It would be impractical for contract law to enforce all agreements, so the doctrine of consideration distinguishes which agreements are legally enforceable.
Views on Consideration:
Sceptical View (Atiyah):
No single, coherent doctrine of consideration.
Argues consideration is any reason to enforce an obligation that can be found by a judge, not just reciprocity.
Orthodox / Generally Accepted View (Treitel):
Consideration is the element of exchange of benefit in a contract.
Argues only agreements with an exchange are legally enforceable.
Chen-Wishart [1]:
Consideration is justified due to the idea of reciprocity. Exchanges are a moral norm.
Perhaps too broad (reciprocity could be revenge, not a contract).
Conditions of Consideration:
Consideration does not have to be ‘adequate’, but ‘sufficient’. The economic value of the exchange is irrelevant, as long as the exchange has some value.
In Chappel & Co v Nestle, N promised to send a gift of a music record to anyone who paid an amount of money and four chocolate bar wrappers. C argued that they were entitled to royalties. The money and wrappers were both said to amount to sufficient consideration, even though the wrappers would be thrown away.
Somervell LJ: ‘A peppercorn does not cease to be good consideration [even] if it is established that the promisee does not like pepper and will throw away the corn.’
Consideration has to be requested. The promisor has to receive something they want in return from the promise.
In Combe, during a divorce a husband offers to pay financial support to the ex-wife. Though the husband didn’t request it, the wife said that she had promised in return not to apply to the court for financial support. Denning LJ stated that the wife applied no consideration, so the agreement was not legally enforceable. The agreement between them was also not legally enforceable, so she could apply to the court for financial support.
Consideration can be of benefit to the promisor, or detriment / loss to the promisee.
‘A valuable consideration, in the sense of the law, may consist either in 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.’ [2]
Fuller’s Argument for Written Contracts [3]:
Fuller argues that a formal, written contract aides with consideration. They provide evidence of the agreement, make parties more cautious when entering an agreement and make it simpler for courts to distinguish the nature of the contract (channelling function).
He also argues that there is more economic benefit when there is an exchange compared to a mere promise.
Resources:
References:
[1] Mindy Chen-Wishart, ‘Consideration and Serious Intention’ [2009] Singapore Journal of Legal Studies 434-456
[2] Currie v Misa (1875) LR 10 Ex 153; (1875-76) LR 1 App Cas 554
[3] Lon Fuller, 'Consideration and Form' [1941] 41(5) Columbia Law Review 799-824
Cases Mentioned:
Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1
Combe v Combe [1951] 2 KB 215
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