The to the one party or some

 

The
English legal system was unable to provide a sufficient and practical
definition for the contractual element of consideration for centuries. The case
of Currie v. Misa (1875) became a significant case in terms of providing the
definitive definition for consideration, consequently the case presented Judge
Lush with the opportunity to define consideration as “Either…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”. Meaning
that a party must provide something in exchange for the promise, in order to be
able to impose that promise, that “something” is called “consideration”1.
In terms of the necessity of consideration in the formation of a contract, it
is clear that it is one of the fundamental aspects as contracts will mostly
only be binding if they are supported by the concept of consideration and the
fact that consideration is demanded by the common law. Despite this, it would
be incorrect to assume that the doctrine of consideration is “too firmly fixed”
due to the existence of promissory estoppel. Lord Denning established the
doctrine of promissory estoppel in the case of Central London Property Trust v
High Trees House 1947, which meant that in some instances can stop a person
going back on a promise, which is not supported by some form of consideration.
This essay will examine the true extent in which courts require contracts to be
supported by consideration through three/four main arguments.

 

In
order for consideration to take place, there are four main rules, which should be
took into account. Firstly, the promisee must provide consideration and it must
move from the promisee. Meaning that, the person who wishes to enforce the
contract must show that they provided consideration; it is not enough to show
that someone else provided consideration. The promisee must show that
consideration came from him in some form. As it is not adequate for someone
else to provide consideration, this rule of consideration has caused some
difficulty in contract law, especially in assessing contracts that have more
than two parties involved. This can be explored further through the case of
Price v Easton (1833).

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A
declaration between the parties stated that X owed the plaintiff a sum of
money. Due to this, X agreed to complete work for the defendant in exchange for
payment, which would clear the debt that he owed to the plaintiff. The
defendant agreed he would pay the plaintiff on X’s behalf once the work was
finished. However, once the work was completed for the defendant, he did not
pay the plaintiff, or X, as had been promised. The plaintiff sued the defendant
for the money that X owed him. The court held that X performed his part of the
agreement with the defendant but the plaintiff was not involved with the
contract between the parties and therefore could not sue for the sum owed by
the defendant. This was in consideration of the fact that the money owed would
have been paid to the plaintiff to clear the previous debt. The court found that
on this basis the plaintiff had not provided any consideration for the promise
between the parties. The plaintiff’s claim was dismissed by the court.
Although, this case clearly highlighted the major extent in which courts
required consideration when tackling cases, it was ultimately flawed when a
third party was introduced as it created complications for the courts. Despite
the significant time gap, this case and many other cases including third
parties consequently lead to the parliament passing down the Contract (Rights
of Third Parties) Act in 1999 and “thereby removed one of the most
universally disliked and criticised blots on the legal landscape”2.
The Act allows third parties to enforce terms of contracts that benefit them in
some way. In addition, it allows them access to a range of remedies if the
terms are violated. Moreover, the act limits the ways in which a contract can
be altered without the permission of an involved third party. Simultaneously,
it provides protection for the promisor and promisee in situations where there
is a disagreement with the third party, and allows parties to a contract to
specifically exclude the protection prohibited by the Act if they want to limit
the involvement of third parties3.
The “cardinal necessity” of consideration is pinpointed here, as it is one of
the most significant factors in the formation of a contract.

 

The
second rule states that consideration must be ‘sufficient’ but does not need to
be adequate. It is commonly stated that the court will “not inquire into the adequacy
of the consideration4”.
However, the adequacy of consideration may be relevant in determining the
extent in which the other party is obligated. The case of Bainbridge v
Firmstone (1838) reveals that consideration does not need to be adequate (generous
enough to appear a fair bargain in terms of monetary value) but must be
sufficient (of enough recognisable value to satisfy the courts). The case
consisted of the defendant asking the claimant to let him weigh his two
valuable boilers, the claimant agreed, the defendant then left the boiler in
pieces and the claimant was unable to reassemble the boiler. The defendant
attempted to argue that there was no consideration and therefore no contract; however,
his claim was dismissed by the court. The claimant received the recovered
damages due to the breach of contract5.
  The validity of consideration can be
questioned once again as there are some promises that are regarded as a void or
nullity. Although, a promise to do an act or to refrain from doing an act is
generally deemed as adequate consideration, there are certain acts and promises,
which are deemed to be of no value in law. The case of Gaisberg v Storr (1950)6
assessed both promises made by both parties as void. The wife’s promise not to
take her husband to court to seek maintenance from her husband was deemed void
and the courts would not countenance the exclusion of their statutory
jurisdiction to award maintenance, therefore, her husband’s promise to pay her
money in consideration of her not going to court was made without consideration
and was deemed as void too. Revealing that a void promise is not to be regarded
as consideration. The second rule reveals that, whilst the existence of
consideration in decision making for the courts is significant, factors such as
the sufficiency of consideration must be took into consideration or the
potential for the consideration to be deemed as void is present.

 

 

The
third rule for consideration to take place follows by promises to do what one
has the duty to do. It is the preexisting contractual obligations where a party
merely does something by which they are already legally bound to do, this can
never be sufficient to amount to consideration for an entirely fresh agreement.
Essentially, X is only doing what he is already legally bound to do and Y is
getting nothing more than what he is entitled to under the law, therefore
consideration is not present7.
The case of Glasbrook Bros Ltd v Glamorgan County Council (1925) 8is
a significant case in support of the principle that the performance of a duty
imposed by law is not an adequate consideration. The council sued on a contract
they had made with the owners of a colliery, arguing that a fee was agreed with
the owners in order to receive the police garrison supplied to the colliery in
order to protect the workers of the coal mine. The coal miners refused to go to
work, unless the police supervised them. The owners of the colliery argued that
they should not have to pay the council, as there was no consideration for the
promise, as the police were under the oath of protecting the public and the
property. In this particular case, the court deemed the verdict in favor of the
council. However, this was only because the judge held that that what the managers
required of the police was more than what is required of their public duty. If
the police had done no more than their duty then they would have inevitably be
obliged to do so without extra pay. Therefore, through this case it could be
concluded that the courts do not require consideration to be present in all
cases. Nonetheless, law is a constantly evolving and ever-changing subject, if
the events described in Glasbrook Bros Ltd v Glamorgan County Council took
place today, the verdict could possibly be different. The Police Act (1996) 9
states that

“The
chief officer of police of a police force may provide, at the request of any
person, special police services at any premises or in any locality in the
police area for which the force is maintained, subject to the payment to the
police authority of charges on such scales as may be determined by that
authority.”10 Furthermore, Lord Denning
contested the rule that the performance of a duty is not sufficient
consideration on numerous cases. As an example in Ward v Byham (1956),11
a man promised to pay the mother of his child £1 per week on the basis that the
child was “well looked after and happy”. Lord Denning believed that even though
the mother is doing nothing more than her statutory duty to look after the
child, in essence she was still providing consideration to support the man’s
promise since she was providing a benefit to the father of her child. Which can
be interpreted as a “practical benefit” and consequently, consideration12.
The colliery case highlights the fact that previously in contract law, various
cases did not require consideration due to certain parties being legally
obliged to do certain acts. Yet, a more modern approach by Lord Denning and the
existence of law reforms reveals that in most cases some sort of consideration
is still present and necessary in the formation of a contract.

 

The
fourth role states that past consideration is not generally consideration. An
offer demands for something in return if a binding contract is to be formed13.
This means that

a
promise is not enforceable if it is only to pay for services already rendered,
or for some other benefit already conferred. As an example, the case of Eastwood
v Kenyon (1840) 14  John Sutcliffe died and left Eastwood as the
carer of her child, Sarah. Eastwood borrowed money to pay for Sarah’s education
and Sarah promised to pay him back when she came of age and paid one year’s
interest to him. Sarah then married Kenyon who also promised to pay Eastwood
back. Kenyon failed to do so and Eastwood sued. Kenyon stated that he would repay
the money after he and Sarah have their first child15.
However, this promise is not enforceable. The only possible consideration, which
could be found in this case is the sum of money used to pay for the child maintenance
of Sarah. However, because these acts took place in the past before any
promises had been made, resulting to the consideration not being valid. To
further dissect past consideration, it could be argued that that a minor
exception is present to the rule. Under the Bills of Exchange Act 1882 it
quotes that

“Valuable
consideration for a bill may be constituted by,—

(a)Any
consideration sufficient to support a simple contract;

(b)An
antecedent debt or liability. Such a debt or liability is deemed valuable
consideration whether the bill is payable on demand or at a future time.” 16

Although
being regarded as a limited exception, if person X is owed a sum of money and
that sum is returned to person Y in the form of a variety of bill exchange in
payment, it is possible to sue on that payment and the original debt.

 

Promissory estoppel stands as the main
obstacle to the concept of consideration, as it allows some promises to be
revoked. The case of Central London Property Trust v High Trees House 1947. High
Trees, leased a block of flat from Central London Property Trust. The property was
struggling to be fully let because of to the crisis of World War II. Therefore,
a conscience decision was made to reduce the rent by half. However, the parties
made the mistake of not determining how long the temporary reduced price should
stay. HTH continued to pay the rent at this new rate. The war had ended half a
decade later and the flats were at full occupancy. The CLPT then sued HTH for
the full rent from 1945 onwards. In order to reach a conclusion, the courts
reviewed previous cases such as Hughes v Metropolitan Railway Co (1877)17.
Denning J took a controversial approach by stating that previous similar cases
showed that a promise, which the promisor knew was going to be acted on by the
person to whom it was made, was enforceable even though a lack of consideration
was present. Here, the plaintiffs had made a binding promise. However, this was
only applicable during the period of war. Therefore, only after the war the
defendants were liable for the full sum they claimed.

1 Book 74

2 Dean (2000) p.143

3 http://www.legislation.gov.uk/ukpga/1999/31/section/1

4 Photo Productions v
Securicor 1980; 1 ALL ER 556 in Chapter 15

5 Book 80

6 1 KB 107, CA.

7 Book 83

8 AC 270

9 Section 25(1)

10 http://www.legislation.gov.uk/ukpga/1996/16/section/25

11 Ward v Byham 1956 1
WLR 496

12 Book 84

13 Paul S Davies 78

14 Eastwood v Kenyon (1840), 11 Ad 438

15 http://casebrief.wikia.com/wiki/Eastwood_v_Kenyon

16 Bills of Exchange Act
1882, Section 27 (1)

17 Hughes v Metropolitan Railway Co (1877) 2 App Cas 439,

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