Introduction
In the law of England and Wales, a legally binding contract, unless made by deed, requires the presence of consideration. It is a fundamental element that distinguishes an enforceable agreement from a gratuitous promise. The traditional definition, provided in Currie v Misa (1875), states that consideration consists of some "right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other". This essay will explain the core principles of the doctrine of consideration. It will argue that while the foundational rules of consideration provide a degree of certainty in contract formation, the judicial development of rules concerning past consideration and the performance of existing duties has created inconsistencies. These difficulties, particularly the conflicting approaches in cases of contract modification, demonstrate the challenges the doctrine faces in adapting to commercial realities, a problem the courts have only partially managed to resolve.
The Core Principles of Consideration
The courts have established several key rules that govern the operation of consideration. The first and most important is that consideration must be ‘sufficient’ but it need not be ‘adequate’. Sufficiency means that the consideration must have some recognisable value in the eyes of the law, whereas adequacy refers to its commercial or market value. The courts are not concerned with whether a party has made a good or bad bargain. This principle is illustrated in Thomas v Thomas (1842), where a widow’s promise to pay £1 per year in rent and to keep a house in good repair was held to be sufficient consideration for the right to live in the house for life, even though the rent was not a commercial one. Similarly, in Chappell & Co v Nestle Co Ltd (1960), the House of Lords held that chocolate bar wrappers, although of trivial value and thrown away by the company, could form part of the consideration for the purchase of a record. Lord Somervell noted that "A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn." These cases show that as long as each party provides something of legal value, the contract will be enforceable.
A second principle is that consideration must move from the promisee. This means that a person who wishes to enforce a promise must have themselves provided the consideration for it. The classic authority for this rule is Tweddle v Atkinson (1861). In this case, the fathers of a husband and wife agreed between themselves to pay a sum of money to the husband. When the wife’s father failed to pay, the husband could not sue to enforce the promise because he had personally provided no consideration for it; the consideration had been provided by his father. This rule is closely linked to the doctrine of privity of contract, which states that a contract cannot confer rights or impose obligations upon any person who is not a party to the contract. While the rule in Tweddle remains good law, its effects have been significantly altered by the Contracts (Rights of Third Parties) Act 1999, which allows a third party to enforce a contract in certain circumstances.
The Problem of Past Consideration
A further established rule is that past consideration is not good consideration. This occurs where a promise is made after an act has been performed. Because the act was not done in return for the promise, it cannot be valid consideration to support that promise. In Roscorla v Thomas (1842), after a contract for the sale of a horse was completed, the seller gave a verbal warranty that the horse was "sound and free from vice". The horse was not sound, but the buyer's claim failed because the consideration for the warranty was past; the sale had already been concluded. A more modern example is Re McArdle (1951), where a woman carried out improvements to a house she lived in with her family. Afterwards, the other family members signed a document promising to pay her for the work. The Court of Appeal held this promise was unenforceable as the work had been completed before the promise was made, and was therefore past consideration.
However, the courts have recognised an exception to this rule, sometimes known as the doctrine of implied assumpsit. In Lampleigh v Brathwait (1615), a defendant who had killed a man asked the claimant to obtain a royal pardon for him. The claimant went to considerable effort and expense to do so. The defendant then promised to pay the claimant £100 but later failed to do so. The court held the promise was enforceable. The modern test for this exception was summarised by the Privy Council in Pao On v Lau Yiu Long (1980). Lord Scarman stated that an act done before the giving of a promise to make a payment can be good consideration if three conditions are met: the act must have been done at the promisor’s request; the parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit; and the payment or benefit must have been legally enforceable had it been promised in advance. This exception shows the courts attempting to enforce promises in situations where it is commercially just to do so, preventing a party who has requested a service from later refusing to pay for it on a technicality.
Performance of an Existing Duty
One of the most complex and contested areas of consideration is whether the performance of, or promise to perform, an existing duty can constitute good consideration for a new promise. The law distinguishes between three types of existing duty. The first, an existing duty imposed by law (a public duty), is generally not good consideration. In Collins v Godefroy (1831), a promise to pay a witness who was already under a legal duty to attend court was held to be unenforceable. However, if a party does more than their public duty requires, this can be good consideration. In Glasbrook Bros v Glamorgan County Council (1925), a coal mine requested a police garrison during a strike, which was more than the police thought necessary. The House of Lords held that the police had gone beyond their public duty and had therefore provided good consideration for the promise of payment.
The second type, an existing contractual duty owed to a third party, is generally held to be good consideration. For example, in Scotson v Pegg (1861), the claimant’s performance of an existing contractual duty to a third party was held to be good consideration for a promise made by the defendant.
The third, and most problematic, category is where a party promises to perform an existing contractual duty already owed to the other contracting party in return for a promise of additional payment. The traditional rule, from Stilk v Myrick (1809), is that this is not good consideration. In that case, two sailors deserted a ship mid-voyage, and the captain promised the remaining crew they could share the deserters’ wages if they worked the ship back home. The court found this promise unenforceable because the crew were already contractually bound to do this work.
This long-standing rule was significantly modified by the Court of Appeal in Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991). The defendants, a firm of builders, were contracted to refurbish a block of flats and had subcontracted the carpentry work to the claimant. When the claimant got into financial difficulty, the defendants, concerned they would incur a penalty for late completion under their main contract, promised to pay the claimant an additional sum to ensure the work was finished on time. The Court of Appeal held that the claimant had provided good consideration. The defendants obtained a ‘practical benefit’ by avoiding the penalty clause, not having to find a replacement carpenter, and formalising the payment schedule. This decision has been seen as a pragmatic approach that reflects commercial reality, but it sits uneasily with Stilk v Myrick.
Furthermore, the ‘practical benefit’ principle from Williams v Roffey directly conflicts with the House of Lords' decision in Foakes v Beer (1884), which affirmed the rule from Pinnel's Case (1602). This rule states that the-part payment of a debt is not good consideration for a promise to forgive the balance. A creditor's practical benefit in receiving some money rather than potentially none at all if the debtor becomes insolvent is not sufficient. The Court of Appeal in Re Selectmove Ltd (1995) acknowledged this inconsistency but felt bound by the House of Lords' authority in Foakes v Beer, stating that any extension of the Williams v Roffey principle to cases of part-payment must come from the Supreme Court. The Supreme Court had an opportunity to address this conflict in MWB Business Exchange Centres Ltd v Rock Advertising Ltd (2018) but ultimately decided the case on other grounds, leaving the tension between these two lines of authority unresolved. This creates significant uncertainty for contracting parties, especially in the context of debt renegotiation.
Conclusion
The doctrine of consideration remains a cornerstone of the English law of contract, serving to distinguish enforceable bargains from unenforceable gifts. Its core rules, such as the requirement for sufficiency but not adequacy, are well-established and provide a framework for contract formation. However, the doctrine is not without its difficulties. The strict application of rules regarding past consideration and the performance of existing duties has often appeared to contradict commercial common sense. In response, the judiciary has developed exceptions and modifications, such as the doctrine of implied assumpsit and the ‘practical benefit’ principle in Williams v Roffey. While these developments show a judicial willingness to adapt the law, they have also created friction and inconsistency within the doctrine. The unresolved conflict between the pragmatic approach in Williams v Roffey and the rigid rule in Foakes v Beer highlights a significant area of legal uncertainty. Thus, while consideration provides a necessary test for enforceability, its application remains complex and, in some areas, inconsistent, demonstrating the ongoing struggle to balance legal certainty with commercial practicality.
References
- McKendrick, E. (2020) Contract Law: Text, Cases, and Materials. 9th edn. Oxford: Oxford University Press.
- Poole, J. (2021) Textbook on Contract Law. 15th edn. Oxford: Oxford University Press.
Cases
- Central London Property Trust v High Trees House [1947] KB 130
- Chappell & Co v Nestle Co Ltd [1960] AC 87
- Collins v Godefroy (1831) 1 B & Ad 950
- Combe v Combe [1951] 2 KB 215
- Currie v Misa (1875) LR 10 Ex 153
- Foakes v Beer (1884) 9 App Cas 605
- Glasbrook Bros v Glamorgan County Council [1925] AC 270
- Hughes v Metropolitan Railway Co (1877) 2 App Cas 439
- Lampleigh v Brathwait (1615) Hob 105
- MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2018] UKSC 24
- Pao On v Lau Yiu Long [1980] AC 614
- Pinnel's Case (1602) 5 Co Rep 117a
- Re McArdle [1951] Ch 669
- Re Selectmove Ltd [1995] 1 WLR 474
- Roscorla v Thomas (1842) 3 QB 234
- Scotson v Pegg (1861) 6 H & N 295
- Stilk v Myrick (1809) 2 Camp 317
- Thomas v Thomas (1842) 2 QB 851
- Tweddle v Atkinson (1861) 1 B & S 393
- Ward v Byham [1956] 1 WLR 496
- Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1
