Consideration
What is consideration
• And act, or forbearance (not doing) an act
o E.g. payment of money, provisions of service, carrying out of acts, not doing smth
• "An act or forbearance of one party, or the promise thereof, is the price for which the
promise of the other is bought, and the promise this given for value is enforceable"
o It's the price you pay for the promise
o Dunedin LJ in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847, 855
• "Valuable consideration, in the sense of the law, may consist either some right, interest,
profit, or benefit accruing to the one party, or some forbearance, detriment, loss or
responsibility given, suffered or undertaken by other"
o Promise to do or not to do something
o Lush J in Currie v Misa (1875) LR 10 Ex 153, 162
Bilateral Contract
• Each party undertakes to the other to do or to refrain from doing smth
o United Dominions Trust Ltd v Eagle Aircraft Services
o Price paid for promise (the consideration) is the other party's promise
• Promise 1 = I'll give you my car for $15,000
• Promise 2 = I'll pay you the $15,000
• Basically because of this they're both bound by the promises made to do and not to do smth
o Need to meet requirements
Unilateral contract
• Promisee does not undertake to do or refrain from doing a particular act
o Lord Diplock
• Only promise is the one made by promisor IF the promisee follows the stipulated conditions
• Promise to do smth = a car on the side of the road with a sign saying "I'll sell my car for
$15,000 or close"
• Party D has a choice if they wanna pay $15,000 on the spot but no promise to do so in
advance. If they don't then they're not liable to do so. If they promise to do so then they are
liable
Executory and executed consideration
• No difference in value in contract creation
• Executory = obligation has not yet fallen due and has yet to be performed
• Executed = consideration executed by promisor
, Rules governing consideration
Consideration must move from promisee
• Need not move to promisor
o Somone else might be able to enforce promise once promisee has given sufficient
consideration
o Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd
• Dew and Co sold tires to Selfridges on the promise that they would also sell
products no less than Dunlop's listed price but they didn't so they were sued
• Court allowed implication of promise by Selfridge not to sell tires at lower
cost as they bought it from a third party subject to those terms but there
was no consideration provided by Dunlop for Selfridge's promise so it was
unenforceable
• Promisee (dunlop) also neither did nor suffered nor forbore anything, not
promised to do anything at all, in exchange for the undertaking purporting
to be given by the Selfridge's
▪ No consideration even if promise applied
• Lord Dunedin noted that obligation could exist of clear evi of consideration
moving from promisee to another party
• Joint promisees
o Consideration need only flow from one promisee
o Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460
• O'Neil's construction could quarry stone on Mr and Mrs Coulls land
• Settling of Mr Coulls' estate after his death was left to his executor
• Should the money be paid to Mrs Coulls or the executor
• Promise by O'Neil's construction was to pay all moneys due to Mr and Mrs
or his partner
• Mrs Coulls claimed she was joint promisee
• Consideration need only move from one of the joint promiseees
• Overlap w/ doctrine of privity
o Doctrine = only a person who is a party of contract can sue on it
Be bargained for
• Parties must have acted in reliance of other parties promise
• Act or forbearance must be done at request of promisor
o Either expressed or implied
• Act done by promisee must be smth done so that they could benefit from or accept the offer
o Easy to determine in bilateral contracts, not unilateral contracts
• Coombe v Coombe [1951] 2 KB 215, 221 - Denning LJ
• Aus Woollen Mills Pty Ltd v Cth - HC found there was no consideration for a 'promise' to pay
subsidies
What is consideration
• And act, or forbearance (not doing) an act
o E.g. payment of money, provisions of service, carrying out of acts, not doing smth
• "An act or forbearance of one party, or the promise thereof, is the price for which the
promise of the other is bought, and the promise this given for value is enforceable"
o It's the price you pay for the promise
o Dunedin LJ in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847, 855
• "Valuable consideration, in the sense of the law, may consist either some right, interest,
profit, or benefit accruing to the one party, or some forbearance, detriment, loss or
responsibility given, suffered or undertaken by other"
o Promise to do or not to do something
o Lush J in Currie v Misa (1875) LR 10 Ex 153, 162
Bilateral Contract
• Each party undertakes to the other to do or to refrain from doing smth
o United Dominions Trust Ltd v Eagle Aircraft Services
o Price paid for promise (the consideration) is the other party's promise
• Promise 1 = I'll give you my car for $15,000
• Promise 2 = I'll pay you the $15,000
• Basically because of this they're both bound by the promises made to do and not to do smth
o Need to meet requirements
Unilateral contract
• Promisee does not undertake to do or refrain from doing a particular act
o Lord Diplock
• Only promise is the one made by promisor IF the promisee follows the stipulated conditions
• Promise to do smth = a car on the side of the road with a sign saying "I'll sell my car for
$15,000 or close"
• Party D has a choice if they wanna pay $15,000 on the spot but no promise to do so in
advance. If they don't then they're not liable to do so. If they promise to do so then they are
liable
Executory and executed consideration
• No difference in value in contract creation
• Executory = obligation has not yet fallen due and has yet to be performed
• Executed = consideration executed by promisor
, Rules governing consideration
Consideration must move from promisee
• Need not move to promisor
o Somone else might be able to enforce promise once promisee has given sufficient
consideration
o Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd
• Dew and Co sold tires to Selfridges on the promise that they would also sell
products no less than Dunlop's listed price but they didn't so they were sued
• Court allowed implication of promise by Selfridge not to sell tires at lower
cost as they bought it from a third party subject to those terms but there
was no consideration provided by Dunlop for Selfridge's promise so it was
unenforceable
• Promisee (dunlop) also neither did nor suffered nor forbore anything, not
promised to do anything at all, in exchange for the undertaking purporting
to be given by the Selfridge's
▪ No consideration even if promise applied
• Lord Dunedin noted that obligation could exist of clear evi of consideration
moving from promisee to another party
• Joint promisees
o Consideration need only flow from one promisee
o Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460
• O'Neil's construction could quarry stone on Mr and Mrs Coulls land
• Settling of Mr Coulls' estate after his death was left to his executor
• Should the money be paid to Mrs Coulls or the executor
• Promise by O'Neil's construction was to pay all moneys due to Mr and Mrs
or his partner
• Mrs Coulls claimed she was joint promisee
• Consideration need only move from one of the joint promiseees
• Overlap w/ doctrine of privity
o Doctrine = only a person who is a party of contract can sue on it
Be bargained for
• Parties must have acted in reliance of other parties promise
• Act or forbearance must be done at request of promisor
o Either expressed or implied
• Act done by promisee must be smth done so that they could benefit from or accept the offer
o Easy to determine in bilateral contracts, not unilateral contracts
• Coombe v Coombe [1951] 2 KB 215, 221 - Denning LJ
• Aus Woollen Mills Pty Ltd v Cth - HC found there was no consideration for a 'promise' to pay
subsidies
