Enforceability of contracts is ofgreat importance in our legal system to ensure justice when forming contractsbetween two parties. Under common law, no contract is legally binding unlessconsideration is present which was defined in 1875 in the case of Currie v Misa1where Lush J describes consideration ‘some right, interest, profit or benefit,accruing to the one party, or some forbearance, detriment, loss orresponsibility, given, suffered or undertaken by the other.’ Consideration is apromise by a party to a contract that is equivalent to the price of buying apromise from the other party to the contract.2Consideration is essential for a contract to be valid as the absence ofconsideration in an agreement means it will no longer enforceable by law unlessit is made in a deed. 3 Ithas become so entrenched into our legal system and is the basis of forming acontract and therefore, to no longer regard it as a necessary element wouldcause many difficulties.
The better approach would be the dilution ofconsideration as at times it results in inconsistent outcomes of judgement as considerationmust be sufficient but need not be adequate4. Considerationis imperative as it is the foundation of forming a contract and makes a promiselegally binding5highlighting the seriousness of promisor’s intention to be bound. It is simplyan indication by the promisee to make what is essentially a costless promiseenforceable.
6 Thefollowing essay will discuss why consideration in fact is essential in theEnglish law of contract as it’s a fundamental prerequisite and improvements tothe law should be made rather than removing consideration from the English Lawof Contract as well as discussing the alternative to consideration being promissoryestoppel. To regard consideration as nolonger having relevance to the English Law of Contract due to it being convolutedis a misconception as consideration is fundamental in ensuring a contract islegally binding as well as it is profoundly rooted in our law7. Asconsideration is deeply rooted into our law, promises need not to be a specificformat or to be put in writing, as it will be enforceable if there isconsideration – both parties bring something to it.
8 Asnot all contracts are enforceable by our legal system, rules and regulationsmust be put into place to manage contracts and the parties going into them. Theserules are what identifies which contracts are enforceable by the law,consideration is the main part which identifies these contracts.9 Therefore,it plays a large role in our English law of Contract in identifying which contractsare legally binding, highlighting the importance of consideration in our law. Withthe absence of the identification of which contracts are legally binding, willresult that in the law there is no promise or the promise itself will not beenforceable by the law.
10 Considerationis still relevant in the English law of Contract as it is used every day in theformation of contracts. Without consideration, it would be very difficult to doany business as a contract is what allows each party a way to do business, thislegally binding document with the presence of consideration is what makes all partiesmeet their obligations as well as highlight the seriousness of a promisor’sintention to be legally bound. This is shown in the case Antons Trawling Co LTDv Smith, Baragwanath J agreed that “the importance of consideration is avaluable signal that the parties intend to be bound by their agreement ratherthan an end in itself.” 11 However,many argue that the only usefulness of the doctrine of consideration in moderntimes is its effect as a legal method leading to better negotiation on the partof contracting parties and it fails to do so, therefore if the main objectivecannot be met then consideration no longer serves a purpose in our currentlegal system.12 This viewnevertheless is hyper-focused as that is not the only main function ofconsideration in our current legal system.
It is an entire misapprehension tosay that consideration is a mere form leading to greater deliberation on thepart of contracting parties.13 Consideration,as mentioned previously, is essential in distinguishing an enforceablecontract. The view that consideration hasbecome so convoluted is myopic as they are concerned with the part ofconsideration that stirs most controversy, being that consideration must besufficient and need not to be adequate. Whereas the other two parts ofconsideration are straight forward, those being past consideration is notsufficient to make a promise enforceable and secondly, consideration must movefrom the promisee. Past consideration isdirect as the courts rule that they will not enforce a contract where a contractexists on the basis of an act followed by a promise.14 Pastconsideration is also defined in the case of Roscorla V Thomas15 that awarranty given after the making of a contract is not a consideration in supportof the promise to buy, because it was not given in exchange for that promise.
Thishighlights that past consideration is not convoluted and aids in defining whichcontracts are enforceable by the law and to deem it unnecessary is ill-judgedas it plays a large role in defining the requirements for an enforceablecontract. Howbeit, past consideration can be side stepped and thus, the argumenton whether it is relevant in the English Law of Contract arises. If a part ofconsideration can be avoided then what purpose does it serve as pastconsideration can be side stepped, causing confusion onto which contracts areenforceable if past consideration can be side stepped. On the contrary, the ‘device’used to side step past consideration is not an exception to the rule, it ismerely a way of reinterpreting the factual situation.
This is highlighted inthe case Pao On v Lau Yiu Long16where Lord Scarman provided the following definition of the conditions of theprevious request device17 ‘theact must have been done at the promisor’s request: the parties must have understoodthat the act was to be remunerated either by a payment or the conferment ofsome other benefit: and payment, or the conferment of a benefit, must have beenlegally enforceable had it been promised in advance.’ Where the consideration, whengiven in the past, was given at request, the one making the request or promiseis liable in contract.18 Thishighlights that past consideration is straightforward as you cannot ‘side step’past consideration unless both parties contractually agree to do so. Thus,making past consideration significant in the English Law of contract as it aidsin defining which contracts are legally binding.
In addition to that, Consideration has not becomeconvoluted as in the English Law of Contract consideration must move from thepromisee, meaning that the individual whom requests to enforce the contractmust indicate that they have provided with consideration but considerations doesn’thave to move from the promisor19 asdefined in the case Tweddle v Atkinson20 Inthe court case, the court declared that only those who are party to an agreementmay sue or be sued as well as establishing the principle that “considerationmust flow from the promisee”. This part of consideration is straightforward andessential in defining the premises of an enforceable contract. Nonetheless, manyargue that consideration is in fact convoluted and outdated and must bereformed due to the idea that consideration must be sufficient and need not tobe adequate. 1 1875-76 Currie v Misa, LR 1 App Cas 554 (Currie vMisa).2 Jonathan Law,’Shibboleth Authentication Request’ (Oxfordreference.com.
ezproxy.brunel.ac.uk,2016) brunel.ac.uk/view/10.1093/acref/9780198743514. 001.0001/acref-9780198743514-e-819?rskey=p2LjPm=914>accessed 19 December 2017.3 Jonathan Law, ‘Shibboleth Authentication Request’ (Oxfordreference. com.ezproxy.brunel.ac. uk,2016) 1093/acref/9780198743514.001.0001/acref-9780198743514-e-819?rskey=p2LjPm=914>accessed 19 December 2017. 4 Jill Poole, Textbook On Contract Law (13thedn, Oxford University Press 2016). 1275 Jill Poole, Textbook On Contract Law (13thedn, Oxford University Press 2016). 127 6 English Law Revision Committee, TheStatute of Frauds and the Doctrine of Consideration (Cmd5449, 1937) at 21, as publishedin (1937) 15 Can Bar Rev 585.7 English Law Revision Committee, TheStatute of Frauds and the Doctrine of Consideration (Cmd5449, 1937) 1018 Richard Stone and James Devenney, The Modern Law OfContract (12th edn, Taylor & Francis Ltd , Routledge 2017). 929 Richard Stone and James Devenney, The Modern Law OfContract (12th edn, Taylor & Francis Ltd , Routledge 2017). 9210 Richard Stone and James Devenney, The Modern Law OfContract (12th edn, Taylor & Francis Ltd , Routledge 2017). 9511 2003 2 NZLR 23 (Wellington Court of Appeal) 93 12 rankine Wilson, ‘Consideration In The English Law OfContract’ 1902 Law Magazine journals/lmagd28=6=25=journals=0=srchresults>accessed 4 January 2018. Page 2913 rankine Wilson, ‘Consideration In The English Law OfContract’ 1902 Law Magazine 629G17 Jill Poole, Textbook On Contract Law (13thedn, Oxford University Press 2016). 13018 20 1861 EWHC J57 (QB)
