Good Consideration for a Fresh Promise

It will be highly inaccurate to state and conclude that the law has made it quite clear that the performance by contracting parties of their existing duties will not constitute good consideration for a fresh promise. This is due to the fact that it is not backed up by substantial evidence. The aim of this piece of work is to discuss this statement of the law making it clear that the performance by contracting parties of their existing duties does not add up to a fresh contract. This piece of work tends to discuss this critically backing it up with relative facts and evidence such as case laws and statutes. In order to start with this, we must first understand the fundamental principles of the first bit of the saying which talks about performance by contracting parties of an existing duty. The reason for this is as going straight into this without a background understanding of these underlying principles will not provide an easy understanding for the common man reading this that has never attended a contract law lecture. By the term underlying principles, we are talking of the principles of offer and acceptance as well as its link with the other principle of consideration.

It should be clearly understood that for a contract to be enforced, there must be an offer which must be accepted, an intention by the parties to create legal relation between them and finally, a consideration (it should thus be noted that a there is an exception to an agreement that does not require a consideration and that is one in the form of a deed or that is sealed). It could be said that there is an agreement between two parties where there is an offer from one and a corresponding acceptance by the other but for that to be legally contractual, there must be an intention by those two parties to create a legal relationship between them (Richards, 2006). With these two elements present, it is left for just one more for a contract to be formed and that is the principle of consideration. Consideration in its sense is the price given by one party in exchange for another’s promise. This price could be by doing something (an act) or by a promise (Poole, 2008). The party issuing a promise is known as the promisor whom can be likened to the offeror in an offer and acceptance. Likewise, the promisee to whom the promise is made to could be likened to the offeree. The offeree seeks to enforce the promisor’s promise and must show that he has a sufficient consideration to that promise. Promises between parties must therefore be supported by a consideration so as to be enforced.

When talking about performance of an existing duty not constituting a good consideration, it could be seen from three different stand points of view. The first is when talking about the performance of duty imposed by law, the second about performance of an existing contractual duty owed to a third party and the last been performance of an existing contractual duty owed to the promisor. In relevance to this piece of work as regards constituting a good consideration, we will be considering just the first and last as they will not constitute good consideration between the both parties and not an outside body. When a party is enforcing any duty imposed by law, that action will not constitute a good consideration in a contract. For instance, A promising to give B twenty pounds if B would pay up B’s tax of eight pounds. B eventually pays the tax because he was going to record a profit from the money given him by A. This is in this sense no consideration on the part of B as regards the enforcement of the contract as he is normally obligated by law to pay his tax. This can be illustrated legally with the case of Collins v Godefroy (1831) 1 B & Ad 950.in this case, the plaintiff was promised a fixed amount of money if he was going to give evidence in a law case. He did that but no payment was issued. He sued the defendant for the lack of payment. It was however held that a person summoned by subpoena in a law case cannot seek a reward from the party that subpoenaed him. This in its fundamental nature means that he was legally obliged to carry out that duty and has not proved any consideration rather he had only done his legally imposed duty. This can therefore not be considered as a good consideration for a fresh promise.

The law has also made it clear that on performance of a duty owed a promisor will not constitute a good consideration. This is due to ha fact that the terms of the contract are already laid out and there should thus be no other reward for completion. This was clearly illustrated in the case of Harris v Watson (1791) Peake 72,170 ER 94. The fact of which was that a commander of a ship made a promise of extra wages to a seaman onboard the ship to navigate the ship which was in distress based on the fact that he felt the seaman was performing some extra work in so doing. When sued for breach of contract, it was held a sailor was responsible for sailing his ship at all time with no extra pay when the ship is in danger as this will make them stiffer the ship to sink so as to get extra pay. The fact here is that the defendant has not done anything that constitutes a consideration other than the performance due the plaintiff in the context of their normal contract.

Furthermore, the law also makes it clear that when a contract is been made, both parties are contractually bound in law as they both had intention to create legal relations when they were entering the contract. Both parties are thus legally obligated to perform their part of the contract without any further expectation aside from what is stated down in the contract. As stated by Richards (2006. p.305) in his Law of Contract book, in accordance with the basic rule relating to performance, a contract must be carried out according to the laid down terms of the contract, failure to which gives right to the not guilty party to claim for damages on the grounds that the contract has not been performed. This is illustrated in law with the case of Re Moore & Co. v Landauer & Co. [1921] 2 KB 519. This is a case where a contract was entered between two parties to supply a certain quantity of canned fruit to be in cases of thirty tins each with payment to be on per dozen tin. The sellers supplied as was ordered but unfortunately, some contained twenty four tins. The buyers therefore rejected the supply on this ground. They were sued for this but the appeal court held the decision in their favour. It was stated that there was an implied term in the contract to which the goods delivered must be in correspondence with the description and for the fact that that condition had been broken, the buyer had every right to reject the goods. It is clearly seen from the above case that parties must carry out their part of a contract effectively as laid down in the terms of the contract. Nevertheless, performance of your part of a contract to its best, will not guarantee for another promise as that performance is past and was in relation to a contract which you were contractually bound to fulfil failure to which will see for a claim of breach of contract against you. Contrarily, fresh promises can nevertheless be made but could only be seen as an appreciation and nothing more.

It can also be argued that the principle of substantial performance as provided by law has made it clear that performance of an existing duty will not constitute good consideration. How does this occur? This occurs where in performing their contractual obligation, a party to a contract anticipate that they have finished their part of the contract or delivered everything they are supposed to (as the case may be) but have no idea that there are some minor defects in their performance of the contract. The parties here can be allowed by the courts to claim the price of the contract less some amount for the minor defects (Poole, 2008. p.259). This is as seen in the case of Hoenig v Isaacs [1952] 2 All ER 176. Here, there was a contract between the plaintiff (an interior decorator) and the defendant to decorate and furnish his (defendant’s) flat for a fee of seven hundred and fifty pounds to be paid as the work proceeds with balance on finishing point. The defendant alleged that the workmanship was poor and defective nevertheless had paid four hundred pounds. He was sued for the balance and it was held by the courts that there were indeed some defects and that the plaintiff had substantially performed the contract but could recover the full amount of the contract less the cost of correcting the defects which would cost only fifty five pounds and thus awarded him the balance less only amount for the correction. From this, it can be argued that there was a performance of a contractual obligation but not to its fullest and could in essence, be short of forming a good consideration as there could be risk of some defects thereby making it not to constitute a good consideration for a fresh promise.

In summary, as could be seen from the vivid examples given, it could therefore be said that the law has in reality made it clear that performance of an existing duty by contracting parties will not constitute good consideration for a fresh promise. It could further be deduced from the last few instances above that past consideration is no consideration. In this sense, on completion of a duty will not provide a good consideration for a fresh promise this is as you are contractually bound under the contract and cannot use the fact of completion to constitute a consideration for another contract. As could be seen from section 2 of the Consideration Act 2009 which states that “past consideration is no consideration; if the promise has been made after the party has performed the act then the promise is not enforceable”. For instance A promising to do Z for B because of what B had done, that past work does not constitute a good consideration. As could therefore be seen from the various points above in this piece of work, it will be agreed that the law has made it clear that the performance by contracting parties of an existing duty does not constitute a good consideration.

Bibliography

Collins v Godefroy (1831) 1 B & Ad 950.

Consideration Act 2009

Harris v Watson (1791) Peake 72, 170 ER 94.

Hoenig v Isaacs [1952] 2 All ER 176.

J. Poole. Textbook on Contract Law, 9th edn. Oxford University Press, 2008.

Re Moore & Co. v Landauer & Co. [1921] 2 KB 519.