Consideration in English Law - Value

Value

Consideration for a particular promise exists where some right, interest, profit or benefit accrues (or will accrue) to the promisor as a direct result of some forbearance, detriment, loss or responsibility that has been given, suffered or undertaken by the promisee. The consideration must be executory or executed, but not past.

Consideration is executory when a promise to do something in the future is given in exchange for another promise to be done in the future. Consideration is executed when a promise is actually executed, in exchange for another promise to be executed in the future. Consideration is past when a promise has been given or executed before and independently of the other promise. For example, I promised to take you to lunch, and then when we got there I said "you must pay, because I have given you the benefit of my company". This is past consideration and therefore NO consideration.

Consideration can be anything of value (such as an item or service), which each party to a legally binding contract must agree to exchange if the contract is to be valid. If only one party offers consideration, the agreement is not legally a binding contract. In its traditional form, consideration is expressed as the requirement that in order for parties to be able to enforce a promise, they must have given something for it (quid pro quo): something must be given or promised in exchange or return for the promise. A contract must be "met with" or "supported by" consideration to be enforceable; also, only a person who has provided consideration can enforce a contract. In other words, if an arrangement consists of a promise which is not supported by consideration, then the arrangement is not a legally enforceable contract. Mutual promises constitute consideration for each other. ("I promise you to do X, in consideration for which you promise me to do Y").

In Australia, the bargain theory of consideration prevails, where the act or forbearance of one party or promise thereof is the price for which a promise is bought.

• ex nudo pacto actio non oritur
• Dyer's case (1414) 2 Hen. 5, 5 Pl. 26
• Lucy v Walwyn (1561) KB 27/1026, m. 76; 94 Seldon Soc. 268, early case on the doctrine of consideration, concerning an executory contract where the plaintiff recovered damages for the loss of a bargain.
• Thomas v Thomas (1842) 2 QB 851
• White v Bluett, Bluett, when sued by his father’s executors for an outstanding debt to his father, claimed that his father had promised to discharge him from it in return for him stopping complaining about property distribution. The Court held that the cessation of complaints was of no economic value; thus, Bluett’s father had received no real consideration for the promise, and the debt was enforceable at law.
• Currie v Misa (1875) LR 10 Ex 153, 162
• Bolton v Madden (1873) LR 9 QB 55, 56, Blackburn J, ‘The general rule is that an executory agreement, by which the plaintiff agrees to do something on the terms that the defendant agrees to do something else, may be enforced if what the plaintiff has agreed to do is either for the benefit of the defendant or to the trouble or prejudice of the plaintiff.’
• Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd AC 847, 855, Lord Dunedin, "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."

Lush J. in Currie v Misa (1875) LR 10 Exch 153 referred to consideration as consisting of a detriment to the promisee or a benefit to the promisor:

"... some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other."

The definition given by Sir Frederick Pollock, approved by Lord Dunedin in Dunlop v Selfridge Ltd AC 847, is as follows:

"An act or forebearance 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."