The doctrine of consideration is a feature of EnglishContract Law that is not found to be in civilian legal systems. It is not avery technical doctrine and it has been the subject of considerable criticism. 1Theorthodox view remains that intention to create legal relations, consideration andevidential formality are all essential ingredients of enforceability.2But many critics have questioned the true usage of it because of the way judgestreat different cases as well as the many conditions required for considerationto be valid.
In it’s original form, the doctrine was founded upon the principleof reciprocity and the idea that a promise should not be enforceable if nothinghas been given in return.3It is widely regarded as one of the most problematiccontract law doctrines present within common law. 4It has been argued we can no more abolish one element of a contract withoutdestroying the others; it is like a circle without a circumference.5In English Law, a promise becomes binding either throughconsideration or a deed. French law doesn’t require consideration, instead it isbased on theories of autonomy and consent. Many legal systems in the world haveefficient and just rules of contract law without any requirement ofconsideration as a precondition of enforceability.6In England, gifts are not considered as contracts, differently from France.7The approaches to the institute are also very different.
8It has no place in the laws of France, Italy, Spain and Germany. These are allcivilised countries with a highly developed system of law.9Because of this, it can be argued that consideration has no meaning orrelevance in English contract law. The notion was described in Currie v Misa10as consisting of “either in some right, interest, profit, or benefit accruingto the other party or some forbearance, detriment, loss or responsibilitygiven, suffered or undertaken by the other” per Lush LJ. Both parties need tomake an exchange of an economic value for there to be an intention to createlegal relations. It was further approvedby the House of Lords in Dunlop Pneumatic Tyre Co Ltd v Selfridge and Co Ltd.”An act or forbearance of one party, or the promise thereof, is the price forwhich the promise of the other is bought, and the promise thus given for valueis enforceable.
“11This was initially put forward by Sir Frederick Pollock in his book “Pollock’sPrinciples of Contract”12 There is an inconsistency in the application because judgesare unwilling to be strict in some cases, and lack understanding and knowledgein a topic.13Consequently, the law of contract is uncertain and in doubt. In the case ofRicketts v Scothorn14,the issue was whether the promisee could still rely on a promise even withoutconsideration because of their weakened position. The courts found theplaintiff so heavily relied on the promise of the money that it created apromissory estoppel. The lack of consideration was a defence. Despite consideration receiving critique from judges and analysts,it is still advantageous.
It allows us to see which promises should be regarded asgratuitous or should be enforceable. Enforcing gratuitous promises would leadto the floodgates being open, allowing many claimants opening cases claiming acontract has been breached when only a mere promise has been made. Smallpromises can easily be broken so it is right that the law steps in and does notenforce them. The element allows the courts to be stricter and saves time; judgescan quickly dismiss cases if promises are trivial. Promises are not alwaysenforceable; this protects the promisor themselves. Those who make extravagantpromises need to be protected from their own recklessness. The doctrine acts asa gatekeeper which stands in the way of the enforcement of promises which arenot intended to have legal consequences.15In regards to the above statement, this shows that consideration does haverelevance and meaning in Contract law.
In addition, if the notion of consideration is asfundamental as that of offer and acceptance, any radical alteration of thedoctrine will necessarily alter a great part of the rules concerned with simplecontract. 16Even though many think that it should be abolished, doing so would have a knock-oneffect on the other two elements. Furthermore, the doctrine of privity dictates that a personwho is not a party to the contract cannot be granted contractual rights by thecontract or be placed under contractual obligations by it.17In the case of Tweddle v Atkinson18,the third party could not recover damages. This prevents other peoplebenefitting from damages of a contract they have no involvement in. In otherwords, consideration is between the promisor and promisee.
In relation to theabove statement, this seems to be a less convoluted part of considerationbecause it makes sense that the exchange should be between the two partiesonly. Something that does not count as consideration is beingobliged to do something. In Collins v Godefroy19the failure of consideration was due to the plaintiff already being under anexisting duty imposed by law.
This seems fair because claimants cannot say whatthey are already expected to do constitutes to consideration because otherwisethe floodgates would be open and everyone would claim so. However, performing alegal duty and more could amount to consideration. Such as in Glasbrook BrothersLtd v Glamorgan CC20where it was held the element was present because the police had gone beyondtheir legal duty.
From the above points, consideration can be seen to be ofrelevance and have meaning to the law of contract. Some of the requirements areshown to be reasonable and it is relevant because without it the other key elementswould be affected.Nonetheless, consideration has still been subject tosubstantial criticism and many have questioned the relevance and meaning of it.One issue is that it is difficult to determine what amountsto consideration.
It would not be right for the courts to determineconsideration because it is subjective; what may seem as consideration to theparties may be interpreted differently by the courts. In Currie v Misa21 whilst describing the law, Lush LJ used thephrase “in the sense of the law” implying that it is for the law to decide ifconsideration has been supplied or not. This is not fair to the parties in acase because their arguments can be ignored, and judges should not be able tohave a say in what each person brings to an agreement. In White v Bluett22the son’s complaining was seen to be too nebulous.
There have been times whenjudges have conflicted on this idea. In Thomas v Thomas23Patteson J stated, “consideration means something which has some value in theeye of the law” whereas in Chappell & Co Ltd v The Nestle Co Ltd24Lord Somervell stated “a contracting party can stipulate for what considerationhe chooses”. In other words, parties decide the value of their considerationand the courts conclude whether it is enough. This shows how overly complex thedoctrine is.
Moreover, the pre-existing rule has been subject tocriticism. The general rule is that having a pre-existing duty to a certainrole does not constitute to consideration. This was held in Stilk v Myrick25that “A does not provide consideration by promising to perform a contractualduty owed by B”. This was challenged by Williams v Roffey Bros26where it was suggested that A does provide consideration. It seems that the considerationis convoluted because of the many variations available in different cases.There is uncertainty around the rule because judges interpret it in differentways. Another rule of the doctrine is that it need not beadequate, but sufficient.
This has led to trivial acts constituting toconsideration. The doctrine can cause inconvenience where the law treats apromise as not being supported by consideration even though the partiesreasonably regard it as having been made for value.27Bilateral contracts are those where consideration is apromise for a promise. It has been argued that it is incorrect to speak ofexchange in bilateral contracts at the consideration, but rather it is thething promised i.e.
the performance of the promise rather than the promiseitself.28Professor Ballantine highlighted one promise cannot fertilise another withconsideration until it is itself fertilised.29In other words, a promise must be put into action for it to be consideration.Consideration is not necessary for the purpose of provingintention to be legally bound.
It is even unnecessary for proving seriousintention, there are many other ways to prove the parties’ intent to be legallybound.30Such as having a written agreement which says each party will take furtherlegal action should the other breach their part. Another problem with the notion is it is too narrow it it’sscope and so fails to give effect to promises that ought to have legal effect.31It denies legal effect to promises where there is nothing given or received inexchange.32It must also move from thepromisee not necessarily the promisor. Consideration was invalid if a thirdparty intervened.
The current legislation governing this rule is the Contracts(Rights of Third Parties) Act 1999 which states a person who is not a party to a contract (a “third party”) may in his own right enforce a term ofthe contract if (a) thecontract expressly provides that he may, or (b)subject to subsection (2), theterm purports to confer a benefit on him.33 As of 1999, third partiesnow have rights to a contract if the original parties say so, but they do nothave to provide consideration to be able to enforce their right. However, in Beswickv Beswick34 the widow was prevented from suing due to the doctrine of privity,but now under s1(1)(b) Mrs Beswick would be able to claim because the contracthad a benefit to her. The law in this area seems to be inconsistent andconfusing due to the constant developments that make it difficult for judges tofollow precedents. For a contract to be enforceable, consideration need not always bepresent.
Estoppel is when a man by his words or conduct, has led another man tobelieve in a particular state of affairs, he will not be allowed to go back onit when it would be unjust or inequitable for him to do so.35 This is good for the promisee because the promisor cannot go backand change the agreement. The problem is it can only be used as a shield andnot a cause of action.36 For example in Combe v Combe37 the wife could not rely on promissory estoppel despite herhusband not providing any consideration because Denning LJ said “the principledoes not create new causes of action where none existed”.38 But in Central London Property Trust v High Trees House39 the plaintiffs were successfully able to rely on the doctrine ofpromissory estoppel, but since it can only be used as a defence, it would notbe appropriate for it to replace consideration. Instead of replacing consideration, it can be changed to provide certaintyand consistency in the law. The Law Revision Committee put forth a report in 1937stating the different ways consideration can be reformed. Thefirst group of recommendations aims at the reform of consideration, and may betermed reformative; the second aims at its abolition in certain cases and maybe termed radical.
40 Onesuggestion was that that a promise in writing should be enforceable even if notsupported by consideration.41 Alsothe rule in Pinnel’s Case should be abolished as an absolute rule of law andperformance of an existing contractual obligation should be admitted as a possibleconsideration even between the original contracting parties.42However they acknowledged public policy could be offended.43But the committee have agreed that gratuitous promises should not be binding whichwould limit the floodgates and prevent petty cases reaching the courts.
In GayChoon Ing v Loh Sze Ti Terence Peter44Andrew B L Phang JA explained that “the doctrine might now be outmoded or evenredundant and its functions may well be met by more effective alternatives”45such as economic duress. In conclusion, the notion ofconsideration has become very convoluted since it originated many centuries ago;judges have conflicting ideas, the interference of the legislature and othercountries not requiring it are just some reasons why many have been in favourfor it’s abolition. Not regarding it as a necessary element would highly affectthe other elements of contract and make the law more difficult due to it needingadjustment. Despite the many problems mentioned, the doctrine does make sensein terms of parties having to make a form of economic contribution to anagreement for an intention of legal relations to be evident. The issue is themany variations there are that make the law so confusing. In terms ofimprovement, the doctrine should be altered in a way that prevents uncertaintybut is also fair to the parties concerned. It can be said therefore that it is relevantin English law.