Contract law Consideration and Promissory Estoppel Summary

Table of Contents
Considera*on .................................................................................................................... 2
Introduc)on ....................................................................................................................................... 2
What is Considera)on? ...................................................................................................................... 3
Requirement of Nexus ....................................................................................................................... 3
Requirement of Value ........................................................................................................................ 6
Pre-exis)ng Du)es ............................................................................................................................. 8
Contract Varia)on ............................................................................................................................ 11
Considera)on: Assessment .............................................................................................................. 20
Promissory Estoppel ........................................................................................................ 24
Overview .......................................................................................................................................... 24
Estoppel in General .......................................................................................................................... 24
Origins of Promissory Estoppel ........................................................................................................ 24
Requirements of Promissory Estoppel ............................................................................................. 25
Effect of Promissory Estoppel ........................................................................................................... 27

, Considera*on

Introduc)on

1. When is considera*on required?

“To be legally binding, an agreement, unless made by deed, must be supported by
considera6on” – Burrows

Considera6on is required:

i. Not only when a contract is formed
ii. But also when a contract is varied

2. Requirements of form

i. Formali*es in place of considera*on

These formali6es, in place of considera6on, show an inten6on to create legal
rela6ons – i.e. performing an eviden6ary, and a cau6onary, func6on

o Gratuitous promises without considera6on are valid if contained in a
deed – requirements for a valid deed set out in the Law of Property
(Miscellaneous Provisions) Act 1989, s1

§ Document must describe itself as a deed, must be signed by
the person making it in the presence of a witness who must
also sign (aOesta6on), and must be no6onally delivered

ii. Formali*es addi*onal to considera*on

Generally, no requirement as to form for contracts supported by
considera6on

BUT – a contract for the sale of an interest in land must be made in wri6ng
(LP(MP)A 1989, s2)

o Jus6fica6on is to protect the par6es to such contracts from
commiTng themselves too easily because the subject maOer (land) is
very important

, What is Considera)on?

1. Defini*on

“Considera6on means that, in exchange for a promise by one party, a counter-
promise or performance is given by the other party” – Burrows

• Each party must be promised something in return for giving or promising
something – i.e. considera6on as the legal descrip6on of the element of
exchange

o “Price of the promise” – O’Sullivan, Dunlop v Selfridge

• Prac6cal effect is to ensure that gratuitous promises are not binding whereas
bargains are

2. Considera*on in bilateral and unilateral contracts

• In a bilateral contract yet to be performed, each party’s promise is
considera6on for the other

E.g. I promise to give you £10 and in exchange you
promise to clean my car on Monday. My promise to
give you £10 is the considera6on for your promise to
clean my car on Monday and vice-versa.


• In a unilateral contract, the promisee’s performance of the requested act is
the considera6on for the promise, and the promise is the considera6on for
the performance of the request act

E.g. in Carlill v Carbolic Smoke Ball Co Ltd (1893),
taking the smoke ball as instructed and catching flu is
the considera6on for the promise of the reward and
the promise of the reward is the considera6on for the
performance of the requested act.


Requirement of Nexus

1. Considera*on must be requested by the promisor

• Considera6on must be given in return for the promise i.e. the promisee’s act
or promise must have been requested by the promisor