Consideration
March 19, 2023
1 Consideration
• As mentioned, for a contract, there must be: agreement; contractual in-
tention; and consideration.
• Consideration has various definitions.
• One definition is contained in Currie v Misa (1875) LR 10 Ex 153, which
refers to benefit and detriment.
• A valuable consideration may consist either in some right, interest, profit
or benefit accruing to the party or some forbearance, detriment, loss or
responsibility, given, suffered or undertaken by the other.
• In other words, what is provided by way of consideration should either be
a benefit to the person receiving it, or a detriment to the person giving it.
Often, both will be present.
• Consideration can also be though of as being the price one party pays for
the other party’s promise.
• Sir Frederick Pollock defined consideration as ‘an act or forbearance of
one party, or the promise thereof, is the price for which the promise of the
other is bought’ (Pollock on Contracts, 8th edn, p 175 ).
• Consideration must be sufficient; however, it need not be adequate.
• As consideration does not need to be adequate, this means that it does
not have to adequately reflect the value of the promise in return for which
it is given.
• However, as consideration must be sufficient, this means that it must have
some value.
• Traditionally, the fact that consideration must be sufficient, and thus have
some sort of value, has been interpreted as relating to economic value.
• Now days, this requirement for ‘economic value’ does not seem to be a
strict one.
1
, • An authority for the view that consideration does not have to have intrinsic
economic value is Chappell Co Ltd v Nestlé Co Ltd [1960] AC 87, HL,
where Lord Somervell said that: ‘[A] contracting party can stipulate for
what consideration he chooses. A peppercorn does not cease to be good
consideration if it is established that the promisee does not like pepper
and will throw away the corn.’
• In this same case, Lord Reid said that: ‘[I]t is a perfectly good contract
if a person accepts an offer to supply goods if he (a) does something of
value to the supplier and (b) pays money; the consideration is both (a)
and (b).’
• Again, in some cases, the requirement for economic value is very loose.
• In the American case of Hamer v Sidway (1891) 27 NE 256, an uncle
promised to pay his nephew $5000 on his nephew’s 21st birthday on the
condition that his nephew stopped drinking alcohol, smoking, swearing
and gambling until he was 21 years of age. His nephew agreed and ‘in all
things fully performed his part of the said agreement.’
• Here, it was held that the nephew had provided consideration for the
uncle’s promise - this is particularly easy to see with the detriment view
of consideration - and so the agreement was enforceable.
• Whereas, in the English case of White v Bluett (1853) 23 LJ Ex 36, a
father promised not to enforce a debt against his son on condition that
the son stopped moaning about the distribution of his father’s property.
• Here, the court decided that the son had not provided consideration for
the father’s promise.
• As Hamer is an American case which may not be followed in England, as
a matter of authority, there is no conflict between Hamer and White.
2 Past Consideration
• Past consideration is no consideration.
• Past consideration will not be sufficient. An authority for this principle is
found in Roscorla v Thomas [1842] QB 234.
• In Roscorla, Roscorla bought a horse from the defendant. Afterwards, the
defendant assured Roscorla that the horse was ‘sound and free from vice.’
This proved to be untrue, and Roscorla sued the defendant for breach of
contract.
• Here, it was held that the assurance was unenforceable as Roscorla had
not given any consideration for it. Roscorla had not bought the horse in
exchange for the defendant’s promise; Roscorla had already bought the
horse.
2
March 19, 2023
1 Consideration
• As mentioned, for a contract, there must be: agreement; contractual in-
tention; and consideration.
• Consideration has various definitions.
• One definition is contained in Currie v Misa (1875) LR 10 Ex 153, which
refers to benefit and detriment.
• A valuable consideration may consist either in some right, interest, profit
or benefit accruing to the party or some forbearance, detriment, loss or
responsibility, given, suffered or undertaken by the other.
• In other words, what is provided by way of consideration should either be
a benefit to the person receiving it, or a detriment to the person giving it.
Often, both will be present.
• Consideration can also be though of as being the price one party pays for
the other party’s promise.
• Sir Frederick Pollock defined consideration as ‘an act or forbearance of
one party, or the promise thereof, is the price for which the promise of the
other is bought’ (Pollock on Contracts, 8th edn, p 175 ).
• Consideration must be sufficient; however, it need not be adequate.
• As consideration does not need to be adequate, this means that it does
not have to adequately reflect the value of the promise in return for which
it is given.
• However, as consideration must be sufficient, this means that it must have
some value.
• Traditionally, the fact that consideration must be sufficient, and thus have
some sort of value, has been interpreted as relating to economic value.
• Now days, this requirement for ‘economic value’ does not seem to be a
strict one.
1
, • An authority for the view that consideration does not have to have intrinsic
economic value is Chappell Co Ltd v Nestlé Co Ltd [1960] AC 87, HL,
where Lord Somervell said that: ‘[A] contracting party can stipulate for
what consideration he chooses. A peppercorn does not cease to be good
consideration if it is established that the promisee does not like pepper
and will throw away the corn.’
• In this same case, Lord Reid said that: ‘[I]t is a perfectly good contract
if a person accepts an offer to supply goods if he (a) does something of
value to the supplier and (b) pays money; the consideration is both (a)
and (b).’
• Again, in some cases, the requirement for economic value is very loose.
• In the American case of Hamer v Sidway (1891) 27 NE 256, an uncle
promised to pay his nephew $5000 on his nephew’s 21st birthday on the
condition that his nephew stopped drinking alcohol, smoking, swearing
and gambling until he was 21 years of age. His nephew agreed and ‘in all
things fully performed his part of the said agreement.’
• Here, it was held that the nephew had provided consideration for the
uncle’s promise - this is particularly easy to see with the detriment view
of consideration - and so the agreement was enforceable.
• Whereas, in the English case of White v Bluett (1853) 23 LJ Ex 36, a
father promised not to enforce a debt against his son on condition that
the son stopped moaning about the distribution of his father’s property.
• Here, the court decided that the son had not provided consideration for
the father’s promise.
• As Hamer is an American case which may not be followed in England, as
a matter of authority, there is no conflict between Hamer and White.
2 Past Consideration
• Past consideration is no consideration.
• Past consideration will not be sufficient. An authority for this principle is
found in Roscorla v Thomas [1842] QB 234.
• In Roscorla, Roscorla bought a horse from the defendant. Afterwards, the
defendant assured Roscorla that the horse was ‘sound and free from vice.’
This proved to be untrue, and Roscorla sued the defendant for breach of
contract.
• Here, it was held that the assurance was unenforceable as Roscorla had
not given any consideration for it. Roscorla had not bought the horse in
exchange for the defendant’s promise; Roscorla had already bought the
horse.
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