TOPIC 3 Consideration

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TOPIC 3 Consideration

3.1 Introduction

Consideration is a necessary component in all simple contracts. Contrast formal deeds.

Consideration involves the concept of a bargain being struck, or a deal being done by the contracting parties. Something of value must be exchanged in order for a valid contract to be formed.

3.1.1 Definition

s 2(d) Contracts Act

Guthrie Waugh Bhd v Malaippan Muthucumaru [1972] 1 MLJ 35 HC at 38-39; [1972] 2 MLJ 62 FC

3.1.2 Act or forbearance as consideration

An act or forbearance may constitute valid consideration under the Contracts Act.

Guthrie Waugh Bhd v Malaippan Muthucumaru [1972] 1 MLJ 35 HC; [1972] 2 MLJ 62 FC

Sharma J (at 39-40) HC decision

Gill FJ (at 67) FC decision

See also the different ground propounded by Ong CJ (Malaya) in allowing the appeal.

3.1.3 Promisee must take upon himself a burden or detriment

Macon Works & Trading Sdn Bhd v Phang Hon Chin & Anor [1976] 2 MLJ 177 HC

HC considered the common law meaning of consideration, ... observed that a valuable consideration may consist either in some, right, interest, profit or benefit