(iii). Adam v.

Beth

Beth lost her Persian Cat and Adam who was the neighbour of Beth, had found her cat.
Beth promised to pay Adam RM200 as the reward for finding and returning her Persian Cat.
However, Beth regretted and refused to pay Adam the reward. This is considered as past
consideration where a promise is made subsequent to and in return for an act that has already been
accomplished. The promise is therefore made based on the consideration that has been past. In
other words, the act is performed prior to the promise.

Under English law, the general rule is that past consideration is insufficient to support a
contract and the contract is said to be invalid. By past consideration, it means that Adam’
consideration has already performed before Beth made her promise, thereby, Adam had not given
anything new in return for Beth’s promise. Hence, the contract between Adam and Beth was said
to be invalid. However, in Malaysia, under Contract Act 1950, a past consideration is accepted as
good consideration under Section 2(d) CA 1950 and Section 26(b) CA 1950. In Section 26 CA
1950, the general rule of the law claimed that a valid agreement must be supported by consideration.
A bargain without consideration is said to be void. According to Section 26 (b) CA 1950, the
agreement was reasonably valid when the promisor has made the promise to compensate for the
act has been done. In this case, Adam has already voluntarily found and returned the Persian Cat
to Beth. When Beth has promised to pay RM200 to Adam as a reward, there was an agreement to
compensate for past voluntary act of Adam. Therefore, Beth’s promise was legally binding to the
contract.

According to Section 2(d) CA 1950, it implied that even if the act performed is prior to
the promise, such an act would be recognized as valid consideration as long as it is done at the
desire of promisor. Although the performance was done by Adam prior to promise, the act of Adam
by returning Persian cat to Beth was a valid consideration for the promise. Thus, there was a valid
and enforceable contract between Adam and Beth and Beth was legally bound to the contract. Beth
was not entitled to terminate the contract by refusing to pay Adam. Adam has right to claim RM200
as a reward.
The bus conductor can actually sue Allan can get the RM500 according to Section 2 (a)
Contracts Act 1950 states that “when one person signifies to another his willingness to do
or to abstain from doing anything, with a view to obtaining the assent of that other to the
act or abstinence, he is said to make a proposal." The bus conductor is willingness to
contact Allan and return him the folder.

On the facts, Alice lost her folder and this was found by the bus conductor who returned it to her on his
own accord. This is the act already been done before a promise in return is given. Once the conductor
returned the folder, only then Alice promised to pay him RM500. This is the promise by Alice has done
after the bus conductor returned the folder to her. Therefore, it is an agreement which is without
consideration. An agreement made without consideration is void, but in this cases it is the exception
which is under S26 Contracts Act 1950. In S26 (b) Contracts Act 1950, it said an agreement made
without consideration is void unless it is a promise to compensate a person who has already voluntarily
done something for the promisor. According to S2 (d) Contracts Act 1950, S26 (b) Contracts Act 1950
and Illustration (c) to S26, this is a valid contract. On the fact, Alice get back her folder which containing
all her certificates. The bus conductor will get RM500 reward from Alice.This is a valid contract which we
called past consideration. So, Alice can't refuse to hand over the reward, and said there was no
agreement as there was no consideration to support her promise. If Alice refuses to hand over the
reward, the bus conductor can sue Alice for the breach of contract. Therefore, there is a valid contract
formed between Alice and the bus conductor.

lso, Under Section 26 (b) Contracts Act 1950 provides that agreement made without
consideration is void unless it is a promise to compensate a person who has already
voluntarily done something for the promisor. It is a promise to compensate, wholly or in
part, a person who has already voluntarily done something for the promisor, or something
which the promisor was legally compellable to do. Allan promised to reward the bus
conductor with RM 500.

https://www.lawteacher.net/free-law-essays/consideration-law/consideration-in-contract-
formation.php

It is illustrated in the case of Kepong Prospecting Ltd & Ors v Schmidt (1968), the court held that
the services prior to the company's formation could not amount to consideration as they could not
be rendered to a non-existent company, nor could the company bind itself to pay for services
claimed to have been rendered before its incorporation. Nevertheless, the inclusion of that
ineffective element did not prevent the other two elements. (Lee Mei Pheng, 2005)

The following case illustrates the application of the provisions relating to ‘past' consideration. In
South East Asia Insurance Bhd v Nasir Ibrahim (1992), it was an action of indemnity and the
Supreme Court held that the essence of consideration is that the promisee has taken upon itself
some kind of burden or detriment. In deciding whether the consideration is past, the Court should
not take a strictly chronological view. If the consideration and the promise are substantially one
transaction, it should not matter in what order they are given. In this case, where the appellant and
where the respondent executed the third party indemnity signed a performance bond, the Supreme
Court allowed the appellant's appeal and held that the third party indemnity was valid on the
ground of past consideration

https://walesvictoria.wordpress.com/2016/10/11/consideration-malaysia-law/
In Malaysia law, passed consideration is recognized as a good consideration. This is different than
English law as it’s general rule doesn’t recognize past consideration. Although that is the case
there are some cases such as Lampleigh v Brathwait where it’s exeption by this rule, in this case
Bratwait promise to give Lampleigh $100, if he help him to get pardon as he has killed someone.
As Lampleigh has performance Bratwait didn’t keep his promise.

The court held that the service would be paid and was not past as it appear to be unspoken
understanding. In Malaysia the good examples of case for past consideration are Kepong
prospecting v Schmidt, Schmidt a consulting engineering assisted Tan to obtain iron ore permit.
Tan promise to Schmidt a tribute of 1% for every iron produced and soled. In the year 1954, after
the company formed, Schmidt was not party of the agreement not until in the year 1955. Schmidt
claimed payment of 1% which has been promise from the company for both year 1954 and 1955.

The court held that, Schmidt can only claim the agreement that made in 1955 and not 1954 due to
one fact that he was not a party of that agreement until 1955. In conclusion of this assignment, as
consideration in one of the 5 elements in acceptance a contract. It play very importance role in
formation of a contract as there no “meeting of mind” between the two party to be bound in a
contract means there have been no agreement taken place and the contract are void.

In any cases the court would first look if there is any consideration have been taken place before
the formation of the contract. There are many cases which recognize the importance of
consideration but in Malaysia law we can see that there slightly different with the English law. For
example in English law they do not recognize past consideration as a good consideration, although
in few cases there are exception. In Malaysia in other hand recognize past consideration as good
consideration.