Basic principles of consideration in English Law and the extent to which case law is inconsistently applied.

The basic definition of consideration was put forth in the case of Currie v Misa as already discussed above. English courts, therefore, employ a benefit/detriment test in finding consideration on the facts of a particular case. A manifestation of such a test was seen in the earlier US case of Hamer v Sidway, according to which, the fact that the plaintiff promised not to indulge in drinking or gambling was sufficient to constitute a detriment on his part and a corresponding benefit to his uncle. However, in the case of White v Bluett, the courts reached a different decision. On the facts of the latter, the courts did not find a benefit or a detriment where a son promised his father not to bother him with complaints about the distribution of property if the father promised not to sue the son on some debt owed by his son to him.

The son in this case was entitled to complain about the distribution of property and by not doing so he had incurred a detriment. Yet, this case was decided differently from the earlier case of Hamer v Sidway. These two analogous cases are difficult to reconcile and show that there is no set principle employed by the courts for finding a benefit or detriment incurred by the parties to constitute consideration on any given facts. However, it can also be argued that Hamer was a US case where as White was decided in the English jurisdiction so it is not pragmatic to compare the two. These cases can on another note be harmonized on he grounds that in White, the son’s activities were not socially acceptable or perhaps too uncertain for the courts to find consideration.

Other basic principles of the doctrine of consideration include that consideration must be sufficient but need not be adequate. Courts do not look at the adequacy of the bargain and leave parties free to negotiate the terms on which promises can be exchanged. This is evident from the case of Chappell v Nestle, where it was held that chocolate wrappers even though of trivial economic value granted an indirect benefit to Nestle and hence, amounted to good consideration. It has also been established as a general rule that past consideration does not amount to good consideration. This was put forth in the cases of Re McArdle and Roscorla v Thomas.However, exceptions to this are included in the case of Pao On v Lau Yiu Long that past consideration will not amount to good consideration if the past benefit is conferred at the beneficiary’s request, if it was within the parties’ contemplation that the plaintiff would be paid remuneration or if a benefit was promised in advance.

The above cases indicate that the doctrine of consideration is practical for the parties to the extent that it gives them the leeway to decide the adequacy of the bargain. This coupled with the fact that the law would not hold parties accountable to promises made in the past indicates that consideration promotes economic efficiency in the legal arena. Parties know for certain that they won’t be held liable for promises exchanged in the past for enticing the other party into any type of bargain leaving them free to enter into commercial transactions.

In order to justify the doctrine of consideration as an essential ingredient to contract formation it is imperative to see whether the concepts of ‘value’ or ‘benefit’ can be rationally applied across the board in all cases. It is usually argued that consideration must be of some value in the eyes of law. It has already been seen in the case of Currie v Misa that it must amount to some ‘benefit’ to one party and a ‘detriment’ to another. However, in English Law the, courts have not adopted a steady approach in tto application of these concepts. In the case of Foakes v Beer , te courts did not find a ‘factual benefit’ which one of the parties gained by forgoing the interest and asking for payment before the due date. The courts found that in the eyes of law, the promisor did not gain anything so no consideration arose. On the contrary, the courts have gone out of the way in finding consideration in some cases, despite the lack of benefit or detriment.

An example of this was seen in the case of Cook v Wright where an honest belief by one of the parties that they were entitled to reimbursement was sufficient to constitute detriment for the purposes of finding consideration. Moreover, in some cases such as Bainbridge v Firmstone, courts have adopted a very subjective approach in finding consideration. In other cases such as White v Bluett discussed above, the courts employed an objective approach to conclude that there was no good consideration for the promise. In the case of Williams V Roffey Brothers, however, the Court of Appeal highlighted the significance of finding a “practical benefit” rather than “a benefit in the eyes of law”. Nonetheless, this aspect of construing benefit or detriment has not been reflected in all facets of the doctrine.

In my opinion, these cases indicate that there is no fixed set of rules employed by the courts in evaluating whether the promises exchanged by the parties amount to good consideration. Parties can never be certain whether their actions amount to legal benefit, practical benefit or whether the courts apply a subjective or objective approach in deciding that promises are supported by consideration. This leads to uncertainty not only in contract law but also in encouraging commercial transactions.

Another important principle underlying the doctrine of consideration is that performance of a pre- existing contractual duty owed to the promisor cannot amount to good consideration for a new promise. The origins of this principle can be traced back to the case of Stilk v Myrick on the facts of which two sea mean isolated their crew and the captain promised to divide the wages of the two men equally amongst the remaining crew if they undertook work of the remaining sea men. It was held that these workers were obliged to perform their pre-existing contractual duty in an emergency situation and hence, the captain’s refusal to pay an extra sum was justified. This case is difficult to reconcile with the case of Hartley v Ponsonby where seventeen sea men out of a crew of thirty-six desserted, the courts reached a different conclusion by holding that performance of a pre-existing contractual duty is good consideration for a fresh promise.

These two cases were then followed by the landmark decision of Williams v Roffey Brothers. On the facts of this case, Roffey Bros. entered into a carpentry contract with Williams under which Williams undertook to complete carpentry work on flats for £20,000. The latter ran into financial difficulties and in order to insure the completion of work in time, Roffey Bros. paid an additional sum of £575. This was upheld as being good consideration. Stilk v Myrick was distinguished on the basis that there was no duress on the facts of William v Roffey and by paying more the defendants also avoided a penalty clause which they would have been subject to, had the work not been completed in time. As per Glidewell LJ, all these factors gave rise to a practical benefit to the defendant as the latter avoided trouble and expense of finding new workers to get the work completed in time.

These cases demonstrate that the courts do not follow one stringent principle in finding consideration. Whilst courts adopted a ‘practical benefit’ test in the case of Williams v Roffey, such a practical benefit could also have be found on the facts of Stilk v Myrick, yet the two cases were decided differently. Professor Mckendrick, however, argues that Williams was appreciated as a very practical decision. By giving parties the liberty to modify the terms of the contract at a later stage, they are encouraged to wriggle out of an unexpected bargain. However, by doing so the certainty by which the courts hold the parties accountable to the terms of the contract may be compromised. It has also been argued by that the decision in Williams v Roffey has perhaps pushed English Law to the position where it is suggested that consideration should not be used as a prerequisite for contract formation but only for contract modification. This is problematic and points towards the possible redundancy of the doctrine as an essential ingredient for contract formation. The same position has also been taken by the United States. Art 2–209 of the Uniform Commercial Code clearly specifies that consideration should only be used forth.

However, on another note, it can be argued that Stilk v Myrick was perhaps different from the case of Williams v Roffey Brothers so that problems of the law being inconsistently applied in these cases do not arise. The courts in Stilk did not find consideration on the facts due to public policy reasons. Purchas LJ in this report pointed out that in the beginning of the 18th century there were exceptional circumstances under which seamen had to fulfill their contracts of employment and there were strong public policy grounds that afforded protection to masters of the ship in similar situations. Another point on the basis of which the different decisions in Stilk and Williams v Roffey can be justified in spite of being similar is the existence of duress in the former case unlike the latter. One of the rationales for the existence of the doctrine of consideration is that it prevents duress. This point was manifested in the case of Stilk v Myrick whereby the captain was allegedly coerced into paying more to the crew as a result of which the courts did not find new consideration for a pre existing contractual duty. On the contrary, in Williams v Roffey there was no economic duress and Roffey Brothers were not threatened into paying more for the pre-existing work. It is therefore suggested modification of contract rather than its formation. This point was further reinforced by the US case of Alaska Packers v Domenico.

However, on another note, it can be argued that Stilk v Myrick was perhaps different from the case of Williams v Roffey Brothers so that problems of the law being inconsistently applied in these cases do not arise. The courts in Stilk did not find consideration on the facts due to public policy reasons. Purchas LJ in this report pointed out that in the beginning of the 18th century there were exceptional circumstances under which seamen had to fulfill their contracts of employment and there were strong public policy grounds that afforded protection to masters of the ship in similar situations.26 . Another point on the basis of which the different decisions in Stilk and Williams v Roffey can be justified in spite of being similar is the existence of duress in the former case unlike the latter. One of the rationales for the existence of the doctrine of consideration is that it prevents duress. This point was manifested in the case of Stilk v Myrick whereby the captain was allegedly coerced into paying more to the crew as a result of which the courts did not find new consideration for a pre existing contractual duty. On the contrary, in Williams v Roffey there was no economic duress and Roffey Brothers were not threatened into paying more for the pre-existing work. It is therefore suggested that the case of Stilk v Myrick should be comprehended as if there was consideration but the contract was set aside due to duress.