Consideration in English Law - Adequacy

Adequacy

For consideration to be good consideration, it must be of some value, even if it is minimal value. There is no requirement that the consideration be commensurate in economic terms to the original promise. Nominal consideration will suffice as good consideration for a contract, Courts will not measure the adequacy of the consideration as it is up to the parties to decide the subjective worth of each promise.

• Chappell & Co Ltd v. Nestle Co Ltd AC 87, Lord Somervell, ‘A contracting party can stipulate for what consideration he chooses. A peppercorn does not cease to be good consideration if it is established that the promisor does not like pepper and will throw away the corn.’

How does consideration become acknowledged by the courts?

Consideration, in some way, must be acknowledged, and the legal term for this is ‘sufficient’, therefore the consideration must be sufficient and is usually of monetary value. Another legal term used here is ‘adequate’, this means fair price. However, the consideration does not need to be adequate, but needs to be sufficient to form a contract. An example of this occurred in the case of Thomas v Thomas (1842), where the decision was made that a woman was allowed to reside in a property for £1 a year.

Consideration must be given at the time of agreement, but it does not include previous acts. For example, in the case of Re McArdle (1951), previous work was not seen as consideration in that particular contract for a future arrangement. However, if there is an agreement between parties that previous work is to be included, then that consideration would be seen as valid, this was apparent in Lampleigh v Braithwaite (1615) an in Re Casey’s Patents (1892).

Consideration in a contract must not be illegal, in the case of Foster v Driscoll (1929), this is where goods were smuggled into the USA, and therefore the consideration became illegal.

Consideration should not be a duty which exists currently. For instance, in the case of Collins v Godefroy (1831), a lawyer who attended court as a witness, could not also agree to appear in court. Another case is Stilk v Myrick (1809), this is where sailors had a duty to sail the ship short-handed, therefore, when they promised the captain they would do this, this was not a consideration because it was their duty to do this anyway.'''''''