In English law, consideration is a fundamental requirement for a legally enforceable contract, alongside agreement and the intention to create legal relations. It is rooted in the “bargain theory” of contract, which dictates that a promisee can only enforce a promise if they have given or promised “something in return” for it.
The Definition and Core Rules
A classic definition of consideration, found in Currie v Misa (1875), states it may consist of a benefit to the promisor or a detriment to the promisee. Sir Frederick Pollock famously described it as the “price for which the promise of the other is bought”. Consideration can be executory (an exchange of promises) or executed (a promise in exchange for an act).
The doctrine is governed by three primary rules:
- Consideration must be sufficient but need not be adequate: the law requires that consideration have some value in the “eye of the law”, but it does not inquire whether the bargain is fair. In Chappell & Co Ltd v Nestlé Co Ltd (1960), chocolate wrappers were valid consideration because the company specifically requested them, despite being thrown away on receipt. Nominal consideration, such as £1 for a luxury car, is legally sufficient.
- Past consideration is no consideration: generally, an act already performed before a promise is made cannot support that promise. In Roscorla v Thomas (1842), a warranty given after a horse sale was unenforceable because the purchase was “past and executed”. An exception exists under the Lampleigh v Brathwait (1615) rule if the act was done at the promisor’s request with an implied understanding of reward.
- Consideration must move from the promisee: only the person who provides the consideration can enforce the promise.
The Issue of Intangibles and Public Policy
Courts sometimes struggle to determine if intangible benefits, like refraining from certain behaviours, constitute sufficient consideration. In White v Bluett (1853), a son’s promise to stop “moaning” about his father’s property distribution was not consideration because he had no legal right to complain. Conversely, in the American case Hamer v Sidway (1891), a nephew’s promise to stop smoking and drinking was valid consideration because he abandoned a legal right.
The “Vexed” Issue of Existing Duties
A major area of controversy involves whether performing a duty one is already legally or contractually bound to do can count as new consideration.
- Public / legal duties: generally, performing a duty imposed by law is not consideration (Collins v Godefroy). But if the party exceeds that duty, it becomes valid, as in Glasbrook Bros Ltd v Glamorgan CC (1925).
- Duties to third parties: performing a duty already owed to a third party is good consideration for a new contract (Scotson v Pegg, 1861).
- Duties to the promisor: traditionally, Stilk v Myrick (1809) held that performing an existing contractual duty is not consideration for more money. This was modified by Williams v Roffey Bros (1991), introducing the “practical benefit” rule.
Part payment of debt
Unlike the “upward” variation in Williams v Roffey, “downward” variations (accepting less money) are stricter. The rule in Foakes v Beer (1884), affirming Pinnel’s Case, states that part payment of a debt is not satisfaction for the whole. The Court of Appeal in Re Selectmove (1995) refused to extend the “practical benefit” rule to debts.
The role of promissory estoppel
Where consideration is absent, the equitable doctrine of promissory estoppel may provide a limited “shield”. Established in Central London Property Trust v High Trees House (1947), it prevents a promisor from enforcing strict legal rights where they promised to waive them and the promisee relied. As shown in Combe v Combe (1951), estoppel is a “shield, not a sword”.