The Element of Consideration

The question addresses the element of consideration. Firstly, consideration is a vital component of a binding contract. Good consideration as decided in Currie v Misa (1875) is usually valuable in the eyes of law, by means of profit or benefit to one party, or some loss or detriment suffered by the other party.

The main focus is on performance of existing duty. Good consideration in relation to performance within a contract is generally based on the idea of exchange. This is usually the exchange of promises often referred to as ‘quid pro quo’, translated to the meaning of ‘something for something’. Where the exchange element is lost, it subsequently does not constitute good consideration.

It is a general rule that performance of existing duty does not constitute good consideration. In order for it to be measured as good consideration, fresh consideration should be provided on behalf of the promisee. As displayed in the case of Tweddle v Atkinson (1861), it is a general rule that consideration must move from the promisee. Where consideration is not provided, the contract would become unenforceable.

A promise to perform a duty that you are already bound to do under general law does not constitute good consideration, as exercised in Collins v Godefroy [1831]. Here the plaintiff promised to pay Collins, the witness for his attendance to give evidence in court. However, Collins was already bound to give evidence by the court. Collins had therefore not provided any consideration for Godefroy’s promise. However, a promise to perform more than you are already bound to go under general law will constitute good consideration, as proven in Glasbrook Bros v Glamorgan County Council [1925].

A promise to perform something you are already bound to do under an existing contract also does not constitute good consideration. In Stilk v Myrick [1809], a voyage was scheduled to sail from London to the Baltic and back, during which, two seamen deserted. The captain agreed to divide their pay between the remaining members of the crew if they helped sail the ship back to London without the two seamen who deserted. On return the captain refused to pay Stilk and the other seamen. It was held that the seamen had not provided fresh consideration for the captain’s promise. As they had only agreed to do what they were already bound to, no consideration was provided on behalf of the promisee (the seamen).

The courts later found that development of the principle of economic duress provided an alternative to such a decision. Economic duress was established in Pao On v Lau Yiu Long [1979], where Lord Scarman outlined the essential elements of the doctrine economic duress, by deciding whether true consent was provided. His Lordship referred to economic duress as being “coercion of the will” where there is no true consent.

Such development has allowed the decision in Stilk v Myrick [1809] (supra n.6) to now be distinguished in latter cases, as the application of the doctrine of consideration has become increasingly flexible.

Williams v Roffey Brothers & Nicholls (Contractors) Ltd [1990], is a significant case within Law of Contract, and specifically in relation to the case of Stilk v Myrick [1809] (supra n.6). The defendants sub-contracted carpentry work to the plaintiffs in flats they were building. The plaintiffs got into financial difficulty due to underestimation of the job costs. The defendants promised to pay an additional sum to the plaintiffs, if they were able to complete the flats on time, ensuring that they would avoid having to pay a penalty for late completion. On completion of eight further flats, the defendants refused to pay the promised sum. The plaintiffs brought an action against the defendants for the outstanding payment. The defendants claimed that no consideration was provided, as they did not receive any benefit. The defendants claim was dismissed, as the court held that there were practical benefits from the contract, as completion of the flats would result in the defendant avoiding the penalty for delay. Therefore, in this circumstance performance of existing duty, where practical benefit is provided, constitutes good consideration.

The judgement was seen as an anomaly in the law, as it distinguished the previous case of Stilk v Myrick [1809] (supra n.6). It changed the application of consideration as it allowed the enforcement of a promise for an existing duty. Glidewell L.J. believed that Williams v Roffey Bros [1990] (supra n.10) refined the application of the doctrine of consideration, rather than contravened with the original principle established in Stilk v Myrick [1809] (supra n.6).

In conclusion, Williams v Roffey Bros [1990] (supra n.10) has caused many departures within the Law, by resulting in a more flexible application of the consideration doctrine.

However, the case of Williams v Roffey Bros [1990] (supra n.10), has many implications in the area of part-payment of debt. The previous case of Foakes v Beer (1884), asserted that payment of a lesser sum by the debtor does not constitute consideration for the whole sum. Williams v Roffey Bros [1990] (supra n.10) was distinguished in Re Selectmove Ltd [1995], as it was seen to only be applicable to a contract for the supply of goods and services.

The principle established in Williams v Roffey Bros (supra n.10), is often criticised for disregarding the rule that consideration must move from the promisee. Although it was held that practical benefit constituted sufficient consideration, the benefits did not move from the promisee. Instead, the practical benefits arose from the promise to pay more money, ensuring that the flats were completed before the penalty. The principle behind the case was seen to be “inconsistent” according to Colman J. obiter, in South Carribean Trading v Trafigura Beheer BV [2005]. Though the decision was criticised, the case decision was followed.