Enforceability of contracts is of
great importance in our legal system to ensure justice when forming contracts
between two parties. Under common law, no contract is legally binding unless
consideration is present which was defined in 1875 in the case of Currie v Misa1
where Lush J describes consideration ‘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.’ Consideration is a
promise by a party to a contract that is equivalent to the price of buying a
promise from the other party to the contract.2
Consideration is essential for a contract to be valid as the absence of
consideration in an agreement means it will no longer enforceable by law unless
it is made in a deed. 3 It
has become so entrenched into our legal system and is the basis of forming a
contract and therefore, to no longer regard it as a necessary element would
cause many difficulties. The better approach would be the dilution of
consideration as at times it results in inconsistent outcomes of judgement as consideration
must be sufficient but need not be adequate4. Consideration
is imperative as it is the foundation of forming a contract and makes a promise
legally binding5
highlighting the seriousness of promisor’s intention to be bound. It is simply
an indication by the promisee to make what is essentially a costless promise
enforceable.6 The
following essay will discuss why consideration in fact is essential in the
English law of contract as it’s a fundamental prerequisite and improvements to
the law should be made rather than removing consideration from the English Law
of Contract as well as discussing the alternative to consideration being promissory
estoppel.

 

 

To regard consideration as no
longer having relevance to the English Law of Contract due to it being convoluted
is a misconception as consideration is fundamental in ensuring a contract is
legally binding as well as it is profoundly rooted in our law7. As
consideration is deeply rooted into our law, promises need not to be a specific
format or to be put in writing, as it will be enforceable if there is
consideration – both parties bring something to it.8 As
not all contracts are enforceable by our legal system, rules and regulations
must be put into place to manage contracts and the parties going into them. These
rules are what identifies which contracts are enforceable by the law,
consideration is the main part which identifies these contracts.9 Therefore,
it plays a large role in our English law of Contract in identifying which contracts
are legally binding, highlighting the importance of consideration in our law. With
the absence of the identification of which contracts are legally binding, will
result that in the law there is no promise or the promise itself will not be
enforceable by the law.10 Consideration
is still relevant in the English law of Contract as it is used every day in the
formation of contracts. Without consideration, it would be very difficult to do
any business as a contract is what allows each party a way to do business, this
legally binding document with the presence of consideration is what makes all parties
meet their obligations as well as highlight the seriousness of a promisor’s
intention to be legally bound. This is shown in the case Antons Trawling Co LTD
v Smith, Baragwanath J agreed that “the importance of consideration is a
valuable signal that the parties intend to be bound by their agreement rather
than an end in itself.” 11 However,
many argue that the only usefulness of the doctrine of consideration in modern
times is its effect as a legal method leading to better negotiation on the part
of contracting parties and it fails to do so, therefore if the main objective
cannot be met then consideration no longer serves a purpose in our current
legal system.12 This view
nevertheless is hyper-focused as that is not the only main function of
consideration in our current legal system. It is an entire misapprehension to
say that consideration is a mere form leading to greater deliberation on the
part of contracting parties.13 Consideration,
as mentioned previously, is essential in distinguishing an enforceable
contract.

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The view that consideration has
become so convoluted is myopic as they are concerned with the part of
consideration that stirs most controversy, being that consideration must be
sufficient and need not to be adequate. Whereas the other two parts of
consideration are straight forward, those being past consideration is not
sufficient to make a promise enforceable and secondly, consideration must move
from the promisee.  Past consideration is
direct as the courts rule that they will not enforce a contract where a contract
exists on the basis of an act followed by a promise.14 Past
consideration is also defined in the case of Roscorla V Thomas15 that a
warranty given after the making of a contract is not a consideration in support
of the promise to buy, because it was not given in exchange for that promise. This
highlights that past consideration is not convoluted and aids in defining which
contracts are enforceable by the law and to deem it unnecessary is ill-judged
as it plays a large role in defining the requirements for an enforceable
contract. Howbeit, past consideration can be side stepped and thus, the argument
on whether it is relevant in the English Law of Contract arises. If a part of
consideration can be avoided then what purpose does it serve as past
consideration can be side stepped, causing confusion onto which contracts are
enforceable if past consideration can be side stepped. On the contrary, the ‘device’
used to side step past consideration is not an exception to the rule, it is
merely a way of reinterpreting the factual situation. This is highlighted in
the case Pao On v Lau Yiu Long16
where Lord Scarman provided the following definition of the conditions of the
previous request device17 ‘the
act must have been done at the promisor’s request: the parties must have understood
that the act was to be remunerated either by a payment or the conferment of
some other benefit: and payment, or the conferment of a benefit, must have been
legally enforceable had it been promised in advance.’ Where the consideration, when
given in the past, was given at request, the one making the request or promise
is liable in contract.18 This
highlights that past consideration is straightforward as you cannot ‘side step’
past consideration unless both parties contractually agree to do so. Thus,
making past consideration significant in the English Law of contract as it aids
in defining which contracts are legally binding.

 In addition to that, Consideration has not become
convoluted as in the English Law of Contract consideration must move from the
promisee, meaning that the individual whom requests to enforce the contract
must indicate that they have provided with consideration but considerations doesn’t
have to move from the promisor19 as
defined in the case Tweddle v Atkinson20 In
the court case, the court declared that only those who are party to an agreement
may sue or be sued as well as establishing the principle that “consideration
must flow from the promisee”. This part of consideration is straightforward and
essential in defining the premises of an enforceable contract. Nonetheless, many
argue that consideration is in fact convoluted and outdated and must be
reformed due to the idea that consideration must be sufficient and need not to
be adequate.

1 1875-76 Currie v Misa, LR 1 App Cas 554 (Currie v
Misa).

2 Jonathan Law,
‘Shibboleth Authentication Request’ (Oxfordreference.com.ezproxy.brunel.ac.uk,
2016)
accessed 19 December 2017.

3 Jonathan Law, ‘Shibboleth Authentication Request’ (Oxfordreference.com.ezproxy.brunel.ac.uk,
2016)

accessed 19 December 2017.

4 Jill Poole, Textbook On Contract Law (13th
edn, Oxford University Press 2016). 127

5 Jill Poole, Textbook On Contract Law (13th
edn, Oxford University Press 2016). 127

 

6 English Law Revision Committee, The
Statute of Frauds and the Doctrine of Consideration (Cmd5449, 1937) at 21, as published
in (1937) 15 Can Bar Rev 585.

7 English Law Revision Committee, The
Statute of Frauds and the Doctrine of Consideration (Cmd5449, 1937) 101

8 Richard Stone and James Devenney, The Modern Law Of
Contract (12th edn, Taylor & Francis Ltd , Routledge 2017). 92

9 Richard Stone and James Devenney, The Modern Law Of
Contract (12th edn, Taylor & Francis Ltd , Routledge 2017). 92

10 Richard Stone and James Devenney, The Modern Law Of
Contract (12th edn, Taylor & Francis Ltd , Routledge 2017). 95

11 2003 2 NZLR 23 (Wellington Court of Appeal) 93

 

12 rankine Wilson, ‘Consideration In The English Law Of
Contract’ 1902 Law Magazine

accessed 4 January 2018.  Page 29

13 rankine Wilson, ‘Consideration In The English Law Of
Contract’ 1902 Law Magazine

accessed 4 January 2018.  Page 31

14 Jill Poole, Textbook On Contract Law (13th
edn, Oxford University Press 2016). 129

15 (1842) 3 QB 234, 114 ER 496

16 (1980) AC 614, at p. 629G

17 Jill Poole, Textbook On Contract Law (13th
edn, Oxford University Press 2016). 130

18
accessed 4 January 2018. 403

 

19 Tracey Hough and Kathrin Kühnel-Fitchen, Optimize
Contract Law (1st edn, Routledge 2014).

 

20 1861 EWHC J57 (QB)