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Content:

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1. Introduction --------------------------------------------------------- 2

2. Case References --------------------------------------------------------- 4

a. Chappell & Co Ltd v Nestle Co Ltd ------------ 5

b. Thomas v Thomas ----------------------------------- 6

c. White v Bluett ---------------------------------------- 7

d. Ward v Byham --------------------------------------- 8

e. Alliance Bank v Broom ------------------------------ 9

f. Williams v Roffey Bros ------------------------------ 10

g. Stilk v Myrick ---------------------------------------- 11

3. Example of a Valid Consideration in Bangladesh ----------------- 12

4. Conclusion --------------------------------------------------------------- 13

5. Citations --------------------------------------------------------------- 15

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Introduction

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Consideration:

Consideration is the value bargained for by the parties, and most decisions indicate there is

no reason to inquire into a party's motivation for giving another party an incredible deal. In a

famous legal quote, a single peppercorn was considered adequate consideration.

Having said that, consideration must meet other requirements. The consideration must be an

exchange for the bargain in question; past consideration is no good.

Adequacy:

It is presumed that each party is capable of serving their own interests, and the courts will

not seek to weigh up the comparative value of the promises or acts exchanged.

Sufficiency:

Consideration is sufficient if it has some identifiable value. The law only requires an element

of bargain, not necessarily that it should be a good bargain.

Consideration needs to be Sufficient and need not to be Adequate:

According to the law, consideration for a contract must be sufficient but it need not be

adequate.

First of all, in order to make a contract, there are four elements that is compulsory. These are

offer, acceptance, consideration and intention. Consideration is one of the important elements

that must be present with the purpose of making a contract binding. Consideration can be

defined as payment or money and it is also a fundamental element into a contract. The

principle of consideration is to ensure that promises are enforced to the parties that promised

to exchange something of value in the viewpoint of the law. Consideration is only present

when the parties mean to have an exchange.

However, consideration must be sufficient but need not be adequate. It means consideration

must be having some values, whether it appropriates in order to meet the return of the

agreement. The things that they agree to make an agreement are not just simply in oral

promises but also in exchange of some value of the exchange. They would probably not need

to have the same value or equal value of the exchange in an agreement but the law will take

it as a consideration as adequate if the parties are agreed to the exchange. The conditions of

a legally consideration is simply that the parties agree into an exchange and respect to each

other, the subjects exchanged or promised in exchange.

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Case References

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Chappell & Co Ltd v Nestle Co Ltd [1960]

Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87 is an important English contract law case,

where the House of Lords confirmed the traditional doctrine that consideration must be

sufficient but need not be adequate. In layman terms this means, to enforce a contract, the

person suing must have given value to the other but that the courts won't look at how much

value it has or whether it was a good deal at all.

Facts:

Chappell & Co. owned the copyright to ‘Rockin’ shoes’ (by The King Brothers). Nestle was

giving away records of it to people who sent in three wrappers from 6d chocolate bars, as

well as 1s 6d. The Copyright Act 1956 s 8 said a 6.25% royalty needed to be paid on the

‘ordinary retail selling price’ to the owners of copyrights. Nestle said 1s 6d was the ordinary

retail selling price, but Chappell & Co argued that it should be more and sought an injunction

for breach of CA 1956 s 8. In this way the question arose as to whether the wrappers were

consideration for the records. Upjohn granted an injunction. The Court of Appeal reversed the

decision and Chappell & Co appealed.

Issue:

Whether chocolate wrappers formed a part of consideration?

Judgment:

The majority of the House of Lords (Lord Reid, Lord Tucker and Lord Somervell) held that the

wrappers were part of the consideration, and so Nestle was in breach of the Copyright Act

1956, by failing to pay royalties reflecting the extra cost of the wrappers.

Reason:

1. Consideration need not be sufficient.

2. Nestle encouraged sales of sweets therefore the consideration was valuable to them.

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Thomas v Thomas [1842]

Facts:

John Thomas, shortly before dying, orally expressed a desire for his wife to have either the

house used as their residence and its contents or £100 in addition to the other provisions

made for her in his will. After his death the executors of his estate (Samuel Thomas, his

brother, and Benjamin Thomas) entered into an agreement with Eleanor (his wife) “in

consideration of John's desires” whereby Eleanor would take possession of the house and in

return maintain the house and pay £1/year for the "ground rent".

The respondent remained in the house for some time; however after the death of Samuel,

the appellant refused to complete the conveyance, claiming that consideration was lacking.

The lower court found for Eleanor and Benjamin appealed.

Issue:

1. Is respecting the wishes of her dead husband (motive) sufficient consideration?

2. Does the willing of the house constitute a voluntary gift and hence the respondent has

no rights?

Judgment:

Appeal dismissed, No, claim allowed.

Reasons:

1. In the court's findings Justice Patteson held that motive is not the same as

consideration; consideration must be something which is of value in the eyes of the

law.

2. The court found that the agreement entered into between the executors and Ms.

Thomas contained an agreement to pay £1 rent/year which showed this was not

merely a voluntary gift and was sufficient consideration.

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White v Bluett [1853]

White v Bluett (1853) is an English contract law case, concerning the scope of consideration

in English law.

Facts:

Mr Bluett had lent his son some money. Mr Bluett died. The executor of Mr Bluett's estate

was Mr White. He sued the son to pay back the money. In his defense, the son argued that

his father had said the son need not repay if the son would stop complaining about how Mr

Bluett would distribute his property in his will among the children.

Issue:

Could ‘not complaining’ constitute good consideration for the promise of not needing to repay

the debt?

Judgment:

Pollock CB held there was no consideration for any discharge of the obligation to repay. The

son had ‘no right to complain’ anyway. Not complaining was therefore an entirely intangible

benefit.

Reasoning:

Such consideration cannot be of value in the eyes of the law; there is no right to complain.

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Ward v Byham [1956]

Ward v Byham (1956) is an English contract law case, concerning the scope of consideration

in English law.

Fact:

An unmarried couple had a child together and lived together for five years. The father then

turned the mother out of the house and sent the child to live with a neighbour and the father

paid the neighbour £1 per week. The mother then got a job as a live in house keeper and

wished to have the daughter live with her. The father agreed to allow the daughter live with

the mother and agreed to pay her £1 per week provided she ensured the child was well looked

after and happy. The father made payments but then when the mother remarried he stopped

making payments. The mother brought an action to enforce the agreement. The father argued

that the Mother was under an existing legal duty to look after and maintain the child and

therefore was not providing any consideration for the promise to make payment.

Issue:

Had the mother provided consideration for the promise, bearing in mind she was under

statutory duties to do so?

Judgment:

Yes, claim succeeded

Reasoning:

Keeping the daughter happy went beyond the pre-existing duty, therefore although the pre-

existing duty was for the benefit of the father, it went over and above just that.

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Alliance Bank v Broom [1864]

A mere promise could sufficient consideration. Alliance Bank v Broom (1864) is the perfect

example of it.

Facts:

Broom owed an unsecured debt to the Bank. When the Bank asked for some security, the

defendant promised to provide some goods but never produced them. When the Bank tried

to enforce the agreement for the security, the defendant argued that the Bank had not

provided any consideration.

Issue

Could promising not to sue Broom constitute good consideration for his promise to provide

security for the debt?

Judgment:

Yes, claim allowed.

Reasoning:

Forbearance to sue can be valid consideration.

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Williams v Roffey Bros [1990]

Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] is a leading English contract

law case, which decided that in varying a contract, the court will be quick to find consideration,

if "factual benefits" are given from one to another party.

Fact:

Roffey Bros was contracted by Shepherds Bush Housing Association Ltd to refurbish 27 flats

at Twynholm Mansions, Lillie Road, London SW6. They subcontracted carpentry to Mr Lester

Williams for £20,000 payable in instalments. Some work was done and £16,200 was paid.

Then Williams ran into financial difficulty because the price was too low. Roffey Bros was going

to be liable under a penalty clause for late completion, so they had a meeting on 9 April 1986

and promised an extra £575 per flat for on time completion. Williams did eight flats and

stopped because he had only got £1,500. New carpenters were brought in. Williams claimed.

Mr Rupert Jackson QC held Williams should get the eight times £575 with a few deductions

for defects and some of the £2,200 owing from the original sum. He said that they had agreed

that the original price was too low, and that raising it to a reasonable level was in both sides’

interests.

Issue:

Had consideration been provided for Roffey’s Bros to pay extra, as according to Stilk v Myrick

[1809], there is no consideration in extra payment for performing an existing duty?

Judgment:

Yes, claim allowed.

Reasoning:

1. If there is no economic duress or fraud involved, consideration can be provided for the

promise to pay more for an existing duty if the promisor obtains a practical benefit for

paying more.

2. In this case, avoiding a penalty clause was a practical benefit for the promisor, Roffey

Bros.

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Stilk v Myrick [1809]

Stilk v Myrick [1809] EWHC KB J58 is an English contract law case of the High Court on the

subject of consideration. In his verdict, the judge, Lord Ellenborough decided that in cases

where an individual was bound to do a duty under an existing contract, that duty could not

be considered valid consideration for a new contract. It has been almost wholly reversed by

Williams v Roffey Bros & Nicholls (Contractors) Ltd, and replaced by the doctrine of economic

duress.

Facts:

Stilk was contracted to work on a ship owned by Myrick for £5 a month, promising to do

anything needed in the voyage regardless of emergencies. After the ship docked at cronstadt

two men deserted, and after failing to find replacements the captain promised the crew the

wages of those two men divided between them if they fulfilled the duties of the missing

crewmen as well as their own. After arriving at their home port the captain refused to pay the

crew the money he had promised to them.

Issue:

Was the sailing of the ship consideration for the captain’s promise of extra money?

Decision:

No claim

Reasoning:

The sailors were already obliged to sail the ship, therefore there was no consideration for the

extra money.

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Example of a Valid Consideration in Bangladesh …..

There is a famous transaction in Bangladesh the former Prime Minister Khaleda Zia acquired

a 1.5-bigha Gulshan house in 24th March 1982 which was traded to her for 1 taka by Lt Gen

Ershad. Which was a valid Transaction according to law.

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Conclusion

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In the end the statement ‘consideration must be sufficient but need not be adequate’ means

that consideration must be sufficient in law [however need not be adequate but sufficient].

There must the possibility of some value capable of expression in economic term to the

original promise but need not be adequate (far) as matter of commercial exchange. Thus, a

gratuitous promise or ‘agreement’ cannot enforceable as a contract. Natural love and

affection is also not sufficient consideration, likewise sentimental motive. Therefore, the

Court will not investigate its adequacy and see if the parties have got equal value. It can be

summarized that the limitation to this doctrine as merely doing something to entitle yourself

to a gift will not provide sufficient consideration, and nor will giving something you were not

entitle to give.

Although consideration must provide some benefit to the promisor or detriment to the

promisee, these do not however have a great deal. Providing something is given in return for

a promise, it does not matter that it is not much, or not what the promise would usually be

considered worth. Courts would not inquire into the adequacy of consideration so long as

there are some. The reason for this rule is due to the old idea of freedom of contract, which

required that the parties themselves should be allowed to make bargains that suit them

without interference from courts.

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Citations:

1. http://www.lawteacher.net

2. http://www.casebriefs.com

3. http://en.wikipedia.org

4. https://webstroke.co.uk/law/cases/

5. http://bdnews24.com/bangladesh/2009/04/08/khaleda-to-lose-cantt-home

6. http://dictionary.law.com

7. http://www.lawnix.com