element of valid contract
Elements of Valid Consideration




In common law, without consideration a contract is void, thus it cannot be enforced in court of law.
without consideration contract is void
Void Contract

My focus here is to give you in-depth insight and everything you need to know as far as consideration in contract law is concerned.

Throughout this post, I will use examples, illustrations and decided common law cases to backup my points.



    What is a Consideration?

    Consideration is usually described as being anything of value which benefit or detriment parties to the contract.

    Consideration in contract law hinges itself on the Latin maxim quid pro quo’ which means ‘nothing should go for nothing.

    That means, each party to the contract must give something in return for what is gained from another party, so if you wish to enforce someone’s promise to you, you must prove that you gave something in return for that promise.

    For example, I give my dog and you give me $150, or I wash your car and you pay me $100.



    meaning of consideration how consideration works
      
    That means, your $150 is a consideration for my dog, my dog is a consideration for your $150 or the cleanness I have done to your car is a consideration for your $100, your $100 is a consideration for my cleanness.

    Consideration maybe a thing or a service.

    Consideration entails exchange between the parties.  For example, If I promise to hand over my house and you promise to pay me a sum of money in return, through that exchange we have each provided consideration.

    It may also take the form of promises. For example, I promise to work for you and you promise to pay me a salary.

    What are the Elements of Valid Consideration?

    Elements of valid consideration in contract law



    The following are the elements of valid consideration
    1. Consideration need not benefit the promisor
    2. Consideration may be executory or executed
    3. Consideration must not be past
    4. Consideration must be sufficient
    5. Consideration can be a promise not to sue
    6. Consideration must be of economic value

    Consideration need not benefit the promisor

    Generally, for the consideration to be valid it is not necessarily for the promisor to be benefited from it. What matters is promisor must accept the consideration provided.

    Sometimes there can be a consideration where the promisee suffers some detriment at the promisor’s request, but gives no particular benefit to the promisor.

    For example, in Jones v Padavatton [1969] 1 WLR 328 the plaintiff was a resident of Trinidad. Her daughter had a secretarial job in Washington, but her mother wanted her to give it up and train to be a barrister in England.

    The mother therefore volunteered to give her daughter a monthly allowance for the duration of her Bar studies.

    Here the daughter’s giving up her job would be a consideration for the mother providing an allowance, even though it did not directly benefit the mother.

    Consideration may be executory or executed

    there are two types of consideration i.e. executory and executed consideration.

    What is Executory consideration?

    Executory consideration is a form of consideration where something of value is to be done in the future, usually, after the contract has been formed.

    It happens when parties to the contract promise each other that something shall be done after the contract has been made.

    For example, on making the contract you promise to service my car and I promise to pay when you finish the service.

    In normal circumstances this consideration is known as ‘Pay after work’- you deliver, I pay.

    What is Executed consideration?

    Executed consideration is a form of consideration whereby the consideration is performed at the time of formation of the contract.

    I prefer to call it ‘tit for tat consideration'.

    For example, if I promise to give $50 to anyone who finds my lost dog.  The contract is termed to be performed when someone returns the dog and executed consideration happens when I pay that person.

    Consideration must not be past

    Past consideration is no consideration.
    The past consideration concept is always confusing. Since the focus is not really on time of consideration but on whether the consideration was given in exchange for the other party’s consideration.

    Consideration must be given in return for the promise or act of the other person. Something done, given or promised for another reason will not count as consideration.

    What is past consideration?

    Past consideration is a form of consideration that has been given by one party without the exchange of consideration from another party.

    That usually happens when a person has already performed before the other party offered consideration as an exchange for his/her performance.

    For Example, if you look after my children when I’m on holiday, and when I return I promise to give you some money, my promise will be past consideration because you did not look after my children in return for it.  Consequently, you cannot enforce my promise.

    The legal implication of past consideration can be well found In the case of Roscorla v Thomas (1842) 3 QB 234.

    In that case, the defendant sold the plaintiff a horse. After the sale was completed, the defendant told the plaintiff that the animal was in good condition. Plaintiff found that to be untrue and decided to seek court redress.

    The court held that the defendant’s promise was unenforceable because it was made after the sale.

    If the promise about the horse’s condition had been made before, the plaintiff would have provided consideration for it by buying the horse.

    As it was made after the sale, the consideration was past, for it had not been given in return for the promise.

    The bottom line is Consideration must be given in return for the promise of the other party.

    Exception to the Past Consideration Rule

    Where the past consideration was provided at the promisor’s request and it was understood that payment would be made in return.

    That means when I promise to pay you on a service or task that you have already done for me at my request, then my promise is enforceable.

    For example n the case of Lampleigh v Brathwait (1615) Thomas Brathwait had been convicted of killing a man, and he asked Anthony Lampleigh to obtain a pardon for him from the King.

    Consequently, Lampleigh managed to do so. In the excitement of getting his pardon, Brathwait promised to pay Lampleigh £100, but later refused to hand over the money, so Lampleigh sued.

    It might appear that Lampleigh’s consideration was past since he had secured the pardon before the promise to pay was made.

    But the court held that Brathwait promise to pay was proper consideration for the pardon obtained at his own request, thus enforceable.

    Consideration must be sufficient

    One peppercorn can be good consideration – even if the promisee does not like pepper
    Consideration must be sufficient but need not be adequate. That means it does not matter whether the consideration provided is enough or not enough, good or bad, as long as there is a consideration, that’s fine.

    For example, I promise to sell you my house worth $ 1m for $10000; the consideration you pay is clearly very little compared to the value of my house. But as long as there is a consideration and we are all okay with that, it is sufficient.

    That principle has been invited by the ‘freedom of contract’ concept. Freedom of contract entails that, parties should be voluntarily and free to enter any contract purely based on their agreements.

    In the case of Thomas v Thomas (1842) the plaintiff was a widow whose husband had stated that if he died before his wife, she should be allowed to live in his house for the rest of her life, after which it was to pass to his sons.

    When the man died, the defendant, who was his executor, agreed that the widow could continue to occupy the house in return for a promise that she would pay £1 a year and keep the house in good repair.

    Despite this, sometimes later, the defendant tried to evict the widow, so she sued for breach of contract.

    The defendant claimed that the earlier promise was not binding because of lack of consideration.

    However, the court held that the widow’s promise to pay £1 and keep up the repairs was sufficient consideration to make the owners’ promise binding.

    Consideration must be of economic value

    That simply means that, for a consideration to be valid there must be some physical value, rather than just an emotional or sentimental.

    Consideration can be a promise not to sue

     If a person has a civil claim against the other, a promise not to enforce that claim is a good consideration for a promise given in return.

    For example, I negligent kill your dog, you might agree that you will not sue me if I pay for the damage or buy you a dog, and your promise not to sue will be a consideration for my promise to pay.

    Conclusion
    My endeavor was to give you an in-depth insight into consideration in contract law. The bottom line is
    • Consideration is anything of value which benefit or detriment parties to the contract.
    • Consideration can be executed or executor but not past consideration.
    • Consideration need not benefit the promisor, must be sufficient, must be of economic value and it can be a promise not to sue.
    • Consideration is purely depended on parties autonomy.


    Hope you find this post useful; kindly share it to spread the knowledge.

    References

    CASES
    Jones v Padavatton [1969] 1 WLR 328

    Lampleigh v Brathwait (1615)

    Roscorla v Thomas (1842) 3 QB 234

    Thomas v Thomas (1842)

    BOOKS
    Contract Law (2004), 4th Edition, Great Britain, Cavendish Publishing Limited, ISBN 1–85941–868–6

    Elliott C and Quinn F (2009) Contract law 7th Edition, Great Britain, Pearson Education Limited

    Nditi, N.N.N. (2009). General Principles of Contract Law, 1st Edition, Dar es Salaam: Dar es Salaam University Press.
     

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