Introduction

• general principle: an agreement alone does not make an enforceable contract / consideration must be given in return for promise / except: if agreement made by deed

Definition

• traditional approach: consideration consists of a promise or act which is of detriment to promisee or a benefit to promisor

  Currie v Misa (1875) LR 10 Ex 153

  • Lush J: .. a valuable consideration, in the sense of the law, 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...
• consideration also viewed as price one party pays for the other's promise

  Dunlop Pneumatic Tyre Co. Ltd v Selfridge & Co. Ltd [1915] AC 847

  • Lord Dunedin adopted Sir Frederick Pollock's definition: 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 thus given for value is enforceable...(Pollock on Contracts)

Adequacy and sufficiency

• consideration need not be adequate (reflect value of promise), but must be sufficient (law regards capable of amounting to consideration)

  Bret v JS (1600) Cro Eliz 756

  Facts:

  • defendant's (D) late husband offered to pay plaintiff (P) to provide her son training, D promised to continue paying(out of love for her son), P sued for the money

  Issue:

  • was love and affection capable of being valid consideration?

  Held:

  • natural love and affection cannot amount be sufficient consideration

  Thomas v Thomas (1842) 2 QB 851

  Facts:

  • P's late husband wished her to have a house for life(he stated this on day he died in front of witnesses)
  • D, his executor, agreed in consideration of John's desires provided P plaintiff paid £1 pa and maintain the house, initially agreement adhered to, but then D tried to withdraw

  Issue:

  • had consideration been provided for the executor's promise?

  Held:

  • P's promise to pay £1 and maintain house was sufficient consideration
  • Patterson J: Motive is not the same thing with consideration. Consideration means something which is of some value in the eye of the law, moving from the plaintiff: it may be some benefit to the plaintiff or some detriment to the defendant; but at all events it must be moving from the plaintiff...

  Chappell & Co. Ltd v Nestle Co. Ltd [1960] AC 87

  Facts:

  • Ds ran promotional offer: public could receive a music record by sending off 3 wrappers from D's chocolate bars plus a postal order for 1s 6d, Ds manufactured the records for this purpose
  • Ps, the copyright owners claimed there had been breaches of their copyright

  Issue:

  • were the wrappers part of the consideration?

  Held:

  • majority: wrappers were part of the consideration, even though trivial economic value and thrown away by D's on receipt, there had been a breach of copyright
  • Lord Somervell: I think they are part of the consideration. They are so described in the offer. 'They', the wrappers, 'will help you to get smash-hit recordings'... This is not conclusive but, however described, they are, in my view, in law part of the consideration. It is said that when received the wrappers are of no value to Nestle's. This I would have thought irrelevant. 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...
  • Lord Reid: The purchaser of records had to send three wrappers for each record, so he had first to acquire them. The acquisition of wrappers by him was, at least in many cases, of direct benefit to the Nestle Co., and required expenditure by the acquirer which he might not otherwise have incurred....
  • Viscount Simonds and Lord Keith dissented, arguing: the wrappers were a condition, offer was motivated by D's wish to promote chocolate but did not mean sale of the chocolate should be regarded as part of the transaction to buy the music

Forbearance

• can forbearance from legal activity be valid consideration?

  White v Bluett (1853) 23 LJ Ex 36

  Facts:

  • D owed his father money and had given him a promissory note
  • P, the father's executor, sued for the money, D claimed his father promised to write off the debt if he stopped complaining about father's distribution of assets, which he had done

  Issue:

  • is forbearance from permissible legal conduct (complaining) sufficient consideration to create an enforceable contract?

  Held:

  • D had not provided consideration: no legal right to complain, so not complaining was an intangible benefit
  • Pollock CB: The plea is clearly bad. By the argument a principle is pressed to an absurdity, as a bubble is blown until it bursts... If such a plea as this could be supported, the following would be a binding promise: A man might complain that another person used the public highway more than he ought to do, and that other might say, do not complain, and I will give you five pounds. It is ridiculous to suppose that such promises could be binding... the son's abstaining from doing what he had no right to do can be no consideration...

  Hamer v Sidway (1891) 27 NE 256

  Facts:

  • American case, so it does not overrule White v Bluett (1853)
  • P was promised $5000 by his uncle if he refrained from drinking liquor, using tobacco, swearing and playing cards or billiards for money until he should become 21 years of age..., P complied
  • D, the uncle's executor, refused to pay

  Issue:

  • is forbearance from permissible legal conduct sufficient consideration to create an enforceable contract?

  Held:

  • promise was enforceable as P provided consideration by restricting his lawful activity
  • Parker J: adopted the statement of Sir Frederick Pollock: Consideration means not so much that one party is profiting as that the other abandons some legal right in the present, or limits his legal freedom of action in the future, as an inducement for the promise of the first...(Pollock on Contracts)