Contract Law Essays Help : Consideration

Contract Law Cases referred to in this section:
Combe v Combe (1951) 2 KB 215, (1951) 1 All ER 767, CA
Currie v Misa (1875) LR 10 Exch 153 at 162, Ex Ch
Bailey v Croft (1812) 4 Taunt 611
Wigan v English and Scottish Law Life Assurance Association (1909) 1 Ch 291
Milroy v Lord (1862) 4 De GF & J 264, CA in Ch
Thomas v Thomas (1842) 2 QB 851

Consideration is generally one of the three essential elements of a valid contract. A promise which is made without consideration may not be sued upon in the law of contract, unless the contract is made by deed, in which case consideration is not necessary. Also, where a promise is given without consideration but is intended by the promisor to affect an existing contract between him and the promisee, and is intended to be acted upon by the promisee and is in fact so acted upon, such a promise may be set up by the promisee as a defence to an action by the promisor to enforce the ex-isting contract; but it cannot be sued upon as a separate contractual cause of action by the promisee (Combe v Combe (1951) 2 KB 215, (1951) 1 All ER 767, CA).

‘Valuable’ consideration is “some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other” at his re-quest (Currie v Misa (1875) LR 10 Exch 153 at 162, Ex Ch). The promisor does not necessarily have to benefit from the consideration so if, for example, the promisee does some act which benefits a third person that he would not have done had it not been for the promise, this may be sufficient (Bailey v Croft (1812) 4 Taunt 611). The consideration must, however, be causally linked to the promise it purports to support (Wigan v English and Scottish Law Life Assurance Association (1909) 1 Ch 291), and must be distinguished from a motive or condition.

Consideration may be executed (when it consists of a promise to do or forbear from doing some act in the future) or executory (when it consists in some act or forbearance completed at earliest when the promise becomes binding) but it may not be past; it does not have to be adequate but it must be of some value. What is of value will be decided by reference to the intention of the parties; thus, the inclusion of nominal consideration will not prevent an informal gratuitous promise from being a gift (Milroy v Lord (1862) 4 De GF & J 264, CA in Ch) whereas the deliberate inclusion of a nominal consideration, such as a peppercorn, seems likely to make the transaction a contract (Thomas v Thomas (1842) 2 QB 851).

Consideration must move from the promisee, in that it must be given by him as an equivalent for the promise made by the promisor (Thomas v Thomas (1842) 2 QB 851 per Patteson J).

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