The legal meaning of 'consideration'.

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Contract Law                Assignment 3

“The courts have insisted that no contract (other than a contract under seal) can be enforceable in the absence of consideration.”

Shears & Stephenson [1996]

Under English law, for a simple contract to be valid, there must be ‘consideration’ from the party accepting the offer. The traditional definition comes from the case of Currie v Misa [1875] where Luch LJ states:

        ‘A valuable consideration in the sense of the law may consist either in

        some right, interest, profit or benefit accruing to one party or some

        forbearance, detriment, loss or responsibility, given suffered or undertaken

        by the other.’

The legal meaning of ‘consideration’ is not very different from the everyday use of term. For example, if it was said, “For a small consideration I will…” it is probably an offering to do something for money. However, the consideration need not be monetary. It need not even be a benefit, i.e. if my next-door neighbours offer me money to desist from playing the saxophone in the evenings, the consideration is my desisting, it is not the offer of money, as Sir Fredrick Pollock states: ‘An act of forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.’ 

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For the consideration to be valid it must have the following features:

  • Consideration must ‘move from’ the offeree to the offeror.
  • It must be something of value (however nugatory) to the offeror, or something of detriment to the offeree.
  • Consideration must be sufficient in law, but need not be sensible.
  • It must usually impose an obligation in the future; it is not usually adequate to base an offer on some consideration that was gained in the past.

If no consideration is present, then the contract may not be enforceable, even if it contains a clause to ...

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