – very serious promises.
promisee (receives the promise), who does nothing in
return. The only time these will be enforced is if
there is an indication that the promisor was aware of
the seriousness of their promise.
• It is evidence of the seriousness of a promise.
• The reality is that people make promises all the time.
However, contract law seeks to primarily protect the
rights and interests of parties in commercial
exchanges, which should always involve the amassing
of a benefit and suffering of a detriment considered
to be equivalent.
Promisor - a person who makes a promise
Promisee - a person to whom a promise is made
, Consideration and Promissory Estoppel - Lecture Notes
These cases help to further define and explain consideration:
- Definition
✓ Dunlop v Selfridge [1915] - this case gives us another definition of consideration: “an act or forbearance of one
party or the promise thereof is the price for which the other’s promise of the other is bought and thus, those kind
of promises are enforceable.” This is important, because it underlines that consideration is not simply about
providing something of value to constitute good consideration; the promise to provide something of value is also
good consideration.
Note: Just because there’s only been a promise and no actual good/ performance has been provided does not mean that
there is no good consideration. For example, the promise to provide money is good consideration in itself.
- Explanation
✓ Combe v Combe [1951] - a husband and his wife were estranged. The husband promised to make maintenance
payments to his wife, but failed to do so. The wife brought an action against him to enforce the promise, but it
failed. There were two reasons for this failure: they were married and thus, there was a presumption that there
was no intention to create legal relations; secondly, there was a lack of consideration – the wife had not provided
any consideration in exchange for this promise to pay maintenance payments (essentially, she did not promise
anything to him in return).
_______________________________________________________________________________________
HOW DOES CONSIDERATION WORK?
There are two types of consideration: executed and executory consideration.
A. Executed:
• Where the item or the act has already changed hands. If a party makes a promise in exchange for an
act by other party, when act has been completed, then the consideration has been executed.
Analogy: A has lost her handbag. She offers a reward of £50 to the person who finds/ returns her handbag.
If S finds that bag and hands it in, S has executed the consideration – A asked for an act, S has performed the
act that was sought and completion = consideration. Now, the £50 must be paid.
B. Executory:
• Where the act has not happened yet. It’s merely a promise – not a promise for an act, but a promise
in exchange for a promise.
! Analogy: a bilateral contract for the sale of goods. A is selling a car to S. A promises that they
_______________________________________________________________________________________
will deliver the car, while S promises they will pay. No-one has done anything yet, they’ve merely
exchanged promises; thus, the consideration is executory. Once performance is complete and the
car has been paid for, then consideration will be executed.
Promisor - a person who makes a promise
Promisee •- a person
Executory consideration
to whom a promise isismade
a perfectly valid form of consideration and will, providing all
other elements are present, ensure the contract is valid.
•
Lecture Notes
Elements of Contract Law
Law - Year One
,Consideration and Promissory Estoppel - Lecture Notes
PART I: CONSIDERATION
_______________________________________________________________________________________
INTRODUCTION
1. What is consideration?
• The classic definition of consideration comes from Currie v Misa (1875) (Lush J): “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 or responsibility given, suffered or undertaken by the other."
• Essentially, something of value must be exchanged between the parties.
• This is a formal requirement / general rule: without consideration, the contract will not be valid. However,
contracts structured in the form of a deed are an exception: deeds indicate the seriousness of a promise, and do
not require consideration. To structure a document as a deed: “this document is executed and delivered as a
deed” must be written at the top; the signatures to the document must be witnessed.
2. Why do we have consideration? History:
• We have consideration because contract law cares • Consideration started with the ‘Statute
about ensuring people keep their promises. Only of Frauds’ 1677 – this indicated that
certain types of promises are enforced: certain types of contracts have to be
formalised. Its traditional provisions
The law only wants to enforce promises for which have since been repealed.
the promisee performs/ gives something to the
promisor in return. Thus, it does not want to enforce • Deeds were used in the Middle Ages
gratuitous promises: in which the promisor (makes and were referred to as ‘promises
the promise) performs/ gives something to the under seal’ – very serious promises.
promisee (receives the promise), who does nothing in
return. The only time these will be enforced is if
there is an indication that the promisor was aware of
the seriousness of their promise.
• It is evidence of the seriousness of a promise.
• The reality is that people make promises all the time.
However, contract law seeks to primarily protect the
rights and interests of parties in commercial
exchanges, which should always involve the amassing
of a benefit and suffering of a detriment considered
to be equivalent.
Promisor - a person who makes a promise
Promisee - a person to whom a promise is made
, Consideration and Promissory Estoppel - Lecture Notes
These cases help to further define and explain consideration:
- Definition
✓ Dunlop v Selfridge [1915] - this case gives us another definition of consideration: “an act or forbearance of one
party or the promise thereof is the price for which the other’s promise of the other is bought and thus, those kind
of promises are enforceable.” This is important, because it underlines that consideration is not simply about
providing something of value to constitute good consideration; the promise to provide something of value is also
good consideration.
Note: Just because there’s only been a promise and no actual good/ performance has been provided does not mean that
there is no good consideration. For example, the promise to provide money is good consideration in itself.
- Explanation
✓ Combe v Combe [1951] - a husband and his wife were estranged. The husband promised to make maintenance
payments to his wife, but failed to do so. The wife brought an action against him to enforce the promise, but it
failed. There were two reasons for this failure: they were married and thus, there was a presumption that there
was no intention to create legal relations; secondly, there was a lack of consideration – the wife had not provided
any consideration in exchange for this promise to pay maintenance payments (essentially, she did not promise
anything to him in return).
_______________________________________________________________________________________
HOW DOES CONSIDERATION WORK?
There are two types of consideration: executed and executory consideration.
A. Executed:
• Where the item or the act has already changed hands. If a party makes a promise in exchange for an
act by other party, when act has been completed, then the consideration has been executed.
Analogy: A has lost her handbag. She offers a reward of £50 to the person who finds/ returns her handbag.
If S finds that bag and hands it in, S has executed the consideration – A asked for an act, S has performed the
act that was sought and completion = consideration. Now, the £50 must be paid.
B. Executory:
• Where the act has not happened yet. It’s merely a promise – not a promise for an act, but a promise
in exchange for a promise.
! Analogy: a bilateral contract for the sale of goods. A is selling a car to S. A promises that they
_______________________________________________________________________________________
will deliver the car, while S promises they will pay. No-one has done anything yet, they’ve merely
exchanged promises; thus, the consideration is executory. Once performance is complete and the
car has been paid for, then consideration will be executed.
Promisor - a person who makes a promise
Promisee •- a person
Executory consideration
to whom a promise isismade
a perfectly valid form of consideration and will, providing all
other elements are present, ensure the contract is valid.
•
