Legal :: Consideration in UK Contract Law

A distinction is often drawn between executed consideration, and executory consideration.

Executory consideration exists where the parties exchange promises. Whereas, executed
consideration exists when the promisor asks for something in exchange for his promise. The
promisee then provides consideration by providing to the promisor what he has requested.
Lastly, if an individual is under a public duty to perform a certain task, then the promise to carry out
performance will not be valid consideration. An exception to this rule is if the individual exceeds
their public duty then this may be valid consideration. The case of Glassbrook Bros v Glamorgan
County Council [1925] illustrated this principle. In this case, the police provided protection during a
miner's strike, although they disputed the required amount of protection, they provided the
requested amount. After the strike concluded, the police issued an invoice to provide for the
increased amount of policing protection that they allocated to the strike. The invoice was refused on
the grounds that the police had an existing duty. In a 3:2 decisions the Court ruled that the police
had acted beyond their public duty, and so the invoice was enforceable.

The general rule in English law is that a promise will not be legally binding unless made in a deed,
or supported by some form of consideration. If no deed is present, then for a contract to be held as
legally binding both parties must provide consideration. The definition of consideration was
considered and defined by Lord Dunedin in Dunlop v Selfridge Ltd [1915] AC 847, as follows: "An act
or 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." Often, in commercial disputes the
existence of consideration is a key factor in establishing whether a valid contract exists.
Secondly, consideration must move from the promisee. However, this does not mean it must move to
the promisee. The common example of this as an everyday occurrence is when goods/services are
paid for by the use of a cheque. In this scenario, the issuer of the cheque makes a promise to the
supplier of the goods/services that the cheque will be honored, and the supplier provides
consideration for this promise by supplying the goods/services to the customer.
Another important principle of consideration in contract law is that the consideration must be
sufficient but need not be adequate. An important case precedence on this principle was set in
Chappell & Co. Ltd v Nestle. Co Ltd (1960). In this case, the chocolate manufacturer Nestle held a
promotional offer that members of the public would receive a free music record by sending off three
wrappers of the Nestle brand to the company. The case itself involved a dispute of copyright, and the
determining factor was whether a valid contract existed between the claimant and defendant, with
the consideration in dispute. The Court in this case held that the wrappers formed part of the
consideration, it was irrelevant that they were of trivial economic value.
There are several key legal principles that govern consideration in UK contract law. Firstly, past
consideration is not valid consideration. When determining whether consideration is past, the Courts
are not bound to apply a strict chronological test.