Contract Law - Consideration SC

Consideration
(Adapted from Contract Law, Ewan McKendrick, 13th Edn; UOL Subject Guide)
Learning outcomes
• The basic definition of consideration.

• The significance of consideration to the English law of contract.
• The acts which the courts have recognised as sufficient to constitute good consideration.
• Situations where the performance of, or promise to perform, an existing obligation amount to
consideration for a fresh promise.
• The definition of ‘past consideration’ and its exceptions.
• The role of consideration in the modification of existing contracts.
• The essential elements of the doctrine of ‘promissory estoppel’.
• How the doctrine of promissory estoppel leads to the enforcement of some promises which are not
supported by consideration.
Introduction
The elements of a valid contract - The Eurymedon (1975), Lord Wilberforce
There must be an:

i. Offer
ii. Acceptance
iii. Consideration
iv. Intention to create a legal relationship
o As a general rule a promise can only be enforceable if it is supported by consideration (unless the
promise is contained in a Deed).
o The basis of the doctrine is the idea of reciprocity or bargain
o Thomas v Thomas – Patterson J – “something which is of value in the eyes of the law must be
given for a promise in order to enforce the contract”
o Doctrine of consideration requiring ‘mutuality’ in the agreement. Something being offered by each
side
o Consideration serves the function as ‘badge of enforceability” to certain contracts. It is the

principal way in which English courts decide whether an agreement that has resulted from the
exchange of offer and acceptance should be legally enforceable.
o It would be evidence of the parties intention.
Compiled and prepared by Ms. Sharon Page 1

General definition of Consideration
The orthodox interpretation = based on the idea of reciprocity
The Promisee should not be able to enforce a promise unless he has given or promised to give
something in exchange for the promise or the Promisor has been promised something in return.
Traditional definition Currie v Misa (1875) – Benefit / Detriment principle
Lush J – a valuable consideration in the sense of the law, may consist either in some
right, interest, profit or benefit accruing (or will accrue) to the one party or some
forbearance, detriment, loss or responsibility that has been given, suffered or undertaken by the
other.
Based around the concept of a ‘benefit’ to the person making the promise (the promisor), or a ‘detriment’
to the person to whom the promise is made (the promisee). Either is sufficient to make the promise
enforceable, though in many cases both will be present.
This benefit / detriment traditional approach although works fairly well and generally does represent the
law in most cases, has been subjected to much criticism and as such other definitions have been
proposed.
a. Prof Atiyah – a Good Reason to enforce a promise – a more Liberal approach
The courts never set out to create the doctrine of consideration
When the courts found a sufficient / good reason to enforce a promise then they enforce it and vice-
versa. If they found a reason that makes it undesirable to enforce a promise, then they don’t.
He says that Treitel has invented the concept of ‘invented consideration’ because this is the only way
he can reconcile many cases with his strict theory / rule
b. Prof Treitel – Body of Rules

English law does recognize the doctrine of consideration = a body of rules to be satisfied.
Rejects Atiyah’s view saying that that would mean a ‘negation of the existence of any applicable
rules of law’. This will make the law too vague
Atiyah’s view does not tell us the circumstances in which the courts will find the existence of such a
‘good reason”.

c. Executed and Executory Consideration
Executed - immediate exchange of consideration
Executory - consideration in the future. Wholly executory contracts - the contract is made by
exchange of promises and neither party has performed their obligations yet. Unperformed contracts.
The making of promises alone is capable of being consideration – Dunlop Pneumatic Tyres v
Selfridge (1915)
Thus the promise made by both sides can be enforced.

This however does not fit into the Benefit / Detriment definition.
The Various issues that can arise under Consideration:
Consideration must be Performance of Existing Obligations Past Consideration is Not

Sufficient but Need Not good consideration
be Adequate
Performance of Performance of an existing

an existing Duty Duty under Contract with
under Law SAME contracting party
Forbearance to sue
Performance of an existing
Duty under Contract with
a Third Party
Consideration must move

from the Promisee but need
not move to the Promisor Part Payment of Debt
& Promissory
Estoppel

The Scope of the Doctrine of Consideration
A. Consideration must be Sufficient, need not be adequate.
Something of value in the eyes of the law must be given by the Promisee. It need not be the
exact value of the item. It must have some economic value no matter how minimal.
No need for proportionality.
Adequate – it must match in value
a. Chappell v Nestle (1960), Lord Somervell

The Promisee provided chocolate wrappers as consideration at the request of the Promisor.
The courts held that the Promisee had provided sufficient consideration
“A contracting party can stipulate for what consideration he chooses. A peppercorn does not
cease to be good consideration if it is established that the promisee [Promisor] does not like
pepper and will throw away the corn."
The contracting parties can stipulate what consideration they want and the courts should not
interfere – Bad Bargains
Ø Anything can amount to consideration
Ø This related to freedom to contract.
b. White v Bluett
The Son made a promise to the Father not to bore him with complaints of how the Father
distributed his property in his will, in return for the Father’s promise not to sue the Son for the
debts that owed.
Held: the Son had not provided consideration to enforce the Fathers promise. The Son had no
right to complain to the Father. The Father had all the right to distribute his property whichever
way he wanted.
The consideration provided must have some economic value
c. Hamer v Sidway (1891) American case

The uncle promised to pay the nephew £5000 if the nephew stopped drinking liquor, using
tobacco, swearing, playing cards etc until he is 21 years of age
Held: Promise is enforceable. Here, the court found that it is sufficient that the nephew restricted
his lawful freedom of action within certain prescribed limits upon the faith of the Uncle’s promise.

d. Thomas v Thomas (1842)
o Mr Thomas, before he died said he wished for his wife to have the house they lived in for
the rest of her life. He did not put this down in his will.
o After he died, his PR, ‘in consideration of such promise’, agreed with Mrs Thomas that
she would pay a peppercorn rent of £1 per year in return for being allowed to live in the
house.
o They later tried to evict her.
Held: Patteson J - The £1 rent was recognized as good consideration. Consideration means
something of some value in the eye of the law, moving from the Promisee.
Without consideration the transaction was merely a voluntary gift. However, by agreeing to pay
rent in return for being allowed to stay in the property, Mrs Thomas had provided consideration,
even though it was not economically adequate or anything like a commercial rent for the building.
Therefore, the contract was enforceable.
e. Bret v JS
Natural love and affection is not consideration
f. Ward v Byham (1956)
Note: Performance of an Existing Duty under Law

B. Consideration must move from the Promisee and need not to the Promissor –
combined with Privity of Contract
Only those who supplied consideration or had paid the price for the promise, could sue on the
promise as only then could he prove that there was a bargain in existence.
The underlying assumption of English Law is that a contract is a bargain. If a person furnishes no
consideration, he takes no part in the bargain.
Currie v Misa - Benefit and Detriment principle where it is based around the concept of a ‘benefit’
to the person making the promise (the promisor), or a ‘detriment’ to the person to whom the
promise is made (the Promisee).
This is a situation where the Promisee has suffered a detriment but the Promisor who has made
the promise of payment has received no benefit from the act done. The benefit was enjoyed by a
Third Party. Can the Promisee still bring the action to sue for the promise of payment?
Tweddle v Atkinson
States the principle that in order to enforce a promise it must be proven that the Promisee has
provided consideration for that promise. The consideration must move from the Promisee but
need not necessarily move to the promisor.
Thus, so long as Promisee has provided the consideration (suffered the detriment), the promise
of payment would be enforceable even though the Promisor received no benefit.
Price v Easton
This would be in line with the doctrine of Privity of Contract.
Andy Barry
Promises to pay £500 to wash
all the windows in the
orphanage
Washes all
the windows
Orphanage

C. Performance of Existing Duty imposed by Law
The issue to be considered here is whether the promise to perform a duty already owed under the
general law – a public duty – is good consideration.
The Law: Performance of an existing duty imposed by law will Not amount to good
consideration.
The reason being:

§ Promisee is already under an obligation by law to do the job.
§ Public policy generally suggests that the law should not encourage the opportunities for
extortion that enforcing such a promise would create.
Eg: Policeman
Firemen
Coast guards
Lifeguards
Collins v Godefroy (1831)

A subpoenaed witness was promised some money if he attended the court hearing. He did
attend and asked for the payment.
Held: Cannot claim for the amount promised as he was under a duty to appear in court.
However, if the person has gone over and above / beyond what is required by the existing
obligation, then the promise of payment will be enforceable. This is where he has done MORE
than what he was obliged to do under law.
Glasbrook Bros v Glamorgan County Council [1925] HL
Facts:
During a strike, Defendant owners of a colliery asked the police to provide protection, in the form
of a body of officers on the premises.
Though the police only had the resources to make visiting patrols, they offered to provide the
protection as requested and provided the manpower in exchange for a financial contribution.
After the strike the police presented the colliery with a bill for the provided services.
The defendants refused to pay arguing that the police were under an existing public duty to
provide protection and keep the peace. The police sued.

Issue before the court was whether the police authority had provided fresh consideration for
Glasbrook Bros promise to pay.
Held: Even though the police were bound to provide protection against the possibility of violence
in a coal mine strike but the form it should take would be at their discretion. If they provided any
additional protection or they do go beyond their scope of duty, then that would be sufficient
consideration and they would be able to claim the additional amount promised.
In providing additional officers to that which was required, the police had gone beyond their
existing duty. They were therefore entitled to payment.
There is an obligation on the police to afford efficient protection, but if an individual asks for
special protection in a particular form, for the special protection so asked for in that particular
form, the individual must pay." Affirmed by a majority on the appeal (Bankes, L.J. and Scrutton,
L.J.; Atkin, L.J. dissenting). It appears to me that there is nothing in the first point made for the
colliery owners that there was no consideration for the promise. It is clear that there was
abundant consideration. The police authorities thought that it would be best to give protection by
means of a flying column of police, but the colliery owners wanted the "garrison" and promised to
pay for it if it was sent.
Harris v Sheffield United (1987) CA

In this case, the football club requested for external “services" from the police. There was a large
police presence in the football game. This was only possible by calling the off-duty policemen to
come in.
The Football Club should pay the police. Whether they should pay to the police depends on
where the activities were held, is in private place or public place? It also depends on when the
activities were held.
Note: Ward v Byham
Did the mother provide consideration to be able to enforce the father’s promise?
§ Lord Denning, performance of an existing legal obligation should be treated as good
consideration, ‘so long as there is nothing in the transaction which is contrary to the public
interest.’
§ The more orthodox view, by the majority was that the mother had done more than her legal
duty in relation to her care for her daughter (Glasbrook Bros Ltd v Glamorgan CC). The
implication is that if the mother had done simply what the law required her to do she would
not have provided good consideration.
The problem with this view is if the mother’s actions had any economic value.
A different approach would emphasise as consideration the mother’s preparedness to show
that the child was well looked after and happy.

This position at common law is now, in relation to police services, enshrined in statute. Section
25 of the Police Act 1996 distinguishes between performing their duty of doing what is
necessary to prevent crime for which they cannot charge and doing something else at the request
of an individual for which they can charge.
Section 25(1) of the Police Act 1996 provided that the chief officer of police of a police force 'may
provide, at the request of any person, special police services at any premises or in any locality
in the police area for which the force is maintained, subject to the payment…of charges….'.
In Leeds United FC v Chief Constable of West Yorkshire [2013], the Court of Appeal held that
the police were under a duty to prevent crime, maintain law and order and protect property.
This extended to providing protection in the vicinity of land owned by the club. Thus the provision
of police services in areas adjacent to the football ground which the club neither owned nor
controlled could not be charged for.
Doing what is necessary to Doing something at the

Prevent a Crime request of the Promissor
Cannot Enforce the Promise Can Enforce the Promise
Ipswich Town FC v Chief Constable of Suffolk Constabulary (EFL intervening) [2017]

D. Performance of an Existing Duty under a Contract with a Third Party
The issue to be considered here is whether the promise to perform a pre-existing contractual duty
owed to a third party is good consideration to enforce a new Promise.
Performance of an existing contractual duty owed to a Third Party has been clearly
recognized as good consideration.
University Sam
Contracts with Sam to teach in the University
Parent Sam
Promises to pay £200 if Sam
turns up every day to teach
Scotson v Pegg (1861)
Shadwell v Shadwell (1806)
C Ellen Nichol
Was engaged to
Got a letter from Uncle with a promise to

pay £150 a year after he was married
C sued the Uncle for the promise
Held: He was entitled to claim as he had provided consideration – though he was contractually
bound to marry Ellen and he had done so. Performance of an existing contractual duty owed to
Third Party is recognized as a good consideration.
This principle was affirmed in the case of The Eurymedon (1975) PC
A promise to perform as opposed to actually performing is also good consideration - Pao On v

Lau Yiu Long (1980)
Treitel – this looks like examples of ‘invented consideration.”

Modification of the Contract
This is where there is a Variation made to the obligations under an existing contract between the
contracting parties.
Positive Modification Negative Modification
E. Performance of An Existing Duty Under Contract with same contracting

party – Positive Modification
This is a situation where the Promisor makes a promise to pay more (an additional amount) for doing
what the Promisee is already supposed to do under an existing contract.
The Promisee was merely doing what he was bound to do under an existing contract.
The Law: Performance of an Existing Duty under Contract would Not amount to
sufficient consideration to enforce a new promise for extra payments.
Pam Sam (contractor)

Contract to build a pool for £20,000
3 months later
Pam Sam (contractor)

Pam Agrees to pay £2,000 extra to finish building the pool
Can Sam claim the additional £2,000 for completing work that he was already supposed to do under an
existing contract?

Stilk v Myrick (1809)
- Stilk was a seaman. He had agreed to sail to Baltic and back

- Defendant agreed to pay £5 per month
- Originally there were 11 men
- 2 men deserted the ship during the voyage
- The master could not find a replacement and told the rest that he will share the 2 men’s wages with
the rest if they sailed the ship back to London.
- The crew agreed
- Upon return the Master refused to pay the additional amount
- Stilk sued.
Held: The claim failed. Performance of an existing contractual obligation could never be good
consideration for a fresh promise, to pay more, from the person to whom the obligation was owed.
The Espinasse Report – it is contrary to Policy to allow these promises to be enforced. This can lead to
Economic Duress / Pressure. The promisee can make unreasonable and extortionate demands
The Campbell Report – cannot enforce due to the lack of consideration. There was an existing duty for
the entire duration taking into account of emergencies.
This was quite controversial.
Hartley v Ponsonby (1857)

- 17 men out of a crew of 36 abandoned ship
- Out of the remaining crewmen, only 4 or 5 of them we able seamen.
- The voyage became very perilous / dangerous / unsafe to continue
- The Master of the ship promised additional wages to continue the voyage
Held: The Master had to pay the additional wages promised as they had gone over and beyond their
existing duty. They had provided consideration.
Lord Campbell CJ felt that this change in circumstance had freed Hartley from the original obligations.
The voyage had become dangerous to life in view of the fact that it was severely shorthanded. In light of
these significant and material changes, the men were free and at liberty thus to enter into a fresh bargain,
and hence had provided consideration for the extra wages
Hanson v Royden (1867)

The Claimant was promoted from able seaman to Second Mate
Held: There was consideration as he was doing the work of Second Mate. He had done more than what
was contractually bound to do

William v Roffey Brothers (1991) CA = Practical Benefit
Facts:
• Defendants were Main Contractors
• They had a contract to refurbish a block of flats
• Defendant sub-contracted carpentry works to the Claimant for £20,000
• The Claimant had made a bad bargain and the defendant had acknowledged that the price was
unreasonably low.
• Claimant ran into financial difficulty after doing part of the work due to:
- Failure to manage his workforce
- Undercoating the price for the work
• It was important to the Defendant that the work be completed on time – if they did not, they would be
liable to their employers under a Penalty Clause for late delivery
• Defendant called for a meeting with the Claimants to discuss the situation
• Defendant then agreed to pay more - £575 per flat
• Claimant finished 8 more flats and the Defendant did not pay as promised.
• Claimant sued for the extra payment
• Defendant argued that the Claimant did not provide consideration for the promise of the additional
amount – they were just performing ab existing duty that they were already contractually bound to do.
• Using Stilk v Myrick, they are not bound to pay
Held: Glidewell LJ, Russell and Purchas LJJ CA took a very pragmatic approach. The Claimant could
claim for the additional payment.
The Court came to this conclusion by giving consideration a wider meaning than had previously been
thought appropriate.
The court while stressing that Stilk v Myrick remains good law in the sense that a purely gratuitous
promise remains unenforceable, nonetheless held that the promisee had provided consideration as the
promisor had received Practical Benefits even though strictly, the promisees were only performing their
existing contractual duty.
He pointed to the ‘Practical Benefits’ that would be likely to accrue to the defendants from their promise
of the additional money. Since the Defendant is getting Practical Benefit, thus the Claimants have
provided consideration.
He was perhaps echoing Lord Blackburn’s view in Foakes v Beer where sometimes there is a practical
benefit derived from a promise.

The Practical Benefit would be:
o Ensuring that the Plaintiffs continued work and did not leave the contract uncompleted
o Avoiding a penalty clause which the defendants would have had to pay under their contract with
the owners of the block of flats if there was late delivery
o Defendant avoiding the trouble and expense of finding other carpenters to complete the work.
o A more formalised method of payment was set up –payment per flat as it was completed
o By asking the Claimants to finish one flat at a time, this would mean that the other traders could
do their work on the completed flats. This is a more efficient way of working, as then their work
will not be held up.
“(i) If A has entered into a contract with B to do work for, or supply goods or services to B in return for
payment by B and (ii) at some stage before A has completely performed his obligation under the contract
B has reason to doubt whether A will, or will be able to complete his side of the bargain and (iii) B
thereupon promises A an additional payment in return for A’s promise to perform his contractual
obligations on time and (iv) as a result of giving his promise B obtains in practice a benefit, or obviates a
disbenefit and (v) B’s promise is not given as a result of economic duress or fraud on the part of A, then
(vi) the benefit to B is capable of being consideration for B’s promise, so that the promise is legally
binding”
Glidewell LJ summarizes the circumstances where, in his view, the ‘practical benefit’ approach will apply
in six points, which relate very closely to the factual situation before the court and emphasize the need for
the absence of economic duress or fraud.
The application of Williams v Roffey was held to apply when:
1. There was a contract for the supply of goods or services between A and B (thus it does not cover
Part Payment of Debt situations}
2. A was unable to perform as promised (which can include economic reasons).
3. B agreed to pay more for the performance of the contract
4. B obtained a practical benefit from that promise.
5. There was no fraud or duress by A to obtain that promise.
6. If the above are satisfied then consideration is found for the promise made by B
In the absence of Economic Duress, the Defendant had received Practical Benefit as a result of the
Claimant’s promise to complete the work on time.
This decision has been well received – it is a pragmatic decision giving effect to the parties intentions and
reflects the realities of the situation / life.
Today PB will be applicable as consideration unless there is Economic Duress.

Promise extra payments + Practical Benefit = Consideration [Promise for the extra amount is
Enforceable]
Promise extra payments + Practical Benefit + Economic Duress = No Consideration [Promise

for the extra amount is NOT Enforceable
Re Selectmove (1995) – has put this case on firmer grounds.
This case also raises some controversial points – the duty to keep a contract under common law means a
prediction that you must pay damages if you don’t keep it and nothing else. Here the courts are allowing
people to dishonour their original contracts
Note: How would this principle affect the decision of Stilk v Myrick if it was decided today?
Economic Duress
Pao on v Lau Yiu Long [1979] Privy Council
The Sibeon & The Sibotre [1976]
The Universe Sentinel [1983] HL
Atlas Express v Kafco - the relevance of the absence of protest
The Atlantic Baron [1979] – lack of any other practical choices

F. Part Payment of Debt - Negative Modification
An agreement to take a lesser sum than what was supposed to receive.
An ongoing contract is varied / modified so that one party’s obligation to pay money is reduced. This
variation is binding so long as there is consideration provided.
General Rule: Payment of a smaller sum on the due date is not satisfaction for the debt of the larger
amount
If the Creditor agrees to take a smaller sum and promises not to sue for the remainder, this promise that
he gives (not to sue for the remainder) must be supported with consideration (other than the payment of
the money which he already owes). If consideration is not provided, then he can come back and sue for
the remainder money owning.
A B
Supposed to pay a debt of £10,000 to
(A owing B the money)
B A
Agrees that he will accept a reduced amount of £8,000
(B promises not to sue for the remainder)
A pays the £8,000
Later B comes back and sues A for the remainder £2,000
Can A hold B to his promise not to sue for the remainder?
The payment of the lesser sum will not be consideration for the Promise not to sue as he was merely
performing his existing duty to pay off the debt.
• Pinnel’s Case (1602) and reaffirmed in

• Foakes v Beer (1884) HL

Pinnel’s Case (1602)
Pinnel sued Cole, in an action of debt upon a bond, for the sum of £8 10s. The defendant, Cole, argued
he had, at Pinnel's request, tendered £5 2s 6d one month before the debt was due, and the plaintiff had
accepted in full satisfaction for the debt.
Held:
Lord Coke - ‘Payment of a lesser sum on the day in satisfaction of a greater sum, cannot be any
satisfaction of the whole… but the gift of a horse, hawk, or robe etc. in satisfaction is good. For it shall be
intended that a hawk, horse, or robe, etc. might be more beneficial to the plaintiff than the money’
However since the lesser sum was paid at an earlier date at the request of the Promissor, thus there was
good consideration.
Foakes v Beer (1884) HL

Facts:
- Appellant, Foakes owed the respondent, Beer, a sum of £2,090 19s after a court judgment
- Beer agreed that she would not take any action against Foakes for the amount owed if he would
sign an agreement promising to pay an initial sum of £500 and pay £150 twice yearly until the
whole amount was paid back.
- Foakes was in financial difficulty and, with the help of his solicitor, drew up an agreement for Beer
to waive any interest on the amount owed and she signed it. Foakes paid back the principal but
not the interest.
- Beer then sued Foakes for the interest.
The question was whether she was entitled to it, despite their agreement that he would not need to
pay it.
Held: She was entitled to sue for the interest owing. The respondent’s promise not to enforce the
judgment was not binding as Dr. Foakes had not provided any consideration.
Payment of less than is due on or after the date for payment will never provide consideration for a
promise to forgo the balance.
The case of has been subjected to much criticism.
Lord Blackburn – “All men of business, whether merchants or tradesmen, do every day recognise and
act on the ground that prompt payment of a part of their demand may be more beneficial to them than it
would be to insist on their rights and enforce payment of the whole.”
Corbin – “A bird in hand is worth much more than 2 in the bush”.
This rule is also looked as an infringement on the principle of adequacy of consideration – which is one of
the cardinal rules of consideration.
Despite the above, it is not accepted that such ‘practical’ benefit is, in the eyes of the law, consideration
which will make a promise enforceable at law.
As Dankwerts LJ said in D & C Builders v Rees [1966] ‘[It is] settled definitely [that] the rule of law that
payment of a lesser sum than the amount of a debt cannot be a satisfaction of a debt, unless there is
some benefit to the creditor which amounts to accord and satisfaction.’

Exception to this rule:
- Payment at an earlier date
- Payment at a different place as requested by the creditor
- Payment by a Third Party – Hirachand Punamchand v Temple

The Father paid the Son’s debt. The creditor accepted the Fathers terms and it had the effect of
extinguishing the Son’s debt.
The Creditors were not allowed to sue for the balance owing as it would then mean that the
Creditors had committed fraud on the Father.
- A gift of a horse, a hawk or a robe
If any of the above is present, then cannot sue for the remainder owing.
Can the principle of Practical Benefit (as consideration) be used in Part Payment of Debt?
The application of Williams v Roffey
Should Foakes v Beer be looked at slightly differently with the principle of Practical Benefit?
Since the Creditor received some benefit from the fact that the Debtor gave part of the amount owing,
thus it can be concluded that the Debtor has given consideration to enforce the Creditors promise not to
sue for the remaining amount.
Ø Re Selectmove (1995) – Practical Benefit Cannot be used for Part Payment of Debt
Regardless of all the criticism of the rule in Foakes v Beer, this case did not extend the Practical
Benefit principle to Part Payment of Debt.
Peter Gibson LJ – “When a Creditor and Debtor who are at arm’s length reach an agreement on
the payment of debt by instalments to accommodate the debtor, the creditor will no doubt always
see a practical benefit to himself in so doing. In the absence of authority, there would be much to
be said for the enforceability of such contracts. But the matter was expressly considered in
Foakes v Beer, yet held not to constitute good consideration in law. Foakes v Beer was not
even referred to in William v Roffey Brothers to any circumstances governed by the principle of
Foakes v Beer.
Court may have been reluctant to embark on a general relaxation of the rule as to part payment
of debts because it is a situation where the debtor may often be able to put the creditor under
pressure to accept such an arrangement, and such pressure may go beyond what the courts feel
is acceptable.
If the extension is to be made, it must be by the House of Lords (not the Court of Appeal) or
perhaps more appropriately by Parliament after consideration by the Law Commission”.

Ø MWB Business Exchange Ltd v Rock Advertising Ltd
MWB Business Exchange Ltd v Rock Advertising Ltd [2016] CA held that a property
cMWB
owner was bound by an oral agreement with the occupier who had failed to make
Busine
payments as provided by the parties’ original written agreement to accept a late payment
ss
Excha and a revised schedule of further payments.
nge
Ltd v It was said that the subsequent agreement conferred Practical Benefits upon the land
Rock owner who recovered some of the arrears immediately and benefitted because the
Advert premises would not now be left empty for a period.
ising
Ltd The case may therefore be characterised as one where a contractor promises to do less,
[2016]
because the agreement to accept deferred payment is functionally equivalent to an
EWCA
agreement to accept a lesser sum on the date originally specified.
Civ
553
the If MWB can be read in this way, then henceforth a promise to do less than that which was
Court originally undertaken can constitute good consideration if that promise confers a practical
of benefit upon the other party.
Appeal
held
that a
proper MWB Business Exchange v Rock Advertising (2018) SC – Supreme Court did not
cty
MWB deal with the issue of consideration as they held that the Oral Agreement to modify the
Busine
owner contract was not recognized.
was ss
Excha
bound
byngean
oral
Ltd v Unfortunately, the Supreme Court did not take the opportunity to review the changes to
Rock
agree the doctrine of consideration made by the Court of Appeal in Williams v Roffey
Advert
ment Brothers holding instead that the purported modification was ineffective because of a
ising
with provision (Clause 7.6) in the contract to the effect that the written contract could not be
theLtd
varied orally (called a ‘NOM’ – no oral modification clause).
[2016]
occupi
erEWCA
who This conclusion made it unnecessary to discuss whether the modification was supported
hadCiv
by valid consideration as any such discussion would be obiter dicta.
553
failed
the
to
Lord Sumption said the consideration issue was ‘difficult’ and important and so should be
Court
make
reserved for an enlarged panel of Justices when it formed the ratio decidendi of a case.
payme of
Appeal
nts as
held
provid
ed
that by a
proper
the
partiesty
Although in MWB the Court of Appeal appeared to expand the area of application of the ‘practical
owner
’
benefit’ approach of Williams v Roffey, the latter decision has attracted some criticism elsewhere. In
origina
was
South bound
Caribbean Trading Ltd (‘SCT’) v Trafigura Beeher BV (2004) Colman J doubted the
l
correctness
by an
writte of the decision in Williams v Roffey. In particular, Colman J noted that the decision was
inconsistent
oral
n with the long-standing rule that consideration must move from the promisee.
agree
agree
ment
ment
with
to
accept
Compiled the and prepared by Ms. Sharon Page 19
aoccupi
late
er who
payme
nt had
and
failed
a
So Today – Practical Benefit as Consideration
Practical Benefit as consideration

Practical Benefit as
when there is a payment of a
consideration when there is a
promise to pay a Higher amount Lesser amount and a promise not
to sue for the remainder
for performance of Existing Duty
Valid Consideration Not Valid Consideration
Discuss the Court of Appeal in
Re Selectmove (1995) MWB Business

Exchange Ltd v Rock
Advertising Ltd [2016]
CA
MWB Business Exchange v Rock

Advertising (2018) SC

Promissory Estoppel
This is a principle under Equity
A. The rule
B. The requirements
C. The consequences
A. The Rule
This doctrine was given a breath of new life by Denning J (as he then was) when his Lordship in
Central London Property Trust Ltd v High Trees House Ltd, (1947) CA utilized the judgment of
Lord Cairns in Hughes v Metropolitan Railway Co. (1877)
Lord Cairns explains:
“It is the first principle upon which all Courts of Equity proceed, that if parties who have entered into
definite and distinct terms involving certain legal results ... afterwards by their own act or with their
own consent enter upon a course of negotiation which has the effect of leading one of the parties to
suppose that the strict rights arising under the contract will not be enforced or be kept in suspense,
or held in abeyance, the person who otherwise might have enforced those rights will not be allowed
to enforce them where it would be inequitable having regard to the dealings which have thus taken
place between the parties".
“Where by words or conduct, a person makes an unambiguous representation as to his

future conduct, intending the representation to be relied on and to affect the legal
relations between the parties, and the representee alters his position in reliance of it,
the representor will be unable to act inconsistently with the representation if by so
doing the representee would be prejudiced”
High Trees Case
Facts:
- The Plaintiffs, Central London Property let a block of flats in London to the High Trees (the
defendants) on a 99-year lease at an annual rent of £2,500.
- In 1940 the defendants discovered that as a result of the outbreak of war and the evacuation of
people from London they were unable to let many of the flats.
- CLP agreed to reduce the rent to £1250.
- The promise to accept the reduced rent was unsupported by consideration.

- At the end of the war, in 1945 the property market had returned to normal and the flats were fully
let.
- CLP demanded that that the defendants resumed payments of the entire rent from 1945 but the
defendants refused to pay.
Held: Denning J, the agreement in 1940 was intended to be temporary and ceased to operate in 1945.
Therefore the plaintiffs were entitled to the full £2,500 from 1945 onwards.
The landmark judgment of this case lies in his Lordship's opinion that had the plaintiffs claimed for the
reduced rent during the period of 1940 to 1945, the promisor would be estopped from going back on his
words even though the promisee had not provided consideration to enforce the promise.
This was seen applicable in Tool Metal v Tungsten Electric (1955) HL
A B
Supposed to pay rental of £2,500 under a contract (lease)
B A
Promises A that he will accept a reduced amount of £1,250
(agrees not to exercise his legal rights)
If B insists on the full rental, and A wants to hold him to his promise:
Ø Under Common Law, A should have provided consideration to enforce this promise
Ø Under Equity. A can rely on PE as a defence and B will be estopped from asserting his strict legal
rights

B. The requirements
It is essential to lay down the conditions or aspects of this doctrine that must be satisfied prior to the
courts invoking promissory estoppel.
1. There must be a clear and unequivocal promise or representation that the existing legal rights will
not be fully enforced.
This representation can also be implied as in Hughes.
Kim v Chasewood Park Residents (2013) – rational for the rule that the promise must be clear
and unambiguous was to ensure that one party does not too easily ‘lose’ his contractual
entitlement.
Closegate Hotel Development (Durham) Ltd v McLean (2013) – where the words said to give
rise to the Estoppel are ambiguous and capable of being interpreted in a way which would not
support the estoppel, then the words could not be said to found an estoppel unless the
representee sought and obtained clarification of the statement
2. There must have been reliance on the part of the promisee on the promise of the promisor. This
requirement means that the promise must have in some way influenced the conduct of the party
to whom it was made.
• WJ Alan & Co. v EI.Nasr Export & Import (1972)

• Brikom Imvestments v Carr (1979).
There is however some cases, which require for the existence of detrimental reliance before this
doctrine can be invoked successfully.
The promisee must show that if the promise were revoked, his position would be worse than had
the promise not been made.
The Post Chaser (1982), Robert Goff J who said that the basis of the doctrine was that the
representor would not be allowed to enforce his rights where it would be inequitable to do so. To
establish such an inequity, there is no need to establish detriment although if he has acted to his
detriment it would be easier to establish the inequity.
3. Must be inequitable for the Promissor to go back on his word / promise

The judge is not obliged to apply Promissory Estoppel automatically the moment there is a
promise which modifies the existing contract which has been relied upon.
The courts have a discretion to decide if it is fair to allow the promise to be enforced.
Post Chaser (1982) – the promise was withdrawn so quickly that the other side had suffered no
disadvantage from their reliance on it. Thus it was not inequitable to allow the promissor to
escape from the promise.

4. The obligations would normally arise in the context of a contractual relationship, but this is not
essential as held in Durham Fancy Goods v Michael Jackson Fancy Goods (1968).
Evenden v Guildford (1975) Lord Denning – PE could apply in a situation where there
appeared to be no existing legal relationship at all between the parties.
5. This doctrine can only be used a shield and not as a sword. It can only be used as a defence but
never to- institute a course of action where none existed. It only prevents the enforcement of
existing rights and does not create entirely new rights. It cannot be used to force a party to
comply with the promise but it can be used to prevent the party from ignoring the promise that
they had made.
• Combe v Combe (1951),
This requirement is necessary because it would be wrong to extend this doctrine to the extent of
abolishing the requirement of consideration to enforce a contract in a backhanded way.
Lord Denning – “Consideration remains a cardinal necessity of the formation of a contract,

though not of its modification or discharge”.
6. The promisee must not have acted inequitably in order to rely on the doctrine. He who comes to
equity must come with clean hands.
Lord Denning MR put this requirement forth in D&C Builders v Rees (1966).
On the facts of this case Mrs. Rees could not rely on promissory estoppel as she had extorted the
promise from the builders and had not acted in a conscionable manner when she obtained the
promise from the builders to accept lesser payment in settlement.

C. The consequences
What is the effect of promissory estoppel?
a. Suspensory
If it is suspensory, this would mean that upon reasonable notice, the promisor can insist upon his
strict legal rights; as such it would only afford the promisee with the ability to have some time to
perform his obligation and whilst it is of very little effect in the ultimatum; this approach is entirely
consistent with the principle in Foakes v Beer (1884).
Tool Metal Manufacturing Co. Ltd v Tungsten Electric Co. Ltd (1955) HL, it was confirmed
that the general effect of promissory estoppel is only suspensory and the promisor thus can
enforce his strict legal rights upon furnishing the other with reasonable notice of his intention to do
so.
This case and that of High Trees concern individual periodic payments of a continuing'
obligation. In both cases it was held that once notice is given, the rights which-has been put to
cold storage or suspended, can now be activated, and is now as to the future obligations.
Hughes v Metropolitan Railway (1877)
b. Extinctive
Ajayi v Briscoe (1964) Lord Hodson, ‘the promise only becomes final and irrevoccable if the
promisee cannot resume his position’.
With regards to a single debt - D & C Builders v Bees (1966), Lord Denning MR was prepared
to hold obiter that promissory estoppel can have an extinctive effect. “Where there has been a
true accord, under which the creditor voluntarily agrees to accept a lesser sum in
satisfaction and the debtor acts upon it, then it is inequitable for the creditor afterwards to
insist on the balance."
Suggestion of Arden LJ in Collier v P & MJ Wright (Holdings) Ltd (2007), based upon the obiter
dictum of Denning J, that promissory estoppel has the effect of extinguishing the creditor’s right to
the balance of a debt when he has accepted a part payment of the debt.
Note the case: Evans v Amicus Healthcare Ltd. & Others [2003]

G. Past Consideration
General Rule Exceptions
Will NOT amount to good consideration Pao On v Lau Yiu Long
Re McArdle Re Casey’s Patent
Roscola v Thomas
The act was done at the

The act was one where The promise
request of the Promissor
payment was reasonably was legally
- Lampleigh v
contemplated by both the enforceable
Braithwaite (1615)
parties – Re Casey’s Patent
General Rule
The General Rule states that the Promise for the payment must be made first and then the consideration
must be provided. Thus the consideration must be given AFTER the promise for payment is made.
If the work is done and completed first, and then the promise of payment is made, the promise cannot be
enforced.
The Rule of Consideration:
Promise Consideration / Act
The Law: “Past Consideration is Not Good Consideration”.

Re McArdle (1951)
The plaintiff had carried out work refurbishing a house in which his brothers and sister had a beneficial
interest. He then asked them to contribute towards the costs, which they agreed to do.
It was held that this agreement was unenforceable, because the promise to pay was unsupported by
consideration. The only consideration that the plaintiff could point to was his work on the house, but this
had been completed before any promise of payment was made. It was therefore ‘past consideration’ and
so not consideration at all.
Roscorla v Thomas
A guarantee / promise was made about the soundness of a horse after the sale. This guarantee is not
enforceable as it is past consideration. There was no consideration given for the promise / guarantee.
Exception
However, there is an exception to this rule where a promise made after the acts constituting the
consideration will be enforceable. Past consideration will be good consideration.
This was considered in Pao On v Lau Yiu Long (1979) where Lord Scarman laid down three conditions
which must be satisfied if the exception is to operate.
1. The act constituting the consideration must have been done at the promisor’s request –
Lampleigh v Braithwaite (1615).

The Defendant wanted the Claimant to travel to Nowark to get a pardon for him. He then
promised to pay him £1000. He later refused to pay.
Held: the Claimant can claim the amount promised as the Defendant had requested him to do the
act.
2. It must be reasonably contemplated / understood by both parties that payment was expected. It
was clearly anticipated at the time the service was rendered. The parties must have understood
that the work was to be paid for in some way, either by money or some other benefit - Re
Casey’s Patents (1892).
3. The promise would be legally enforceable had it been made prior to the acts constituting the
consideration.
Note the principles of ITCLR

H. Forbearance to Sue / A promise not to enforce a legal claim
A promise not to pursue a suit/action / not to enforce a valid claim in return for a promise of a
payment, will the undertaking to give up a claim / action amount to good consideration?
A promise not to enforce a Valid Claim is a good consideration.
However giving up a claim that is known to be invalid is not good consideration - Wade v Simeon
(1846).
If the claim is actually bad / invalid but the claimant honestly believes in good faith to be well
founded is good consideration - Cook v Wright (1861).
Cook v Wright (1861)

- Claimant honestly believed that the Defendant were under a statutory duty to reimburse them
with regards to certain expenditure they had incurred in work done on a street adjoining the
house where the Defendant resided
- Defendant denied that they were under an obligation to pay
- He later agreed to pay a reduced sum when he was threatened with litigation if he did not pay
- The litigation was not commenced when he made the promise
- He later discovered that he was under no such statutory obligation to pay.
- So he refused to honor his promise
- Said that the Claimant did not give any consideration in return for his promise
Held: Claimant had provided good consideration. The claimant’s honest belief in the validity of the
claim was sufficient consideration.
Note the problem with this ruling:
Callisher v Bischoffsheim
Simantob v Shavleyan [2019] EWCA applied Cook v Wright

Intention To Create Legal Relationship
The presumption is that there is no intention to create legal relation in a domestic agreement as per
Balfour v Balfour. Jones v Padavatton which involved a pair of mother and daughter, it would be
presumed that neither the mother nor the daughter would want the agreement to be enforceable by law.
Daughter would not be able to claim the £500 promised by her mother.
However, this presumption is a rebuttable one as in Merritt v Merritt.

It could be argued that the parties here have the ITCLR as Rose is running a business and Grace comes
in to help in the business. Thus it could be said that both parties would consider this a business
transaction and therefore legally enforceable.
Blue v Ashley [2017] EWHC 1928, 26 July 2017
MacInnes v Gross [2017] EWHC 46 (QB)

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Consideration

• The basic definition of consideration.

The elements of a valid contract - The Eurymedon (1975), Lord Wilberforce

There must be an:

o The basis of the doctrine is the idea of reciprocity or bargain

o Consideration serves the function as ‘badge of enforceability” to certain contracts. It is the

o It would be evidence of the parties intention.

Compiled and prepared by Ms. Sharon Page 1

Traditional definition Currie v Misa (1875) – Benefit / Detriment principle

a. Prof Atiyah – a Good Reason to enforce a promise – a more Liberal approach

The courts never set out to create the doctrine of consideration

b. Prof Treitel – Body of Rules

Compiled and prepared by Ms. Sharon Page 2

Executed - immediate exchange of consideration

Thus the promise made by both sides can be enforced.

The Various issues that can arise under Consideration:

Consideration must be Performance of Existing Obligations Past Consideration is Not

Performance of Performance of an existing

Consideration must move

Compiled and prepared by Ms. Sharon Page 3

A. Consideration must be Sufficient, need not be adequate.

Adequate – it must match in value

a. Chappell v Nestle (1960), Lord Somervell

The consideration provided must have some economic value

c. Hamer v Sidway (1891) American case

Compiled and prepared by Ms. Sharon Page 4

Therefore, the contract was enforceable.

f. Ward v Byham (1956)

Note: Performance of an Existing Duty under Law

Compiled and prepared by Ms. Sharon Page 5

This would be in line with the doctrine of Privity of Contract.

Compiled and prepared by Ms. Sharon Page 6

The reason being:

Collins v Godefroy (1831)

Glasbrook Bros v Glamorgan County Council [1925] HL

Compiled and prepared by Ms. Sharon Page 7

Harris v Sheffield United (1987) CA

Note: Ward v Byham

Compiled and prepared by Ms. Sharon Page 8

Doing what is necessary to Doing something at the

Cannot Enforce the Promise Can Enforce the Promise

Ipswich Town FC v Chief Constable of Suffolk Constabulary (EFL intervening) [2017]

Compiled and prepared by Ms. Sharon Page 9

Scotson v Pegg (1861)

Shadwell v Shadwell (1806)

Got a letter from Uncle with a promise to

C sued the Uncle for the promise

This principle was affirmed in the case of The Eurymedon (1975) PC

A promise to perform as opposed to actually performing is also good consideration - Pao On v

Treitel – this looks like examples of ‘invented consideration.”

Compiled and prepared by Ms. Sharon Page 10

Positive Modification Negative Modification

E. Performance of An Existing Duty Under Contract with same contracting

Pam Sam (contractor)

Pam Sam (contractor)

Compiled and prepared by Ms. Sharon Page 11

- Stilk was a seaman. He had agreed to sail to Baltic and back

Hartley v Ponsonby (1857)

Hanson v Royden (1867)