Consideration is the price paid for a promise. English law will not enforce a bare promise (known as a 'nudum pactum') - there must be something of value given in exchange. Without consideration, a promise is merely a gift and cannot be enforced as a contract (unless made by deed).
In Currie v Misa (1875), Lush J defined consideration as: 'A valuable consideration, in the sense of the law, may consist either in 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 benefit/detriment analysis remains the foundation of the doctrine.
When tackling a consideration question, always ask: (1) Has something of value been given or promised in return for the promise? (2) Does it satisfy all the rules of consideration? (3) If not, could promissory estoppel apply? This three-step framework covers most exam scenarios.
Executory consideration is a promise given in exchange for a promise. Neither party has yet performed. For example, A promises to deliver goods next week, and B promises to pay on delivery. Both promises are executory - they will be performed in the future. This is the most common form of consideration in commercial contracts.
Executed consideration is where one party has already performed their side of the bargain. This commonly arises in unilateral contracts. For example, A promises to pay £100 to anyone who finds their lost dog. B finds the dog. B's act of finding the dog is executed consideration for A's promise to pay.
Past consideration is something done before the promise was made. As a general rule, past consideration is not good consideration. If you do something voluntarily and the other party later promises to pay you for it, that promise is not enforceable because your act was not done in exchange for the promise.
| Type | Timing | Valid? | Example |
|---|---|---|---|
| Executory | Promise for a promise (future) | Yes | A promises to sell car; B promises to pay £5,000 |
| Executed | Act performed in response to promise | Yes | A promises reward; B performs the requested act |
| Past | Act done before promise made | No (general rule) | A helps B voluntarily; B later promises to pay |
In Re McArdle (1951), a wife carried out improvements to a house. After the work was completed, the other family members signed a document promising to reimburse her. The Court of Appeal held the promise was unenforceable because the consideration (the improvements) was past - it had been completed before the promise to pay was made.
Similarly, in Roscorla v Thomas (1842), the claimant bought a horse. After the sale was complete, the seller promised the horse was 'sound and free from vice.' When the horse turned out to be vicious, the buyer sued. The court held the promise was unenforceable because the purchase (the consideration) was already complete when the warranty was given.
Past consideration CAN be valid where: (1) the act was done at the promisor's request, (2) there was an understanding that payment would be made, and (3) the payment would have been legally enforceable if promised in advance. This exception was established in Lampleigh v Brathwait (1615) and confirmed by the Privy Council in Pao On v Lau Yiu Long (1980).
Brathwait had killed a man and asked Lampleigh to obtain a royal pardon for him. Lampleigh went to great effort and expense to do so. Brathwait then promised to pay £100 but never did. The court held the promise was enforceable even though the act preceded the promise, because the act was done at the promisor's request and both parties understood payment would follow.
Only a person who has provided consideration can enforce a promise. In Tweddle v Atkinson (1861), a bride's father and the groom's father agreed that each would pay a sum of money to the groom. The groom's father died without paying. The groom sued the estate but failed - he had provided no consideration for the promise. The consideration had moved from the bride's father, not from the groom himself.
This rule is closely linked to the doctrine of privity of contract. Note that the Contracts (Rights of Third Parties) Act 1999 now allows third parties to enforce terms in certain circumstances, but it does not abolish the consideration requirement - it creates a statutory exception to privity.
The law requires that consideration has some recognisable value in the eyes of the law ('sufficient'), but the courts will not investigate whether it represents a fair bargain ('adequate'). The parties are free to make whatever deal they wish, even a terrible one. The court's role is not to rescue people from bad bargains.
A dying husband expressed a wish that his wife should have their house for life. The executors agreed to let her live there in return for £1 per year and keeping the house in repair. The court held this was sufficient consideration even though £1 was clearly not adequate rent. The payment of £1, though nominal in practical terms, had value in the eyes of the law.
Nestle offered a record to anyone who sent in 1s 6d plus three chocolate bar wrappers. The wrappers were thrown away on receipt. The House of Lords held the wrappers formed part of the consideration - they had economic value to Nestle because they promoted sales, even though the wrappers themselves were worthless. Lord Somervell said: 'A contracting party can stipulate for what consideration he chooses. A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn.'
A key exam topic: can performing a duty you are already bound to perform count as consideration for a new promise? The answer depends on the source of the existing duty. There are three categories: public duty, existing contractual duty to the promisor, and duty owed to a third party.
Performing an existing public duty is not good consideration. In Collins v Godefroy (1831), a police officer was subpoenaed to give evidence at a trial. The defendant promised to pay him for attending. The court held that since the officer was already legally obliged to attend (public duty), his attendance was not good consideration for the promise to pay.
If a party goes beyond their existing public duty, this can constitute good consideration. In Glasbrook Bros v Glamorgan County Council (1925), police provided a garrison of officers at a mine during a strike at the mine owner's request, even though a mobile patrol would have sufficed. The House of Lords held the extra protection beyond what was reasonably necessary was good consideration for the mine owner's promise to pay.
A father promised to pay the mother £1 per week for their illegitimate child, provided the child was 'well looked after and happy.' The mother already had a statutory duty to maintain the child. The Court of Appeal held the mother provided consideration by going beyond her basic legal duty - she promised to keep the child happy, which exceeded her statutory obligation. Denning LJ took the wider view that performing an existing duty is good consideration so long as there is no public policy reason to hold otherwise.
In Stilk v Myrick (1809), two sailors deserted during a voyage. The captain promised to divide the deserters' wages among the remaining crew if they sailed the ship home. The remaining crew were already contractually bound to sail the ship home. The court held there was no consideration for the captain's extra promise because the sailors were merely performing their existing contractual duty.
Williams v Roffey Bros (1991) significantly modified the Stilk v Myrick rule. The Court of Appeal held that where a party to an existing contract promises to perform their existing contractual duty, this CAN be good consideration if the promisor obtains a 'practical benefit' from the promise. The key is that Stilk v Myrick was not overruled - it was 'refined and limited.'
Roffey Bros were main contractors who subcontracted carpentry work to Williams. Williams ran into financial difficulty and could not complete the work on time. Roffey, facing a penalty clause in their main contract for late completion, promised Williams an extra £10,300 to finish on time. Williams did further work but Roffey failed to pay. The Court of Appeal held Williams could recover - Roffey obtained practical benefits: avoiding the penalty clause, avoiding the expense of finding a new subcontractor, and having the work completed on time.
Williams v Roffey applies where additional payment is promised (extra money for doing the same work). It does NOT apply to promises to accept less money - that scenario is governed by the part payment of debts rules (Foakes v Beer). The Supreme Court in Rock Advertising v MWB Business Exchange (2018) confirmed this distinction remains important.
Performing an existing contractual duty owed to a third party IS good consideration for a new promise. In Scotson v Pegg (1861), A contracted with B to deliver coal to B. C then promised A that if A delivered the coal (to B, as already required), C would unload it. A delivered the coal. The court held A's delivery was good consideration for C's promise, even though A was already bound to deliver under the contract with B.
This principle was confirmed by the Privy Council in Pao On v Lau Yiu Long (1980). Lord Scarman held that performing or promising to perform an existing contractual obligation owed to a third party can be valid consideration. The promisee suffers a detriment by making themselves liable to two parties (the original contracting party and the new promisor) instead of one.
Can a creditor who agrees to accept a lesser sum in full settlement later change their mind and sue for the balance? The answer, dating back to Pinnel's Case (1602), is yes. Payment of a lesser sum on the day in satisfaction of a greater sum cannot be satisfaction for the whole. If you owe £100 and pay £80, the creditor can still sue for the remaining £20 even if they agreed to accept £80 as full settlement. The debtor provides no consideration for the creditor's promise to forgo the balance.
The House of Lords confirmed the rule in Pinnel's Case. Mrs Beer obtained a judgment debt against Dr Foakes. She agreed that if he paid in instalments, she would not take 'any proceedings whatever' on the judgment. Foakes paid in full but Beer then claimed interest on the judgment debt. The House of Lords held she was entitled to the interest - Foakes had provided no consideration for Beer's promise not to claim interest. He was merely paying what he already owed.
| Scenario | Can Creditor Claim Balance? | Authority |
|---|---|---|
| Simple part payment accepted | Yes - no consideration | Pinnel's Case; Foakes v Beer |
| Payment in kind (goods/services) | No - valid consideration | Pinnel's Case (obiter) |
| Part payment made early at creditor's request | No - valid consideration | Pinnel's Case |
| Third party makes part payment | No - cannot sue debtor | Hirachand Punamchand v Temple |
| Composition agreement with creditors | No - binding on all creditors | Common law exception |
| Promissory estoppel applies | Possibly not - equitable defence | Central London Property v High Trees |
Crucially, the practical benefit doctrine from Williams v Roffey Bros does NOT extend to part payment of debt cases. In Re Selectmove (1995), the Court of Appeal held it was bound by Foakes v Beer (a House of Lords decision) and could not apply the Roffey practical benefit reasoning to promises to accept less. Only the Supreme Court or Parliament could change the Foakes v Beer rule. This distinction remains good law.
Promissory estoppel provides an equitable escape from the harshness of Foakes v Beer. In Central London Property Trust v High Trees House (1947), a landlord halved the rent on a block of flats during World War II because the tenant could not find sub-tenants. After the war, the landlord claimed full rent. Denning J held that the landlord was estopped from going back on his promise for the war period, even though the tenant gave no consideration for the reduced rent. However, the landlord could restore the full rent for the future once circumstances changed.
Promissory estoppel is an equitable doctrine that prevents (or 'estops') a party from going back on a promise to accept less or to vary their legal rights, even where the promise is not supported by consideration. It does not create new rights - it merely prevents the enforcement of existing strict legal rights where it would be inequitable to do so.
Promissory estoppel can only be used as a defence ('a shield'), not as a cause of action ('a sword'). In Combe v Combe, a wife sought to use promissory estoppel to enforce her ex-husband's promise to pay her maintenance. Denning LJ (as he then was) held she could not do so. Promissory estoppel does not create new causes of action where none existed before. It only prevents a party from enforcing their existing rights. The wife was trying to use it offensively to establish a claim, which is not permitted.
Promissory estoppel generally has a suspensory effect rather than an extinctive one. In Tool Metal Manufacturing v Tungsten Electric (1955), the patent holders waived their right to compensation during the war. The House of Lords held that the waiver suspended the right to claim compensation but did not extinguish it permanently. The rights could be revived by giving reasonable notice that the promisor intended to revert to their strict legal rights.
In most cases, promissory estoppel merely suspends rights - the promisor can resume strict legal rights on giving reasonable notice. However, where the promisee cannot restore their original position (e.g. they have changed their position irreversibly), the estoppel may have an extinctive effect, permanently preventing the promisor from reverting to their strict legal rights. This distinction is particularly relevant for one-off transactions versus ongoing obligations.
| Case | Principle |
|---|---|
| Central London Property v High Trees (1947) | A promise to accept less can be binding in equity even without consideration |
| Combe v Combe (1951) | Promissory estoppel is a shield, not a sword - it cannot create a new cause of action |
| Tool Metal v Tungsten Electric (1955) | Estoppel is generally suspensory - rights can be revived on reasonable notice |
| Woodhouse AC Israel Cocoa v Nigerian Produce (1972) | The promise must be clear and unambiguous |
| D & C Builders v Rees (1966) | Estoppel will not protect a promisee who has acted inequitably (e.g. applied pressure) |