CONSIDERATION

Something of value given to someone in return for goods, services, or some other promise. A valid
contract must include consideration for every party involved. In simple terms, consideration is the
basic reason a party enters into a legal contract.

Example:

A landlord and a prospective tenant meet to discuss the rental of a condo. At the meeting, they go
over the terms of the lease, and agree to enter into the lease, which is signed by both the landlord
and the tenant. In this type of contract, the landlord agrees to provide tenant with housing, and the
tenant promises to pay rent in return.

Elements
1. The contract must include a bargain for the terms of the exchange. This means there must be
something that is worth bargaining over to both the parties.
2. There must be a mutual exchange between the parties. In simple terms, all parties involved
must benefit from the contract.
3. The exchange in the contract must be something of value.

Types
Consideration in a contract is the exchange of anything of value by each party. Most often, services
or goods are exchanged or promised in a contract, though consideration may be whatever the
parties agree to. Examples include:

 Money
 Services
 Personal property
 Real property
 Promise to act
 Promise to refrain from acting

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According to Currie v Misa (consideration)
“A valuable consideration, in the sense of the law, may consist either of some right, interest, profit
or benefit accruing to the one party, or some forbearance, detriment loss or responsibility, given,
suffered or undertaken by the other”.

Explanation
Investigating into the case of Currie v Misa, which was considered whether the existing debt
constituted sufficient consideration for the security so as to constitute a legally-enforceable
contract for the promisor.
At the beginning, a company called Lizardi sold a number of bills of exchange which was drawn
from a banking firm owned by Currie to Misa. He promised to be pay on the next day. However,
Lizardi was in substantial debt to Currie’s bank and was being pressed for payment. A few days
later, upon paying in the cheque, Misa learned of Lizardi’s stopped payments and outstanding
debts, instructing his bankers not to honor the cheque.
The question arose as to whether the cheque was payable, specifically as to whether the sale of an
existing debt formed sufficient consideration for a negotiable security, so as to render the promisor
to whom it was paid, Currie, a holder for the value of the cheque.
The Court held that consideration must ‘’consist either in some right, interest, profit, or benefit
accruing to the one party, or some forbearance, detriment, loss, or responsibility, given, suffered,
or undertaken by the other.” Therefore, there was an absence of any consideration or the making
or payment of the cheque by Misa.

From this case, it is clear that although the act or promise said to constitute the consideration may
be both a detriment to the promisor and a corresponding benefit to the promise, it is not necessary
to have both benefit and detriment.
By the changing of time along with the development of the doctrine of consideration, it was stated
that consideration does not need to be adequate and it must have economic value are the two
essential requirements

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