Consideration
Consideration refers to something of value exchanged between parties in a contract. It can be a promise, an act, or a forbearance, and is essential for a contract to be legally binding. Both parties must provide consideration for the contract to be enforceable, and it distinguishes a contract from a gift or a one-sided promise.
8 Key excerpts on "Consideration"
eBook - ePub- John Adriaanse(Author)
- 2017(Publication Date)
- Bloomsbury Visual Arts(Publisher)
...Consideration Consideration in construction contracts may appear at first an unlikely topic to require detailed discussion. After all, such contracts, whether they are made between commercial companies or between a householder and a builder, usually involve the outlay of significant sums of money. This would suggest that Consideration and the intention to create legal relations are always likely to be present. This perception is not entirely accurate, however. The doctrine of Consideration is of major importance in construction contracts. This is the inevitable consequence of a number of factors likely to be present, such as the length of the contractual chain stretching beyond the parties to their subcontractors and suppliers. In addition, the system of competitive bidding means that one party may well underprice the cost of the work, or the price of the work escalates beyond its control, thus raising the possibility that one party may wish to renegotiate the agreement. Such contracts are often made for the benefit of third parties, and thus it is inevitable that the rights of third parties will be involved at some stage. Lord Dunedin approved, in Dunlop Pneumatic Tyre Co Ltd v. Selfridges and Co Ltd [1915] AC 847, the definition provided by Pollock (1936, p. 133). Consideration is ‘an act of forbearance of the one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable’. Chitty considers that the doctrine is there to provide legal limits on the enforceability of agreements, even when they are meant to be legally binding. Such a valid agreement can only be vitiated by mistake, misrepresentation, duress or illegality (Beale, 1999, p. 167). In English law, a promise is not as a general rule binding as a contract unless (a) it is made under seal or (b) it is supported by Consideration...
eBook - ePub- Keith Owens(Author)
- 2013(Publication Date)
- Routledge-Cavendish(Publisher)
...This is not correct. Provided there has been an exchange of promises whereby each party will provide something of value, each promise is enforceable in the sense that if one party refuses to perform his or her part of the bargain the other may sue for damages. DEFINITION OF Consideration The two most commonly quoted definitions of Consideration are: (a) a valuable Consideration…may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other; Currie v Misa (1875) The main criticism of this definition is that it fails to make it clear that the promisee (that is, the person to whom the promise has been made and who is trying to enforce it) does not need to have actually given the benefit, etc, or suffered the detriment, etc, for him to have given Consideration. It is sufficient if the promisee has promised to give benefit or suffer detriment. (b) an act or forbearance of one party or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable...
eBook - ePub- Gilbert Kodilinye, Maria Kodilinye(Authors)
- 2013(Publication Date)
- Routledge(Publisher)
...Chapter 4 Consideration DOI: 10.4324/9780203488645-4 Definition and Nature of the Doctrine The classic definition of Consideration was given in Currie v Misa 1 by Lush J, who said: 1 (1875) LR 10 Ex 153. A valuable Consideration, in the sense of the law, may consist either in some right, interest profit or benefit accruing to the one party [the promisor], or some forebearance, detriment, loss or responsibility given, suffered or undertaken by the other [the promisee]. In short, Consideration is either a benefit to the promisor or a detriment to the promisee or, in Pollock's words, ‘the price for which the promise of the other is bought, and the promise thus given for value is enforceable’. 2 2 Principles of Contract, 13th edn, 1950, p 133. Consideration is necessary for all contracts, except contracts made by deed under seal. The essence of the requirement is that gratuitous promises cannot be enforced. Thus, for example, if D promises to give $1,000 to C but subsequently changes his mind, C has no cause of action against D for breach of contract, since C gave no Consideration for D's promise; but if D's promise to pay the $1,000 had been given in return for C's promise to look after D's pets while D was away on holiday, then C could succeed against D. The nature and rationale of the doctrine of Consideration are explained in Chitty on Contracts 3 thus: 3 28th edn, Vol 1, Ch 3. The basic feature of the doctrine is that ‘something of value in the eye of the law’ must be given for a promise in order to make it enforceable as a contract. It follows that an informal gratuitous promise does not amount to a contract. A person or body to whom a promise of a gift is made from purely charitable or sentimental motives gives nothing to the promisee, and the claims of such a promisee are regarded as less compelling than those of a person who has provided (or promised) some return for the promise...
eBook - ePub- Chris Turner(Author)
- 2013(Publication Date)
- Routledge(Publisher)
...goods ordered in return for a promise to pay the set price). 3 Executed Consideration is Consideration that is already given (e.g. money claimed under a reward). 4 So the difference between the two is often seen as the difference between bilateral and unilateral agreements. 3.4 The rules of Consideration 3.4.1 Consideration need not be adequate 1 The law of contract regulates the making of bargains. 2 As freedom of contract is vital, the law is not concerned with whether a party has made a good bargain or a bad one. 3 Adequacy is given its normal meaning – the contract is enforceable even if the price does not match the value of what is being gained under the agreement (Thomas v Thomas (1842)). 3.4.2 Consideration must be sufficient 1 In this context sufficiency is given a precise legal meaning. 2 Consideration offered is therefore ‘sufficient’ provided that: • it is real (White v Bluett (1853)); • it is tangible (Ward v Byham (1956)); • it has some discernible value (Chappel v Nestlé (1960)); and • economic value is measured against benefit gained (Edmonds v Lawson (2000), on payment of trainee barristers during pupillage). 3 It is arguable that judges find Consideration exists...
eBook - ePub- Chris Turner(Author)
- 2014(Publication Date)
- Routledge(Publisher)
...It was the quid pro quo, the proof that a bargain in fact existed, and if no Consideration could be found then the agreement could not be enforced. The exception is an agreement made by deed. Initially, Consideration was an essential procedural element, but was ill defined because it could involve almost anything that showed some movement of benefit and detriment. This is inevitably why there was no real attempt at clear definition before the nineteenth century and why it remains a problematic area even now. 3.1.2 Defining ‘Consideration’ Originally, it proved impossible to give a simple, single definition of ‘Consideration’, and the pragmatic view was often taken that it was no more than the reason why the promise should be binding in law. Often in any case it was taken as being no more than a rule of evidence. Many nineteenth-century cases looked for definitions based on benefit gained and detriment suffered. So, for instance, Consideration was variously defined as: ‘loss or inconvenience suffered by one party at the request of the other’ – Bunn v Guy (1803) 4 East 190 ‘some detriment to the plaintiff or some benefit to the defendant’ – Thomas v Thomas [1842] 2 QB 851. A simple, early way of defining Consideration came in Currie v Misa (1875) 1 App Cas 554 where it was described in terms of benefit and detriment: ‘some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other’. So if I contract with you for the sale and purchase of my Unlocking Contract Law textbook for £15, I am gaining the benefit of the £15 but I have the detriment of giving up the book. For you, it is the other way round: you gain the book and give up the money. A more sophisticated definition was later provided in Dunlop v Selfridge [1915] AC 847. The case involved issues of both absence of Consideration and lack of privity of contract by the party seeking to enforce the contractual provisions...
eBook - ePub- Max Young(Author)
- 2009(Publication Date)
- Routledge(Publisher)
...Chapter 5 Consideration CONTENTS 5.1 Introduction 41 5.2 Definition 42 5.3 What constitutes a valuable Consideration? 43 5.4 Types of valuable Consideration 44 5.5 Consideration need not be adequate 44 5.6 Past Consideration 45 5.7 Summary 45 5.1 Introduction English contract law is based on the idea of a bargain. Both parties ‘give’ the other party something – the something is the Consideration. Normally there is no problem in identifying what both parties give to the other. In a contract for the sale of goods one party gives the goods to the other party in exchange for the other party giving the seller money (the price). In such a case the seller’s Consideration to the buyer is the goods and the buyer’s Consideration to the seller is the money paid to the seller. As part of the examination of Consideration this chapter will consider the benefit and detriment test used in determining whether the parties have both furnished Consideration to each other. This chapter will also examine what constitutes a ‘valuable’ – valid – Consideration. Finally, as part of the examination of what constitutes a valuable Consideration, the significance of past Consideration will be explored. 5.2 Definition Consideration is some detriment to the promisee (in that the promisee parts with something of value) OR some benefit to the promisor (in that the promisor receives value). NB The promisee makes the promise to the promisor. In English law a contract is considered to be a bargain...
eBook - ePub- Kenny Chin(Author)
- 2014(Publication Date)
- Routledge-Cavendish(Publisher)
...A binding contract is one in which a party takes something in return for giving something else – this is the bargain. The ‘giving’ and ‘taking’ are the Consideration in a contract. Consideration is the price of a bargain, which does not have to be money, but must have some value in the eyes of the law. It may be some detriment to the promisee or some benefit to the promisor (Thomas v Thomas (1842)). It can be ‘some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other’ (Currie v Misa (1875)). For example, A agrees to work in B’s shop for B forgetting A’s debt to him. Working for B is a detriment to A and a benefit for B. Forgetting A’s debt is a legal right being forfeited. This agreement is supported by Consideration from both sides and is, therefore, a binding contract. A contract is binding, but gifts are not. It is important to distinguish between the two. If one side has not provided Consideration, there is no contract. If A promises to give £100 to B for nothing in return and later A changes his mind, A may be morally wrong, but B cannot sue A for he has not provided Consideration. There are however some exceptions. A gift, if made by deed, is binding. Nature of Consideration Consideration must be sufficient but need not be adequate If A promised to give £100 to B for his old GCSE law book, this is not simply a gift. The old book does not appear to be adequate in return for £100 but, in the eyes of the law, it has some value and is, therefore, sufficient. The agreement has created a right for A to possess the book and it is binding...
eBook - ePub- Richard Stone, James Devenney(Authors)
- 2022(Publication Date)
- Routledge(Publisher)
...In one particular situation, relating to the enforceability of collective agreements between trade unions and employers, this is precisely what has been required. 7 As has been explained in earlier chapters, however, generally the English law of contract does not require formalities. Verbal agreements are enforceable, and no particular forms of words are required. It can be argued, however, that the requirements of offer, acceptance and Consideration, discussed in Chapters 2 and 3, may to a certain extent be regarded in themselves as indications of an intention to enter into a legally binding contract. If the parties have taken the trouble to specify their obligations in a way that makes them clear and unambiguous (as required by ‘offer and acceptance’), and the agreement has the element of mutuality required by the doctrine of Consideration, this may reassure a court that legal enforceability was intended. If, for example, a transaction that would otherwise appear as a gift has Consideration introduced artificially, this may well be strong evidence of an intention to make a contract. The transfer of the ownership of a valuable painting, worth £50,000, which involves the recipient giving the supplier £1 in exchange, would fall into this category. There would be no point in the recipient giving the money unless the intention is to make the transaction of transfer into a contract, and the parties into ‘seller’ and ‘buyer’. The introduction of Consideration is in this case therefore evidence of an intention to create legal relations. Taking this approach to its logical conclusion, some have argued that there is no need for a separate heading of intention, 8 and this point will be discussed below. 9 7 See below 4.6...
