Consideration: The Essential Characteristic of Consideration

Consideration
English law only enforce a promise which is made under a Deed.

A deed is a document which is signed, attested and indicates on its face it is a Deed.
Normally used to grant/transfer right. Previously, a Deed had to be sealed a wax
impression onto the document) Difference between a Deed & a normal contract is
that: no need for Consideration allows a 3rd party beneficiary to enforce the deed.
English law only enforce a promise which is supported by Consideration. What is

Consideration? Lush J in Currie v Misa (1875) A valuable consideration in the eyes of
the law may consist either in some right, interest, profit or benefit to one party, or
some forbearance, detriment, loss or responsibility given, suffered or undertaken by
the other .” On the other hand, consideration, in contract law, an inducement given to
enter into a contract that is sufficient to render the promise enforceable in the courts.
The technical requirement is either a detriment incurred by the person making the
promise or a benefit received by the other person.
How does consideration work in the real world? Let's say you backed into your
neighbor's golf cart and damaged it. Your neighbor is legally permitted to sue you for
the damage but instead agrees not to sue you if you pay him $1,000. This agreement
provides adequate consideration for the contract, because each party is giving up
something in the exchange -- you're giving up some of your money while your
neighbor is giving up the right to sue you.
The Essential Characteristic of Consideration
There's an essential characteristic of consideration which must exist to form a

contract.
Above, 3 types of consideration were listed:
1. a promise to do something
2.a promise not to do something, and

3.a promise to pay money.
Rules of Consideration:
1. It must move at the desire of the promisor:
Case: Durga Prasad vs. Baldeo- An act constituting consideration must have been
done at the desire or request of the promisor ,if it is done at the desire of the third
party or without the desire of the promisor it will not be a good consideration.
E.g., A saves B’ goods from fire without being asked to do so. A cannot demand
consideration for his services.
2.It may move from the Promisee or any other Person:

consideration may move from the Promisee or any other Person, i.e., even a stranger.
This means that as long as there is a consideration for a promise it is immaterial who
has furnished it. But a stranger to the consideration will be able to sue only if he is a
party to the contract.
Case law: an old lady, by a deed of gift, made over certain property to her daughter
D, under the direction that she should pay her aunt, S (Sister of old lady), a certain
some of money annually. The same day D entered into an agreement with her aunt S
to pay her the agreed amount. Later, D refused to pay the amount on the plea that no
consideration has moved from S to D.
Held, S was entitled to maintain suit as consideration had moved from the old lady,
sister of S, to the daughter, D.
Tweddle Vs. Atkinson The plaintiff was to be married to the daughter of one G and in
consideration of this intended marriage G and the plaintiff ‘s father entered in to a
written agreement by which it was agreed that each would pay the Plaintiff a some of
money. G failed to do so and the plaintiff sued his executors. Whitman J considered it
to be an established principle that a person can not take advantage of a contract, who
is stranger to the contract.
3. It may be Past, Present or Future: the word used in Section 2(d) are”… has done or
abstained from doing (Past), or does or abstains from doing (Present), or promises to
do or to abstain from doing (Future), something,”
Past consideration: when the consideration by the party for the present promise was
given in the past, i.e., before the date of promise, it is said to be past consideration.
Present consideration: when consideration is given simultaneously with promise, i.e.,
at the time of the promise, it is said to be present consideration. E.g., cash sale.
Future consideration: when consideration for one party to the other is to pass
subsequently to the making of the contract, it is future consideration.
4. It need not be adequate:

consideration as said “some thing in return” and something this some thing in return
need not be equal in value to “Something given”. The law requires that the contract
must be supported by consideration and not the adequate consideration. The adequacy
of the consideration is to be determined by the parties to the contract at the time of
entering into it, but the court has no right to determine the adequacy of the
consideration.
5. It must be real:
although consideration need not be adequate, it must be real and of some value in the
eye of law. There is no real consideration in the following cases:
Physical impossibility: A promises to put life into B’s dead wife on the consideration
of Rs.999. A’s promise is physically impossible to perform.
Legal impossibility: A owes Rs.500 to B. he promises to pay Rs.50 to, C the servant
of B, who in return promise to discharge A from the liability. This is legally
impossible, because C cannot discharge A from the debt due to B.
Uncertain consideration: A engages B for doing a certain work and promises to pay a
“Reasonable some”. There is no recognized method of ascertaining the “Reasonable
Some”.
6. It must be lawful:
the consideration given for an agreement must not be unlawful. A consideration to the
contract must not be against Public Policy, Immoral and illegal.
7. It must be something which the promisor is not already bound to do: a promise to
do what one is already bound to do, either by general law or under an existing
contract, is not a good consideration for the new promise, since it adds nothing to the
pre-existing legal or contractual obligation.
CL: There was a promise to pay to the vakil an additional sum if the suit was
successful.
Held, the promise was void for the want of consideration. The vakil was under a pre-
existing contractual obligation to render the best of his services under the original
contract.
8.Past consideration is not a good consideration:

Something already completed before the promise is made – this is NOT valid
consideration in the eyes of the law.
Examples of Past Consideration:
D promised claimant that horse bought by claimant was sound and free from vice.
Held: promise made after sale had been completed there was no consideration.
ReMcArdle :A dying mother made her 4 children to sign an agreement to reimburse
her daughter-in-law for money spent on upkeeping the house.
Held : consideration was given before the reimbursement agreement was signed, thus
past consideration – not valid
When a Contract Lacks Consideration
In some situations, courts will step in and declare that a contract is unenforceable
because it lacks consideration. Let's look at some of these scenarios.
One of the parties was already legally obligated to perform. For example, a police
officer cannot claim the reward for capturing a wanted suspect, because the officer is
already legally obligated to capture and arrest people who break the law.
The promise amounts to a gift, not a contract. If your rich uncle promises to give
you money to buy a house, without any strings attached, that is a promise to make a
gift. If he changes his mind, you can't force him to come up with the cash because his
promise was one-sided; you have not done or promised to do anything in exchange.
On the other hand, if you make a down payment on a house in reliance on his
promise, and your uncle knows about it, a court may enforce his original promise.
Although it still isn't a true contract, the law recognizes that it's necessary to hold
people to their promises once others take action on the assumption that the promise
will be kept. This legal theory -- called "promissory estoppel"-- treats promises as
contracts if the promise was reasonably relied upon.
The exchange is for "past consideration." When someone promises to give you

something in return for something you've already done -- "I'm going to pay you $500
because you quit smoking last year" -- a court will not enforce the promise to make
the payment because the performance (quitting smoking) wasn't bargained for. You
did it without knowing that someone would come along later and offer to pay for it.
The bargained-for promise is illusory. For example, the laws in Maria's state

prohibit firing an employee for refusing to sign a noncompete agreement. Maria signs
one anyway, under threat of losing her job. The agreement is unenforceable because
Maria's employer cannot do what it promised (or threatened) to do. A better approach
would have been to provide Maria with some benefit or compensation if she signed
the agreement, rather than threatening to fire her if she didn't.
Do You Need the Word "Consideration" in Your Contract?
Many contracts provide a recital (a statement at the beginning of the contract) that the
contract is being entered into "for good and valuable consideration, the sufficiency of
which is acknowledged," or something to that effect. The writers of these contracts
mistakenly believe that simply stating that consideration exists actually fulfills the
requirement of contractual consideration. In a majority of states, however, this is not
the case; such recitals don't prove anything. In other words, saying there is
consideration doesn't necessarily mean there is consideration.
Legal scholars agree that generally, a contract doesn't need to include anything other
than a statement that "the parties agree." The exception is for contracts that only one
party signs, such as assignments, option agreements, or promissory notes. In these
contracts, a recital that the consideration is sufficient should be included, because it's
not self-evident that a bargained-for exchange has taken place.

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Consideration

English law only enforce a promise which is made under a Deed.

English law only enforce a promise which is supported by Consideration. What is

The Essential Characteristic of Consideration

There's an essential characteristic of consideration which must exist to form a

Above, 3 types of consideration were listed:

2.a promise not to do something, and

2.It may move from the Promisee or any other Person:

4. It need not be adequate:

8.Past consideration is not a good consideration:

When a Contract Lacks Consideration

The exchange is for "past consideration." When someone promises to give you

The bargained-for promise is illusory. For example, the laws in Maria's state

Do You Need the Word "Consideration" in Your Contract?

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