The Doctrine of Consideration

This article explores the concept of consideration in contract law, focusing on its meaning and importance in enforcing promises. It discusses the traditional definition of consideration and its evolution in English contract law. The article also delves into the concept of sufficiency in consideration, highlighting the court's rationale for not interfering with the parties' bargaining. It examines the issues surrounding sufficient consideration and the court's responsibility in ensuring its value. Additionally, it explores exceptions to the general rule of non-interference and the rule regarding past consideration. Overall, this article provides a comprehensive understanding of the doctrine of consideration in contract law.

The Doctrine of Consideration
Contract Law
[Author Name(s), First M. Last, Omit Titles and Degrees]
[Institutional Affiliation(s)]
Author Note

The Doctrine of Consideration 1
Introduction
In contract law, promises are not enforceable unless when made in deed or supported by
consideration. The concept of consideration creates a problematic explanation both to scholars
and even in courts. This is due to the technicality involved while filtering out the specific
consideration of the parties from the conversation that ended up to the disputed contract.
Traditionally, consideration has been discussed in concurrent with two additional terms which
are adequacy and sufficiency. Specifically, these terms are used together in one of the rules of
consideration which states that consideration does not have to be adequate but must be sufficient.
This statement forms the basis of this paper. The paper intends to bring in to understanding the
meaning of sufficiency when talking about consideration.
Meaning of Consideration
The standard definition of consideration was provided in Currie v Misa where the court
stated that in law, valuable consideration could be either some interests, rights, benefit or profit
accruing to one of the contracting parties.1 Either, it can be some detriment, forbearance,
responsibility or loss suffered by the other contracting party.2 Consideration has evolved to be
one of the main intricate topics in English contract law system. Generally, consideration can be
anything as far as it has some value. It can be a tangible object like goods, or intangible such as a
service provided by one party to another. For a contract to be formed, parties must exchange the
1 Currie v Misa [1875] 10 Ex153.
2 ibid.

The Doctrine of Consideration 2
consideration. One of the technicalities of consideration is that English law requires it to move
from the promisee towards the promisor. So, in other words, the offer comes from the promisor
to the promisee, the consideration flows back from the promisee to the promisor, and it must be
something of value as considered by the promisor.3 The main rationale behind consideration is
that English law does not enforce gratuitous promises or those which are ‘nudum pactum’. What
implication this has to the contracting parties’ is that their contractual arrangements must have
gains and detriments. The gain flows to the promisor while the detriment moves to the promisee.
However, one of the critics regarding this interpretation stated that courts never intended
to create the doctrine of consideration4. Rather, the court only enforced contracts that it deemed
fit and declined to enforce those that it felt unnecessary. With this, consideration just arose to
mean a reason for enforcing the contract.5 Professor Treitel, on the other hand, refuses the idea
that consideration is nothing but the courts' reason for enforcing a contract.6 Treitel argues that
this interpretation does not explain why the court declines a contract. On the other hand, Treitel
states that there are some situations where the court use ‘invented’ consideration treating
forbearance or other actions as consideration even where the parties had not taken such regard.7
Sufficiency of the Consideration
Among the rules of consideration, the English law dictates that consideration does not
have to be adequate, but the law would need to be sufficient.8 In other words, this point means
that courts can only enforce a promise that is supported by something that has value as a return to
what the other party is willing to lose. While looking at this point, the idea is connected to the
3 Thomas v Thomas [1842] 2 QB 851.
4 Ewan McKendrick, Contract Law (12nd ed. 2017 edition, Palgrave 2017) 68.
5 ibid.
6 Edwin Peel, Treitel on the Law of Contract (14th edition, Sweet & Maxwell 2015) 3–001.
7 Edwin Peel, Treitel on the Law of Contract (14th edition, Sweet & Maxwell 2015) para 3–009.
8 Richard Stone and James Devenney, Text, Cases and Materials on Contract Law (Routledge 2014) 84.

The Doctrine of Consideration 3
court’s rationale of avoiding to interfere with the parties’ bargaining. As far as parties accept
whatever the bargained objects were, the court will stick to that despite their adequacy.
The concept of sufficiency instead of adequacy is found on the concept of freedom of
contracts. The work of Edward explains that freedom of contract insists on unrestricted freedom
to contract between the contracting parties as far as the contracting parties are equal in terms of
their skills, bargaining power, and they are fully aware of the status of their market conditions.9
Whether a party’s promise to the other makes an equally fair value it is receiving in return is
sorely left for the parties to decide. Where the court interferes what a party considered in return,
the court would badly affect the parties since it would be the court deciding the bargain but not
the parties. Interfering with this bargain is what Weber termed as a fundamental prohibition.10 In
his work, Weber went further to state that a person’s freedom to form a contract is such a basic
right that it is an individual’s choice to dispose or gain something or a service.11With this
freedom, it is then left upon the parties to decide what would be good or bad for them in the
exchange.
However, even though the court has does not interfere with the bargain, it still maintains
a paternalistic responsibility for ensuring that the consideration that was given by a party holds
some value. It is this court’s responsibility that brings about the concept of sufficiency. In the
ruling of Thomas v Thomas, sufficiency in consideration was taken to mean a valuable item or
service in the law’s point of view. Again, this sufficient consideration must be moving from the
plaintiff to the defendant.12 Sufficient consideration is understood as something real and has an
9 Carolyn Edwards, ‘Freedom of Contract and Fundamental Fairness for Individual Parties: The Tug of
War Continues’ [2009] 77 UMKC Law Review 647 (2009)
<https://scholarship.law.marquette.edu/facpub/281>.
10 David Weber, ‘Restricting the Freedom of Contract: A Fundamental Prohibition’ (2014) 16 Yale Human
Rights and Development Law Journal <https://digitalcommons.law.yale.edu/yhrdlj/vol16/iss1/2>.
11 ibid.
12 Thomas v Thomas. (n 3).

The Doctrine of Consideration 4
economic sense. By looking at this reasoning, it seems clear that courts ignore the factual benefit
in the consideration because even if the promisor does not use it, it still remains sufficient in
legal reasoning. However, there have been issues with the lack of consistency in the way courts
find consideration. This particularly happens when consideration involves actions as a benefit
which would be discussed later below.
Issues of sufficient consideration create a crucial question as what the law considers as
valuable. Fandl provides a simplified answer for this question stating that common law does not
know about a “just sale”. All that it cares for is whether a party received what it considered in the
bargain and whether small or big would still amount to sufficient consideration.”13 An approach
to these questions has been suggested as first putting the contracts into groups.14 The first group
is contracted whose disputed consideration involved promise for paying for services, or products.
The second group is for those which the disputed consideration involved providing some non-
monetary benefit.15 Contracts whose considerations are for payment of services or goods are
called nominal considerations. Those made for trivial acts as a benefit are called non-nominal
considerations.
While nominal considerations have not been a problem in law, issues arise when dealing
with non-nominal ones. One example of such cases is the decision of White v Bluett.16 This case
arose from a promissory note between the father and the son on the arrangements of the son’s
debt to the deceased father. The son contented that they had an agreement with the father to
forfeit the debt if the son ceased to complain about the way the father had distributed the
property.17 Deciding on this case, Pollock CB clarified that there was no sufficient consideration
13 Kevin J Fandl, ‘Cross-Border Commercial Contracts and Consideration’ (2016) 34 Berkeley J. Int’l L.
1.
14 Ewan McKendrick, Contract Law: Text, Cases, and Materials (OUP Oxford 2012) 149.
15 McKendrick (n 14).
16 White v Bluett (1853) 23 LJEx.
17 ibid.

The Doctrine of Consideration 5
given by the son.18 The court’s reasoning in the case can be traced back to the rationale of benefit
and detriment. Whatever the son claimed as the consideration had no economic sense in that it
was the father’s right to distribute the property in any manner he wished. It was the legal right of
the father to distribute the property, and the son did not even have the right to complain.
The situation in the case named above is not much different from the case of Ward v
Byham.19The facts of the two cases are a bit similar but in Ward v Byham, the father agreed with
the mother to ensure the child was ‘well looked after and happy’.20 In law, the mother had an
existing legal obligation to take care of the child. However, the court considered keeping the
child happy as sufficient consideration. A similar case of this nature is the case of Chappell & Co
v Nestlé.21 In this case, Nestlé, the defendants were running a promotion. They contracted the
plaintiff Chappell & Co for the manufacture of gramophone records where the plaintiff held the
copyrights.22 The defendant then offered the records at a high discount to anyone who presented
three wrappers from defendants’ chocolate bars.23 When the plaintiff brought an injunction that
the wrappers were worthless and had no value, the Court held that despite the fact that wrappers
were a waste, they still amounted to sufficient consideration. The reasoning of the court was that
a party is free to ask for whatever consideration it may choose despite having no need or use with
it.
Like as mentioned above, issues of nominal considerations do not create complications in
law. Treitel states that nominal considerations are even the appropriate way of evading the strict
rule of consideration since a valuable property can be exchanged at a consideration of an amount
18 ibid.
19 Ward v Byham (1956) 1956 WLR 1.
20 ibid.
21 Chappell & Co Ltd v Nestle Co Ltd (1960) 1960 AC.
22 ibid.
23 ibid.

The Doctrine of Consideration 6
as little as £1.24The general explanation is that the courts would not want to interfere with the
parties’ bargain. Nominal consideration is the most reasonable approach which parties use when
they want to enforce a gratuitous promise and avoid the strict rules of consideration at the same
time.25 An illustration of this situation was the case of Mountford v Scott where the plaintiff
agreed with the defendant property in London for £1. Once the contract was formed, the
defendant was prevented by the court from denying the existence of contract since sufficient
consideration had already been provided.
There a few exceptions to the notion that courts will never interfere with the bargain. All
of these exceptions regard issues where the contract was orchestrated through duress,
unconscionable bargain, and undue influence. These exceptions involve issues where the
nominal consideration was agreed on unfair circumstances. In such cases, the court will take an
objective approach to consider what a reasonable person would have acted under the
circumstances of the alleged unfair conduct. Where the court’s reasonable person's intuitive
shows that the consideration was acquired unfairly, it will refuse to enforce it. An illustration of
such circumstance was the case of Boustany v Pigott.26 This case involved Pigott, an elderly
woman who leased her premise to Boustany for an amount that was less than the 16% of the
market value. To orchestrate the contract, Boustany invited Pigott to a tea party in absence of
Pigott’s caregiver, and both formed the agreement. When the matter came to court, the Privy
Council found that the contract was not enforceable due to the plaintiff unconscionable conduct.
Another rule of sufficiency in consideration dictates that a party cannot rely on past
consideration.27 The rule also involves issues of performance of an already existing duty. Under
24 Peel (n 6) paras 3–014.
25 Elizabeth Macdonald, Ruth Atkins and Ruth Dawn Atkins, Koffman & Macdonald’s Law of Contract
(Oxford University Press 2014) 105.
26 Boustany v Pigott (1995) 69 P & CR.
27 Lucy Jones, Introduction to Business Law (2nd edn, OUP Oxford 2011) 134.

The Doctrine of Consideration 7
the doctrine of consideration, parties must provide fresh consideration in exchange for the other’s
promise. In Collins v Godefroy, the plaintiff was the key witness where he was expected to
appear at a trial.28 If he could have missed the case, the court would have entered judgment on
him over the contempt of the court. However, the plaintiff entered into an agreement with the
defendant to attend the trial. When the defendant failed to pay as agreed, the claimant sued him.
The court held that the agreement was not enforceable the consideration was already the
plaintiff’s existing legal duty. Another case that illustrated an issue of past consideration was the
case of Roscorla v Thomas.29 In the case, the defendant promises that the horse would be healthy
after the contract was fully executed. When the horse later turned to be unhealthy, the court
denied the right to enforce that agreement since the contract was executed a time before that
promise was made.
Additionally, a promise between the debtor and the creditor with that payment of the
lesser amount would lead to forfeiture of the rest of the sum is considered as insufficient
consideration. Since the promise has no sufficient consideration, the law does not prevent the
creditor from asking for the entire debt in the future.30 The landmark case for this rationale was
the decision of Pinnel’s Case where the creditor had offered to accept a smaller amount for the
forfeiter of the entire debt.31 This legal rationale was later confirmed in the case of Foakes v Beer
where Mr. Beer entered into an agreement with Dr. Foakes that she was not going to enforce the
debt on condition that Dr. Foakes paid the installments.32 However, even after paying the
installments, Mrs. Beer enforced the debt. Attempts to enforcing the written agreement by Dr.
Foakes where Mrs. Beer had agreed to forfeiture was unsuccessful.33 Nevertheless, this rule has a
28 Collins v Godefroy (1831) 950 1 B & Ad.
29 Roscorla v Thomas (1842) 234 3 QB.
30 Jones (n 27) 143.
31 Pinnel’s Case (1602) 117 5 Co Rep.
32 Foakes v Beer (1883) 605 LR 9 App Cas.
33 ibid.

The Doctrine of Consideration 8
few exceptions. Where the creditor has promised to forfeit the debt in exchange of a smaller
payment, the court may enforce this agreement in circumstances where the part payment was
requested to be paid on an earlier date than the date of the debt expiry.34 Secondly, the court
would enforce this agreement in circumstances where the creditor requested to be paid at a
different location.35 Thirdly, the court would enforce the creditor’s agreement where the creditor
asks for the smaller debt with an additional benefit.36 Fourthly, the court would enforce the
agreement if the creditor agreed with a third party.37 Lastly, the court would enforce it where the
creditor’s agreement created a reliance on the debtor which brought issues of promissory
estoppel.38
Conclusion
It is not enough for an agreement to have a consideration for it to be enforceable in law.
The consideration must be deemed sufficient by law to ascertain that the parties arrangements
were not gratuitous, and were made for some value. Where parties require to make gratuitous
promises yet require them to be enforceable, the can only do so by using nominal consideration.
These are considerations whose value does not match the quality of the promise that they attract.
This paper intended to explain the rationale that the law does not require consideration to be
adequate for an enforceable agreement, but it requires such consideration to be sufficient. Among
other principles of consideration, this principle allows the court to restrain itself from interfering
with the parties’ bargain.
34 Matthew Burton, ‘Practical Benefit Rides Again: MWB Business Exchange in Comparative
Perspective’ (2017) 46 Common Law World Review 69.
35 Lee Roach, Card and James’ Business Law (4th edn, Oxford University Press 2016) 151.
36 Jones (n 27) 144.
37 ibid.
38 Kathrin Kuhnel-Fitchen and Tracey Hough, Optimize Contract Law (Taylor & Francis 2017) 50.

The Doctrine of Consideration 9
Bibliography
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Edwards C, ‘Freedom of Contract and Fundamental Fairness for Individual Parties: The Tug of
War Continues’ [2009] 77 UMKC Law Review 647 (2009)
<https://scholarship.law.marquette.edu/facpub/281>
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1
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<https://digitalcommons.law.yale.edu/yhrdlj/vol16/iss1/2>
Boustany v Pigott (1995) 69 P & CR
Chappell & Co Ltd v Nestle Co Ltd (1960) 1960 AC
Collins v Godefroy (1831) 950 1 B & Ad
Currie v Misa [1875] 10 Ex153
Foakes v Beer (1883) 605 LR 9 App Cas
Pinnel’s Case (1602) 117 5 Co Rep
Roscorla v Thomas (1842) 234 3 QB
Thomas v Thomas [1842] 2 QB 851

The Doctrine of Consideration 10
Ward v Byham (1956) 1956 WLR 1
White v Bluett (1853) 23 LJEx