CONSIDERATION

A contract must be supported by valuable

consideration. In Currie v Misa (1875) LR 10
Exch 153 Lush J defined this as "some right,
interest, profit or benefit accruing to one
party, or some forbearance, detriment, loss or
responsibility given, suffered or undertaken by
the other". Consideration must be of some
value, but the courts have consistently refused
to look at its adequacy.
Thomas v Thomas (1842)
P was the widow of J, who before his death had
instructed his executors to convey to her a
cottage for the rest of her life in return for a
payment of 1 a year towards the ground-rent.
This was a very small sum even in those days, and
the executors' motive in agreeing was no doubt
respect for J, but the court found there was an
enforceable contract. The 1 a year was valuable
consideration, and that was enough to complete
the contract.
Midland Bank v Green [1981]
A farmer granted his son an option to purchase
the farm at a low price, but then sold the farm
worth at least 40000) to his wife for 500. The
son sought to recover the farm from the wife, but
the House of Lords said the wife took free of the
option because it was void (for the purposes of
the Law of Property Act 1925) against the
purchaser of a legal estate for money or money's
worth. The 500 was valuable consideration,
even though it was manifestly inadequate.
Past Consideration
Consideration must be clearly associated with
the promise, and past consideration is
generally unacceptable.
Roscorla v Thomas (1842)
P bought a horse from D, and after the sale D
promised that the horse would be "sound and
free from vice". In fact the horse proved to be
vicious and very hard to control, and P sued
for breach of contract. The court said he had
no case; the only consideration he had given

(the sale price of the horse) was past by the

time the promise was made, and the contract
was merely that D would deliver the horse on
request.
Re McArdle [1951]
The occupants of a house carried out various
repairs and improvements, and after the work
was completed the beneficial owners of the
house promised to pay for this work. When
they did not do so the occupants sued, but
without success: the consideration for that
promise was past and there was no contract.
Existing public or contractual duty
Similarly, the performance of an existing
public or contractual duty cannot normally be
offered as consideration.
Collins v Godefroy (1831)
An expert witness P attended court for six
days under D's summon, but was not in fact
called to give evidence. D subsequently
promised to pay him a fee of six guineas
[6.30] for his time, but did not do so, and P
sued. Lord Tenterden CJ said that since the
summon imposed a legal duty on P to appear
at court, his doing so was not consideration
that could support D's promise.
Hartley v Ponsonby (1857)
A ship left England with a crew of 36, but as a
result of desertions these were reduced to only
19, including just five able seamen, who were
promised extra pay if they would help to sail the
ship back to England. The court said this promise
was enforceable: the crew was so reduced that it
was dangerous to sail on and the captain would
have had no right to demand it. The original
contract had come to an end, and the seamen
were free to make a new contract on whatever
terms might be agreed.
Debt by part payment
Special problems arise when a debtor (with
his creditor's agreement) seeks to settle a
debt by part payment. He has given no
consideration for the creditor's promise to

cancel the balance of the debt, and so cannot

enforce this promise if the creditor
subsequently changes his mind.
Foakes v Beer (1884)
D obtained a judgment debt against P, but agreed
to accept payment by instalments over five years
and not to take any further proceedings to
enforce the judgment. When all the instalments
had been paid, D claimed the interest added
automatically to a judgment debt not paid
promptly, and the House of Lords reluctantly
upheld her claim. P had given no consideration
for D's promise not to make such a claim, and D
could not be held to that promise.
Promissory Estoppel
The equitable principle of promissory estoppel
provides a limited exception to the rule
requiring consideration to be given in
exchange for an undertaking not to enforce a
debt.
Lord Denning MR said
In Alan v El Nasr [1972] 2 All ER 127, a rather
complicated commercial case, Lord Denning MR said
the principle of waiver (that is, promissory estoppel
under another name) is that if one party by his conduct
leads another to believe that the strict rights arising
under the contract will not be insisted upon, intending
that the other should act on that belief, and he does
act upon it, then the first party will not afterwards be
allowed to insist on the strict legal rights when it would
be inequitable for him to do so. Stephenson LJ,
concurring in the decision on the facts, left open the
question whether the other party's action could be any
alteration of his position or must be to his detriment.
PRIVITY
It is a fundamental principle of English law
that no one can derive rights or obligations
from a contract to which he has given no
consideration and is hence not a party. This
doctrine, known as privity of contract, is still
substantially valid but has been modified in
various ways.
Tweddle v Atkinson (1861)
Tweddle v Atkinson (1861) 121 ER 762, QB
A man P married a woman G. P's father and G's

father agreed between themselves that they

would give 100 and 200 respectively to P as a
marriage portion and dowry, but both fathers
died before G's father had paid up. P sued G's
father's executor for the promised money, but
the court said he was not privy to the contract
and his action must therefore fail.
Dunlop v Selfridge [1915] AC 847, HL
Dunlop and Dew made a contract for the sale and
purchase of motor tyres, with a condition that
they should not be resold below a certain price.
Dew and Selfridge then made a contract
containing a similar terms. When Selfridge broke
their agreement and sold the tyres to the public
at less than the agreed price, Dunlop were unable
to enforce the agreement: they had not been
party to the contract with Selfridge.
It is not always obvious, of course, who should
be regarded as the parties to a contract
particularly where the contract itself is implied
from conduct. If several people go to a
restaurant and each orders a meal, then it is
arguable that each of them individually has
made a contract and undertaken to pay for
the meal, even though at the end the bill is
settled by just one of the party.
Road Traffic Act 1972
Certain statutes create exceptions to the
doctrine. The Road Traffic Act 1972 allows an
injured third party in certain circumstances to
claim directly on the contract between a
negligent driver and his insurance company.
Married Women's Property Act 1882
Similarly, the Married Women's Property Act
1882 allows a widow or orphan to enforce
against the company a life assurance contract
taken out for her benefit by her husband or
father.
Concurrent action in tort.
A third party may also be able to pursue a
concurrent action in tort.
Donoghue v Stevenson [1932] AC 562, HL

 P went to a caf with a friend, who bought her

a bottle of ginger beer. After drinking most of
it, P found a decomposed snail in the bottle
and became ill. P had no contract with the
caf, so she sued the manufacturers in delict
(the Scottish equivalent of tort). The House of
Lords said the manufacturers had a duty of
care to the consumer of their product
Collateral Contract
Alternatively, an action may be based on a
collateral contract, which may be implied
rather than explicit
Shanklin Pier v Detel Products [1951]
Shanklin Pier v Detel Products [1951] 2 All ER
471, McNair J
The owners PP engaged contractors CC to paint
the pier and specified DD's paint; the paint
(bought by CC) did not wear as well as DD had
promised, and the court found a collateral
contract under which PP could recover damages.
PP had given consideration by instructing the
contractors to use DD's paint, and that was
sufficient consideration.