QUAID-E-AZAM LAW COLLEGE LAHORE LLB-I MORNING

PROF. ARMUGHAN ASHFAQ

CONSIDERATION

1. CONSIDERATION DEFINED:

CURRIE V. MISA (1875)

“ a valuable consideration, in the sense of the law, ,au consist either in some right,
interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss
or responsibility give, suffered or undertaken by the other.”

POLLOCK

Consideration is the price for which the promise of the other is bought and the promise
thus given for value is enforceable

2. ADEQUACY OF CONSIDERATION

Consideration need not to be adequate, but it must be sufficient. This means that what is
tendered as consideration must be capable in law of being, regarded as consideration, but
need not necessarily be equal in value.

Chappell & Co. v. Nestle”1960,

The first rule of the doctrine of consideration is that consideration must be sufficient but
need not be adequate. In Chappell & Co. v. Nestle”, trivial acts such worthless chocolate
wrappers sent in return for a “special offer” were regarded as consideration because they
were requested by the promisor.

Facts: as a sales promotion scheme, the defendant offered to supply a record to anyone
who sent in a postal order for 1s.6d (pre decimal currency) and three wrappers from 6d
bars of chocolate made by them. The claimants owned the copyright of the tune. They
sued for infringement of copyright. In the ensuing dispute over royalties the issue was
whether the wrappers, which were thrown away when received, were part of the
consideration for the promise to supply the record. The defendants offered to pay a
royalty based on the price of 1s.6d per record, but the claimant rejected this, claiming that
the wrappers also represented part of consideration.

Decision: the wrappers were part of the consideration as they had commercial value to
the defendants.

WHITE V. BLUETT (1853)

A sons’s promise not to bore his father with complaints was held not to be a good
consideration for the father’s promise not to sue the son on a debt owed by the son to the
father. Pollock said that he son had not provided any consideration as e had no ‘right to
complain’ to his father (because it was for the father to decide how he wanted to
QUAID-E-AZAM LAW COLLEGE LAHORE LLB-I MORNING
PROF. ARMUGHAN ASHFAQ

distribute his property) and so, in giving up his habit of complaining, he had not provided
any consideration.

3. PAST CONSIDERATION

The general rule regarding past consideration is that a detriment previously

incurred by the promisee or a benefit previously conferred on the promisor will not be
good consideration.

In “Re McArdle”, some improvements to a house were made and at a later date
all other family members signed a contract agreed to repay. The Court of Appeal held that
since the work was done before the document was signed, this was a case of past
consideration and the agreement was unenforceable.

Exceptions:

Past consideration can be good consideration only if 3 conditions are satisfied:

1. The act must have been done at the request of the promisor;
2. It must have been understood that payment would be made;
3. And the payment, if promised in advance, must have been legally recoverable.

In “Lampleigh v. Brathwait”, a prisoner requested the plaintiff to get a pardon

for him from the King. The plaintiff incurred all the trouble at his own expense and the
defendant afterwards promised to pay for his trouble but failed. The court held it was not
past consideration on the ground that his services had been procured by the previous
request of the defendant.

In “Pao On v. Lau Yiu Long”, the plaintiffs, at the request of the defendants, had
promised not to sell certain shares. Later, the defendants agreed to indemnify them
against any loss which they might suffer. Afterwards, the defendants refused to indemnify
and argued that the consideration was past and so ineffective. The Privy Council held that
the claimants’ promise was good consideration because it had been made at the
defendants’ request and they understood that the plaintiffs were to receive some sort of
protection against that loss.

4. PERFORMANCE OF AN EXISTING DUTY:

Performance of an existing duty imposed by law and performance of a contractual duty

owed to the promisor do not constitute consideration. In “Stilk v Myrick”, two seamen
deserted a voyage and the captain promised the rest that he would divide the wages of the
deserters between them if they sailed the ship back. It was held that the defendant’s claim
should fail as it provides no consideration for the captain’s promise as he had only done
what he was contractually obliged to do so.
QUAID-E-AZAM LAW COLLEGE LAHORE LLB-I MORNING
PROF. ARMUGHAN ASHFAQ

However, a number of exceptions to this rule are created:

1. It may be good consideration to perform an existing duty if the promisor had a right
to quit at the time when the second promise was made. In “Hartley v. Ponsonby”, a
majority of seamen deserted a vessel which entitled the remaining seamen to abandon
the voyage. But they continued on the master’s promise that he will pay them extra. It
was held that the seamen were entitled to the promise.

2. Where the promisee had done more than his already existing duty. In “Hanson v.
Royden”, the plaintiff was promoted from an able seaman to second mate and asked
for more pay. It was held that in carrying out the job of second mate, he had done
more than he was obliged to do and so had provided consideration.

3. Where the promisor has obtained some practical benefit, PROVIDED:

a. There is absence of economic duress;

b. There is nothing in the transaction against public policy; and
c. The promisee is not responsible for change requiring the second promise.

This rule was laid down in “Williams v. Roffey”, where the defendant
contractors, in trying to avoid some “penalties”, agreed to pay the subcontractors some
extra money to finish the work on time. The Court of Appeal held that the plaintiffs did
provide consideration by entitling the defendants of a practical benefit to complete the
work on time.

5. PART PAYMENT OF DEBT:

The general rule states that a promise to accept part payment of a debt in
discharge of the whole debt is not supported by consideration. However, a number of
exceptions to this rule exist:

1. Unless the time, place or coin is changed as in “Pinnel’s case”. This rule was upheld
by the House of Lords in “Foakes v. Beer”.
2. Any fresh consideration as a general rule.
3. Third parties as in “Hirachand v. Punamchand”. Here, the defendant’s father sent a
draft for a smaller sum than that due in full satisfaction of his son’s debt. The
plaintiffs cashed the draft but then brought an action against the defendant for the
balance. The court held that this action could not be maintained.
4. Promissory Estoppel.

6. PROMISSORY ESTOPPEL:

The doctrine of Promissory Estoppel, as illustrated by Lord Denning, prevents the

lessors from going back on their promise to accept a reduced rent in spite of the absence
of consideration for the promise.
QUAID-E-AZAM LAW COLLEGE LAHORE LLB-I MORNING
PROF. ARMUGHAN ASHFAQ

The rule was first spelled out in “Central London Property v. High Trees
House 1947”. In this case the plaintiffs rented a block of flats to the defendants.
Following the outbreak of the Second World War, the defendants were unable to find
sufficient tenants to take the flats. As a result the plaintiffs agreed that for the duration of
the war the rent could be reduced by half. This arrangement continued until after the war
ended. The plaintiffs then sought to return to the original terms of the agreement, and also
queried whether they might not be entitled to claim the other half of the rent for the war
years, since the promised to accept less was not supported by any consideration.

Lord Denning held that the plaintiffs were entitled to recover the full rent from the
end of the war. Their promise to take less had clearly only been intended to last until that
point. He said obiter that the plaintiffs would not be able to recover the balance for the
war years. The reason being the general equitable principle, which states that a promise
intended to be binding and to be acted upon, and in fact is acted upon, is binding so far as
its terms properly apply.

However, certain limits have been imposed on Promissory Estoppel:

AS A SHIELD NOT A SWORD

In “D & C Builders v. Rees 1966”, the defendants owed the plaintiff some sum of
money. Mrs. Rees, who knew that the plaintiffs were in a financial difficulty, told them
that if they do not accept part payment in full settlement then they would get nothing. The
builders later sought to recover the balance. Lord Denning held that the strain in the
defendants’ behaviour knowingly taking advantage of the plaintiff’s circumstance meant
that it was equitable to allow the plaintiffs to go back on their promise

Decision: the debt must be paid in full; Promissory estoppel only applies to a promise
voluntarily given. The defendants had been aware of and had exploited the claimant’s
difficulties.