Consideration
Consideration, is defined by Lush J, in Currie v Misa, as some right, interest, profit or
benefit accruing to one party or some forbearance, detriment, loss or responsibility
given, suffered or undertaken by the other.
TYPES OF CONSIDERATION
1. Executory consideration
Executory consideration is a promise given for a promise. The consideration in support
of each promise is the other promise, not a performed act. This can be seen in bilateral
contracts.
2. Executed consideration
Executed consideration is an act in return for a promise. The consideration for the
promise is a performed or executed act, i.e. when one party has done what he is bound
to do under the contract, leaving the outstanding liability to the other party only. This can
be seen in unilateral contracts.
Both executory and executed considerations are provided at the time when the promise
is given.
3. Past consideration
Past consideration is when something has been done before a promise is given in
return. As a general rule, it is not sufficient to make the promise binding.
Roscorla v Thomas
After the sale of his horse, the defendant told the claimant that the horse was ‘sound’,
but it was later found out to be otherwise. The court held that the defendant’s promise
was unenforceable, as it was made after the sale and so, the consideration was past.
Re McArdle
After having paid for home improvements, the siblings promised to pay the daughter-in-
law for the work. When they refused to pay, the court held that although the wording of
the document suggested that the payment related to work in the future, the facts made it
clear that the promise was given in return for something DONE. Hence, the promise
was not binding.
, Exception #1: An exception to this general rule is when the consideration is provided at
the promisor’s request and it is understood that payment will be made in return.
Lampleigh v Braithwait
The defendant asked the claimant to obtain for him a royal pardon. After considerable
expense, the defendant promised to pay him £100, but later refused to pay and was
sued. It was held that the defendant’s request was regarded as having an implied
promise to pay and the subsequent promise merely fixed the amount.
Re Casey’s Patents
The defendant promised that in consideration of the claimant’s services, he would give
him a one-third interest. When the defendant claimed that the promise was not binding,
the court held that the claimant’s services were clearly meant to be paid for.
Pau On v Lau Yiu Long
Lord Scarman in Pau On v Lau Yiu Long stated that for past consideration to be valid:
1. the act must have been done at the request of the promisor;
2. the parties must have understood that the act was to be remunerated;
3. the promise of payment if it had been made in advance, must have been
legally recoverable.
Should modern law be based on such old cases, like Lampleigh v Baithwait?
The Law Revision Commission 1937 proposed making past consideration valid.
Exception #2: A second exception is the bill of exchange. Under s.27 Bills of Exchange
Act 1882, an antecedent debt or liability may be consideration for receipt of a bill of
exchange.
Exception #3: A third exception is found under s.29 Limitation Act 1980.
Consideration, is defined by Lush J, in Currie v Misa, as some right, interest, profit or
benefit accruing to one party or some forbearance, detriment, loss or responsibility
given, suffered or undertaken by the other.
TYPES OF CONSIDERATION
1. Executory consideration
Executory consideration is a promise given for a promise. The consideration in support
of each promise is the other promise, not a performed act. This can be seen in bilateral
contracts.
2. Executed consideration
Executed consideration is an act in return for a promise. The consideration for the
promise is a performed or executed act, i.e. when one party has done what he is bound
to do under the contract, leaving the outstanding liability to the other party only. This can
be seen in unilateral contracts.
Both executory and executed considerations are provided at the time when the promise
is given.
3. Past consideration
Past consideration is when something has been done before a promise is given in
return. As a general rule, it is not sufficient to make the promise binding.
Roscorla v Thomas
After the sale of his horse, the defendant told the claimant that the horse was ‘sound’,
but it was later found out to be otherwise. The court held that the defendant’s promise
was unenforceable, as it was made after the sale and so, the consideration was past.
Re McArdle
After having paid for home improvements, the siblings promised to pay the daughter-in-
law for the work. When they refused to pay, the court held that although the wording of
the document suggested that the payment related to work in the future, the facts made it
clear that the promise was given in return for something DONE. Hence, the promise
was not binding.
, Exception #1: An exception to this general rule is when the consideration is provided at
the promisor’s request and it is understood that payment will be made in return.
Lampleigh v Braithwait
The defendant asked the claimant to obtain for him a royal pardon. After considerable
expense, the defendant promised to pay him £100, but later refused to pay and was
sued. It was held that the defendant’s request was regarded as having an implied
promise to pay and the subsequent promise merely fixed the amount.
Re Casey’s Patents
The defendant promised that in consideration of the claimant’s services, he would give
him a one-third interest. When the defendant claimed that the promise was not binding,
the court held that the claimant’s services were clearly meant to be paid for.
Pau On v Lau Yiu Long
Lord Scarman in Pau On v Lau Yiu Long stated that for past consideration to be valid:
1. the act must have been done at the request of the promisor;
2. the parties must have understood that the act was to be remunerated;
3. the promise of payment if it had been made in advance, must have been
legally recoverable.
Should modern law be based on such old cases, like Lampleigh v Baithwait?
The Law Revision Commission 1937 proposed making past consideration valid.
Exception #2: A second exception is the bill of exchange. Under s.27 Bills of Exchange
Act 1882, an antecedent debt or liability may be consideration for receipt of a bill of
exchange.
Exception #3: A third exception is found under s.29 Limitation Act 1980.
