‘The existence of valid consideration is a key component of an enforceable agreement, but this is not without controversy’.
Discuss the requirements for valid consideration in contract law.
This essay will look at consideration in contract law and why it is a key component in contract law as well as the controversy involved with consideration. Lush J stated in Currie v. Miss (1875) “A valuable consideration, in the sense of the law, may consist either of 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”. This was the first real definition of consideration and summarises that consideration is where there is an act or promise given by one party in return for the promise of act of the other party. For consideration to be valid it must be sufficient, which means some acts or promises are not seen as consideration, in terms of the law, and therefore means there is no contract. Examples of insufficient consideration are: past consideration, acts imposed by law and existing contractual duties. There are some cases where there are exceptions and the court finds valid consideration in duties imposed by law and existing contractual duties, these will be discussed later on in the essay.
Past consideration is not consideration at all and therefore does not amount to an enforceable contract. Past consideration is where a promise made after a contract has been agreed or once an act has been performed without reason to do so. For example, in the case Roscorla v Thomas (1842) the defendant made a promise after the contract for the sale of a horse had been agreed and the sale was complete. The promise was that the horse was “free from vice”, however it turned out this promise was untrue, and the horse was violent. As a result, Roscorla decided to sue Thomas, but as the promise was made after the contract had been agreed then the court had to rule in favour of the defendant as it meant it was not part of the enforceable agreement. Therefore, for the promise to be valid consideration, it must have been made before the contract was agreed. This could be considered controversial as the plaintiff was promised a horse which was “free from vice” but as the promise was made after the sale of the horse, it was not part of the contract and therefore was left with a horse which was not what the buyer wanted. On the other hand, it could be argued that the outcome was not controversial as the contract had already been agreed and the promise made by the defendant had no impact on the contract, meaning any legal action taken by the plaintiff on the promise made by the defendant would not have resulted in anything but a decision in favour of the defendant. There have been, however, exception to this rule in Lampleigh v Braithwait (1615) where the defendant promised but failed to pay the plaintiff for an act after the act had been completed. The court held that there was valid consideration as the plaintiff had acted upon a request by the defendant and therefore the promise made by the defendant was enforceable.
Duties imposed by law do not amount to valid consideration, meaning if someone promises to pay you something for an act you are already required to by law them this promise cannot be enforced, as you would have to carry out the act regardless of whether the promise was made. This was the case in Collins v Godefroy (1831) whereby Collins was required by law to give evidence in court. As the evidence Collins was supposed to give would have helped Mr Godefroy’s case at the time, he promised to pay Collins for every day Collins was in court. Mr Collins was not called to give evidence despite being subpoenaed. After the case Mr Collins demanded payment for the six days he was in court, however, Mr Godefroy refused. Mr Collins then sued Mr Godefroy but was unsuccessful as there was no valid consideration as Mr Collins was required by law to be in court anyway, meaning the court ruled in favour of the defendant. This could be considered controversial as Mr Godefroy made a promise to Mr Collins and broke that promise, however as Mr Collins was carrying out a duty he was required to do by law, them the promise did not amount to valid consideration and therefore there was no enforceable agreement. There are cases whereby, if you are willing to do more than the original promise, in other words more than you are required to do by law, then this could be extra consideration which would allow the enforcement of the promise. For example, in Glasbrook Brothers v Glamorgan City Council [1925] the Police were asked by a Colliery manager for extra protection during a strike by the workers of the colliery, meaning having officers stationed there, in return for a fee, which the manager agreed to. After the strike the police demanded payment however the colliery manager refused, claiming there was no valid consideration as the police were simply carrying out their duty to protect people and property. However, the court decided there was valid consideration as the police stationed officers at the colliery, which went beyond their public duty, and as a result meant there was an enforceable agreement. This shows that valid consideration requires the promisee to go beyond their legal duty.
Existing contractual duties, like duties imposed by law, do not amount to valid consideration. This is because you are already contracted to do the act in which someone promises extra for. For example, in Stilk v Myrick (1809) , Stilk was contracted to work for Myrick on a ship, which included a promise to do anything necessary in order to complete the work required by Myrick, regardless of any emergencies. As the ship docked two men abandoned the ship and no replacements could be found in time. This led the captain to make a promise to the remaining crew members that they would receive a share of the wages of the two men who deserted their roles. After completing the voyage Stilk demanded payment but was refused by Myrick resulting in the law suit. The court ruled in favour of Myrick as they declared that they were only doing what they were originally contracted to do, and as a result there was no valid consideration, thus no enforceable agreement. However, the case of Williams v Roffey Bros had a major impact on the doctrine of consideration, making it relatively easier for consideration to be found, depending on the case regarding the facts and circumstance. In Williams v Roffey (1990), the Roffey Bros were contracted to refurbish a block of flats and subcontracted part of the refurbishment to Mr Williams, who completed part of the work and received a payment of £16,200. Williams then ran into financial trouble as the price agreed was too low. The Roffey Bros were at risk of penalties if the work was not completed on time, so the parties agreed that Mr Williams would be paid an extra amount per flat completed. Mr Williams completed 8 more flats but stopped as he was not paid in full for each of the flats he completed. A new firm was then subcontracted to complete the work, so Mr Williams brought a claim against the Roffey Bros. Based on the decision in Stilk v Myrick (1809), Mr Williams would have been unsuccessful in his claim, however the court decided there was good consideration, despite the fact Mr Williams was only performing his pre-existing duty. The reason for this is because the benefit of the Roffey Bros not having to pay penalty fees as a result of Mr Williams work constituted valid consideration, therefore meant the agreement was enforceable. The ultimate difference between the two cases is that the Roffey Bros benefitted from the work done by Mr Williams after the promise made by the Roffey Bros. This could be considered controversial as Mr Williams was only completing work under pre-existing duties and the only reason the Roffey Bros would have had to pay any penalty fees is because Mr Williams did not complete the work. However, it could also be argued that because both parties agreed the original price was too low and Mr Williams was in financial trouble as a result, that the outcome was in fact the right one.
This essay has looked at situations where consideration has been invalid and what was required in these situations to constitute valid consideration. In situations of past consideration, where promises have been made after a contract has been agreed then there is in fact no consideration at all. There are a few exceptions to this such as Lampleigh v Braithwait (1615). In situations where a there are duties imposed by law then the requirement for valid consideration is that the party must go over and above the promise which they are under duty imposed by law. In situations where there are existing contractual duties, valid consideration requires the promisee to provide something extra than the original promise, like duties imposed by law. Finally, in all situations, valid consideration requires both parties to bring something to the table, in other words both parties must give up something in order to gain something. Consideration is key to an enforceable agreement as without it there the agreement is not enforceable at all. This mean that in these situations where the requirements for valid consideration are met, an enforceable agreement is made.