Consideration is the third requirement of contract formation. It is defined as any ‘right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other [party]’: Currie v Misa (1874) LR 10 Ex 153.
The consideration provided must have legal or economic value: abstract promises of love or emotional satisfaction cannot be consideration: Thomas v Thomas (1842) 2 QB 851.
There is no need for the consideration provided to be adequate or proportionate to what was provided by the other party: Mountford v Scott [1975] Ch 258; Chappell v Nestle [1960] AC 87.
Promising not to bring legal action to enforce a claim is a valid form of consideration: Horton v Horton (No 2) [1961] 1 QB 215.
The person who is receiving the promise must provide consideration from themselves. It cannot come from a third-party: Tweddle v Atkinson [1861] EWHC QB J57.
Something which the promisee has already done prior to the agreement cannot be consideration for that agreement: Re McArdle (1951) Ch 669.
There is an exception to the rule against past consideration where the act the promisee is relying on was specifically requested by the promissor: Lampleigh v Braithwaite [1615] EWHC KB J17.
Promises to perform existing legal duties cannot be consideration. This applies to both contractual duties (Stilk v Myrrick [1809] EWHC KB J58; Roscorla v Thomas (1842) 3 QBR 234) and public duties (Collins v Godefroy (1831) 1 B & Ad 950).
If a party promises to go above and beyond their existing contractual or public obligation, this can be good consideration: Glasbrook Bros Ltd v Glamorgan County Council [1925] AC 270. For example:
In Hartley v Ponsonby [1857] 7 EB 872, the claimants were contracted for ship work, but went beyond by agreeing to work when half the crew deserted, making the job very unsafe.
In Ward v Byham [1956] 1 WLR 496 the claimant was under a public duty to provide for her child, but she gave valid consideration by promising to make the child happy and well-looked after.
Note that Hartley v Ponsonby is sometimes interpreted as the original contract having been frustrated. If the contract was frustrated, the claimants were no longer under a contractual duty to work. This means that they could provide new consideration by agreeing to work regardless.
Where a contractual duty is owed to the claimant, another promise to perform that duty can be valid consideration if it confers on the claimant a ‘practical benefit’: Williams v Roffey Bros [1990] 2 WLR 1153. This is particularly important where the promisee seeks to vary the original contract.
It is not clear what counts as a ‘practical benefit’. Some argue that an increased chance of securing performance is enough. The Court of Appeal in MWB Business Exchange Ltd v Rock Advertising Ltd [2018] 2 WLR 1603 argued that this was wrong, and that the benefit had to be an additional benefit to performance (or the chance of obtaining such a benefit). This would fit the facts of Williams v Roffey Bros. In that case, the promissor gained the chance of avoiding liability under a penalty clause with a third-party. However, the Court of Appeal decision in MWB Business Exchange was overruled by the Supreme Court on a different point. As such, the law is unclear.
A party can use a promise to perform duties owed to a third-party as consideration: Shadwell v Shadwell (1860) 9 CB NS 159; Scotson v Pegg (1861) 6 Hurl & Norm 295. If they fail to perform, they will be liable both to the third-party and the promisor.
A person cannot provide consideration by paying part of a debt that they already owe: Pinnel’s Case (1602) 5 Rep 117; Foakes v Beer (1883-84) LR 9 App Cas 605.
There are more limited exceptions to the rule that part-payment of a debt is not consideration:
Paying the debt using something different such as a chattel: Pinnel’s Case (1602) 5 Rep 117.
Making the payment at an earlier date than required: Pinnel’s Case (1602) 5 Rep 117.
Part-payment of the debt by a third-party: Hirachand Punamchand v Temple [1911] 2 KB 330.
However, note that a promise to accept only part of a debt might give rise to promissory estoppel.
