What is consideration?
- McKendrick defines consideration as the 'badge of enforceability' - meaning that in the absence of consideration, a contract cannot be enforced.
- Consideration should be provided by both parties - it is recipricol.
- The notion of consideration has evolved over time through the common law.
- It is a method of deciding which contracts should be enforced and which should not.
- In Currie v Misa, consideration was outlined as potentially being either a benefit or a detriment.
- Although the courts are very rigid in the application of the doctrine, they are also occasionally flexible - in order to reach judgements which satisfy policy and/or equity.
There are three types of consideration:
- Past consideration. This can be identified where a party has done something, and a promise is made by another party to reciprocate this. But, because the act is past, the promise to give something in exchange for this cannot be enforced. As was the case in Re Mcardle where a woman undertook a lot of work on a property, which other parties promised to reimburse her for. However, when they later refused to do so, she could not enforce this promise as her act of completing the work on the house was past.
- Executory consideration. This is where promises are exchanged between two parties to do something in the future. E.g: 'I will clean your car tomorrow.' to which the other party states 'And I will pay you £5 for doing so.' This can most commonly be found in bilateral contracts.
- Executed consideration. Where one party does something to perform a promise made by the other. This is present in most unilateral contracts.
- Of all the three types, the latter two are the only ones which would render a promise enforeceable. Past consideration is never good consideration.
Further examples of past consideration:
- Eastwood v Kenyon - father paid for his daughter's education. When she met her husband, he promised the dad that he would pay him back for the education. But the paying for education was past and so the promise could not be enforced.
- Re McArdle - as above.
- Roscorla v Thomas - a sale for a horse was concluded. Afterwards, the seller stated that the horse was in 'sound and free from vice'. The buyer did not provide any further consideration in order to enforce this promise and so the promise was past.
- The execptions to the rule that consideration must not be past were stated in Pau On v…