Consideration has been the subject of much discussion and controversy in recent times and in trying to define and establish its role in modern contract law academics have looked at both the origins of the doctrine and the way it has developed.

However Lord Ellenborough not only used a different reasoning in a similar claim in Stilk and Myrick, but actually tried to redefine the earlier case by claiming it failed for want of consideration, in that the promisee had failed to provide anything more than in the original bargain (to take the ship to port) to support the new promise.  

It cannot be said though that these cases marked the end of the end of the matter in fixing the doctrine of consideration as examining more recent cases proves that “consideration” can appear in many forms, and the definition becomes increasingly complex.

One of the first definitions following Eastwood v Kenyon appears in Thomas v Thomas, in Patteson J says, “Consideration means something which is of value in the eyes of the law moving from the plaintiff, it may be some detriment to the plaintiff, or same benefit to the defendant”.

This was followed in 1875 in Currie v Misa with the definition of, “A valuable consideration in the sense of the law may consist either in some right, interest or profit or benefit accruing to one party, or some loss, forbearance or responsibility given suffered undertaken by the other.”

These cases, still quoted as “the classical” definitions of consideration, seem to refine it further and move it further away from being any reason, to a very definite benefit or a detriment and value analysis. However this is in itself inconclusive as benefits, detriments, and values are very hard to define, leading to strange and apparently contradictory decisions.

The most controversial case, and far reaching case to illustrate this is probably Williams v Roffey Bros & Nicholls (Contractors) Ltd  where a radical approach was taken to the discussion of consideration in enforcing a promise on a past duty.

The case concerned a contract between a firm, and a sub-contracted firm of carpenters, which ran into difficulty so severe it risked halting their performance before their work was complete on a block of flats. As the main contractors were contracted elsewhere to finish the development in a certain time or face a penalty clause, the two parties renegotiated the price.

If the judge had followed Stilk v Myrick it is clear the promise for extra pay should not be binding. Further more if applying the classical legal definitions of value and benefit and detriment nothing more had been provided for the new promise and so there was no consideration.  

However Russell LJ chose to distinguish Stilk v Myrick, saying its rigid approach to form was neither “necessary nor desirable.” He went on to say, “Consideration there must still be but in my judgement, the courts must nowadays should be more ready to find its existence so as to reflect the intention of the parties to the contract where the bargaining powers are not unequal and where the finding of consideration reflects the true intention of the parties.” 

Russell LJ’s words seem clear on his trying to redefine consideration as evidence of intention to contract.  

The case also took on the benefit/detriment and value situation in the judgement of Gildewell LJ who emphasised that paying more to obviate a “practical benefit” such as hiring a new contractor, can if not procured by duress or fraud, could provide consideration even if it is paying twice for the same performance.

This not only redefines the benefit/detriment analysis, but also reflects Russell LJ’s inference that there are now other ways to find “reasons” to enforce a contract, such as intention to create legal relations, and to rule out reasons not to enforce a contract such as duress and fraud.

This backs Atiyah’s assertion that courts merely finding “reasons” to enforce promises, but remains unclear in that it still pays lip service to consideration where Russell J says courts should be more ready to “find” consideration where it’s absence is obstructing the intention of the parties.

The judgement also does nothing to clarify the ambiguities in “practical benefit” which seems an even less certain term than legal benefit.

This is perhaps the reason that Court of Appeal refused to reconcile the judgement with the apparently contradictory case of Foakes v Beer which reinforced the rule that part payment of debt could not be consideration for the discharge of the whole debt. The House of Lords had explicitly been asked to consider whether a practical benefit of a reduced sum now as opposed to the whole sum later could be good consideration and had rejected it.

Williams v Roffey Bros would seem to entirely contradict this, in that a practical benefit was deemed good consideration.

The problem of extending this to overrule Foakes v Beer was considered in Re Selectmove but was rejected by Peter Gibson LJ who said that it could not leave Foakes v Beer “with no application” as there could always be some practical benefit found in part payment of debt.

He did however say this was out of respect for the ruling in the higher court, and as Foakes had not even been considered in Williams v Roffey Bros, the decision could only be overruled in the House of Lords or by Parliament itself.

The need for this to be sorted out in a properly legal manner with respect to precedent does not only rest on the landmark decision in Williams v Roffey Bros. however.

Further evidence of the modern focus on practical benefit can be found in the comparative concepts of benefit and value seen in White v Bluett and the recent case of Pitt v PHH Asset Management. Ltd. 

In White v Bluett, a father who had asked his son to stop moaning at him in return for him clearing his son’s debts was not held to be supported by good consideration as the son’s giving up moaning did not have any value, as he did not have any right to do it in the first place.

In the later case the claimant sued on a promise citing his forbearance to sue for breach of an earlier contract was good consideration. The claimant also claimed his forbearance from making trouble with the defendants other contracting parties was good consideration.

Even though the judge, Peter Gibson LJ held that his action for breach of contract would not succeed, the removal of  “the nuisance value” of both the litigation and the troublemaking was good consideration.

It is claimed by McKendrick that courts’ willingness to use forbearance to sue as consideration explains the difference in the perceived value of moaning as a nuisance, and a threat of litigation as a nuisance.

But this judging of the actual value of consideration, of the nuisance value of giving up moaning as compared to giving up the right to sue does not sit well with the definition of value of consideration given in Chappell & Co. v Nestle where it was held that chocolate wrappers did provide consideration for the exchange of records in a special offer run by Nestle even though they had no actual economic value.

It was stated by Lord Somervell that, “A contracting party can stipulate for whatever consideration he chooses. A peppercorn does not cease to be good consideration even if it is established that the promisor does not like pepper and the corn will be thrown away.”

In addition, even the relatively simple formula that forbearance to sue is good consideration remains ridden with ambiguity in terms of benefit and detriment. It has been held in Wade v Simeon that although giving up the right to sue on a valid claim is good consideration, giving up the right to sue on a bad one is not.

However this is subject to the caveat that there is authority that giving up the right to sue on a clearly bad claim, when you evidentially believe it is a valid claim, is good consideration in Cook v Wright.

This is all very well, but as giving up a clearly bad claim is not a detriment; it seems again merely a reason to enforce a bargain.

In all these instances benefit, detriment and “some value in the eyes of the law” the classical definitions of consideration, have been left in such an ambiguous state that it could often be said that courts have enough leeway to fit any “reason” into benefit and detriment and value.

McKendrick also usefully compares the strictness of Foakes v Beer with the many cases such as Shadwell v Shadwell and Scotston v Pegg and Pao On v Lau Yiu Long where courts have found the performance of existing duty, due to a third party rather than the promisor “of value” and therefore good consideration.

He also suggests however that in these cases the total absence of duress gave the courts confidence to “find” consideration in a practical rather than legal benefit.

In this he too expressly backs Atiyah by claiming this inconsistent use of benefit and detriment hides the true finding of “reason” rather than consideration. 

The courts also display their strange attitude to consideration in the way they deal with promises unsupported by consideration in the benefit and detriment model but in which the claimant has relied in someway on the promise.  

This is explained by comparing the treatment of two cases where the promisee gave up some right of action (classically good consideration) but not at the express request of the promisor, (classically bad consideration as it was not part of the exchange of promises).

In the first case, Combe v Combe a wife refrained from suing her husband for maintenance on his promise of an allowance. It was held that she had not supplied consideration, as her forbearance was not at the request of her husband, and therefore not part of the contract.

However this decision cannot be reconciled with the earlier case of Alliance Bank v Broom where the bank had forgone their right to sue for a large debt on the promise of some security for it. When they then sued to enforce the promise of security the court ruled there had been consideration in an implied request for forbearance to sue.

Here it is again claimed that the difference is explained by the courts finding, or not finding “consideration” where actually it is merely a reason for justice, in this case the fact that the wife had more money than the husband was allegedly stronger than the earlier authority of implying a request.

But it also seems clear that the reliance test has been refused as a “reason” for enforcing contracts as Combe v Combe also expressly refused the chance to extend the equitable principle of estoppel (reliance rendering a promise unbreakable) from a defence to being the cause of new action, thus putting reliance in competition with consideration, or redefining it.  

In overview, consideration seems to have been used by courts as a means to manipulate the way the law of contract is enforced, in that they are continually trying to find a reason, economic or political, for enforcing promises according to the needs of the time while still adhering to the way law has developed before them.

Judges have used the natural difficulty in defining consideration to move the goal posts, as evidenced by comparing Foakes v Beer and Stilk v Myrick with Willams v Roffey Bros, but have been unable to reject the doctrine due to respect for precedent, as explicitly stated in Re Selectmove.

On that analysis, Atiyah seems right in his assessment, particularly as he is not trying to abolish the requirement, simply trying to restate it’s function.

Even Atiyah’s main critic Professor Treitel, in using consideration as representative of his benefit and detriment analysis is maintaining that consideration exists for the purpose of only enforcing contracts, which are a bargain made to the benefit and detriment of the bargainers. He himself is defining consideration as a way of maintaining the importance of bargain and exchange, rather than going back to the moral obligation involved in letting reliance become a reason for enforcing a unilateral promise.

However it’s only through maintaining the doctrine of consideration courts provide certainty to their cause, and they have pursued this explicitly. It cannot be discounted that courts are unwilling to let go of consideration it having proved so useful in the past in changing the reasons for enforcing a promise merely by manipulating the definition of consideration.

It could also be true to say that in the lack of affirmation of Wiliams v Roffey Bros, as redefining consideration as evidence of intent to create legal relations, as in Re: Selectmove and of refusing to redefine it as including reliance as in Combe v Combe, the courts are in fact not “setting out to create a doctrine of consideration” but are trying to emphasise there are now many many reasons for enforcing contracts and they need help from a higher authority such as Parliament to form a more coherent view of contract law as a whole.

BIBLIOGRAPHY:

Micheal Furmston, Cheshire, Fifoot and Furmston’s Law of Contract. London: Butterworths 2001. 14th Ed.

Ewan McKendrick, Contract Law, Hampshire, New York: Palgrave, 2000 4th Ed.

Guenter Treitel, The law of contract, London: Sweet & Maxwell, 1999. 10th Ed.

AWB Simpson, A History of the Common Law of Contract Oxford : Clarendon Press, 1975