(CHAPTER THRER Consideration 1 General! (@) Introduction [B0t] Why we have a requirement of consideration. At te heat af he ln of contrat a thesis at eatain promines may be enforced in f court oflaw. The concept of consideration owes ite extence to temps to dane thor promizee which are legally enforceable Tex dealt within tm early chapter of« book on contrat In becate the concept dors not rarely qualify te sblity to go to court 10 enforce te promis, i Aleermines wheter the promise should be recognised as eating 20 ‘obligation capable of being described as ‘contractual ‘At times the concept is spoken of almost at « living ching, 20 (esetephorealy) contactal promises ate “supported” by considertion tnd consideration must move fram the promince. The consicertion put {Srward ey ise be (ood? (Fecognised i law) or “bad” (nt recognised). Agtin, the cours ere accustomed to say that coniderton mast be ‘sfclent to justly the recogaition of promis. Again, some promites are clothed ‘wth consderevony wheres others are "ake that i NOt supported by consideration? More generally sil, same promises are ‘merely grakouy, for example, a promise to male « git of money, while those supported by consdemon are purchased oF bergined fir for ‘example, « promise to pey money in return for @ promise to deliver ‘ood. [02] Why consideration? No legal eyetem can countenance the Droposion that any and every promise shall imposs legal obignon. All fmage on some indkia theta promise Isto give ive to legal, ex dstnet ffom purely mora! or commercial, enforceability. Some lege jets di- tingulh betveen promises which are legally binding and those which are not by veference only to the verouanest of intent which characteriacs 3 Premise, atest which can be sacsied by e gretaitous promise? While the 1 See og K.O Shwe, “The Dosrin of Conseraton in te Modern Law (1955) 1 ‘Se LR 20%; Sun, Corton Reon, 197% MF Blips, Cone ‘ened Conaced (1915) 10 MULR 8); KC 'T Suter Tromer aed {Govier ee aa ot Core, 1987, 935. 2 Henge he deen of some proce mdm pact! (x nado pace non oxiae Baby Beg Pars Von hp C169 3 Bar 100 18,1) RS 5 Se the dacs by the Hag Law Revision Commitee, Sih arin Ree, Cd 3433, 1937 par e- * ‘CONSIDERATION ps common Iw insits upon an intention to be hound by a promise, it holds Sine an agreement if not a contract unless consideration is preset, Te Rifows fom the conception of contract as an institution accepted by olely ax cine of giving legal effect to promises that some exteion for ‘SRforceabilay rmust be developed within the law of contract itself. ‘Consideration’ was the exteion adopted in English law and accepted in (Aosraia, In Coule Bagor's Beacuer and Traser Co Lid? Windeyee 5 ‘Ghecredé “Whether we lke thera or aot, the rules relating to conser Gon seem to me 8 etubbora part of our aw. "They cannot be displaced by ours by head-on collision’ ‘More than one rationale has been offered for consideration. The promicee under # gratiitous promise has a less compelling claim on the Fw to enforce the promise than a promisee who ‘bought « promise by furnishing consideration for i. Enforcement of gratuitous promises could pectic thowe, such es creditors, who have given value to the promisoc. igs doctine slo protects, deservedly or not, the person who makes & pauitous promise rashly and subsequently has regrets. "To the modern reader, the rules which we discuss in this chapter, and the difficaltes encountered in applying those rules, not to mention defining the concept iell, raise serious doubts as to the utllry of the ‘concept in the modem world. Perhaps this disquiet arises from three Snaconceptions. Fit, iis probably misleading to concsive of Consideration es «single concept which may be defined succincly In fact, the concept seems better Understood a5 8 description of a not wholly preche or internally consistent tet of ‘iles. Second, oven though Consideration ise ererion of enforceability, consideration should not be ‘egnrded as the joleeiterion. The reli it chat promises which are not Supported by consideration are fequenty enforced, although important [gucstions ative arto whether dhese promises are enforced as contracts (ot {Inder contact lew). Third, the law of contract is concerned with much more than the enforceability of promises. Many contrac, particularly there of eoneumers, involve the exchange of goods or services for money fd the question of consideration is usually not controversial in these [203] Form and coatent of promise. Whether the promise is to do fn act for example, to uke ut an insurance policy in the plaints name? or to forbear from doing one, for exemple, to refisin from faforcing a judgment for debt or othe: legal right,® and whether the ‘promise is expressed_in absolute terms or subject to one or more anditions or qualifications, the promise is enforceable only if ‘oasideretion was given fr it Considertion fs concemed with the enforceability of promises as ‘promises. A promise without consideration may, when coupled with 4 Lp 5 {os Tho Cun aso, 6 A489. Se duo tly Ld Ky (1991) 22 NSWLE 189 22 (onion eects tn Ascent) Cl Oo» doo (1860) 8 SCR (NSW) C) 355 Lain Gonos cous) 4 $4 (NSW 365 1 Abo tite » Goole (793) 1 Tap 7; 170 ER 286, 1 Sees og Pee Reale 978) VR,ba FORMATION OF CONTRACT subsequent events, give rise o rights end duties other than enforceability ‘3s « contract. In the first place, the pramisor (such ea person who hi agreed 10 provide services) may have embarked upon a pecformance of the promise and may have performed negligently, causing injury or loss to the Dromisee. In that case the promisor stands co be lible tothe promisee for negligence in tort, though not, in the absence of cousideration, in contract® Second, according to the doctrines of estoppel!” a promiser ‘may be precluded for acting inconsistently with a promise, that iy from cnforcing his or her legal rights, even though there was no consideration for the promises that isto sey, it wes gratuitous. Thos, one ofthe alleged wealesses af consideration under Anglo-Australian law in that ic gives inguficient recognition to the phenomenon of reliance, and denies the contractual signibeance of a promise which, though sot supporced by Consideration, has been the subject of injurious reliance. [304] Consideration required for legally binding promise. The proposition that consideration isan essential element of @ contract is most fasly understood if conceived of a6 being concered with the essentia) ‘elements ofa legally binding promie or undertaking. A person is bound to perform a promise only if consideration was given for it; indeed, as we Shall see late!" a promisor is bound to perform promise only if ‘consideration was given for it by she promise. 8 few simple llustrations may be given ‘Assume an agreement buy and 10. sell, what constitutes ‘consideration? ‘The seller provides consideration for the buyer's promise to pay the price by promising to tansfer ownership. The buyer's promise to pay the price constitutes consideration for the selle’s promise 0 transfer ownership. Assume « partnership agreement benween solicitors, wnt consis consideration The promises of « perner wader the tgreoment are the consideration for the promises by the other partners, ‘Assume that A pays en architect who promises co design « house, what is the consideration for the payment? Tt is no more and no less than the sechiteet's promite to design the house (®) Historical Development [305] Origins.!* Tn the sixteenth century the scope of the action of assumpsic was allowed to expand at the expense of the older forms of ftetion, particulaly the action of debt sur contract. Moreover, it offered Femedy’in situations in which the older forms of wrt had not. As fssumpsit became atthe end of the sbeenth century and in the ft half Of the seventeenth century « general remedy for all breaches of parol promises or underakings, she doctrine of consideration developed as & fequirement of promissory lability. Tn ics earliest usage in the present Content the wor ‘consideration’ bore the very general connotation of “reason for enforceability’. So, assumpsit would le in respect of w parol promite only if the promite hed been supported by « good reason for inn» Goo (1799) 1 Tap 755179 BR 2, 10 See es 187). 1 See} faa) 12 Ste Sia, ay fe Com La of Cones 1975 92 (CONSIDERATION (2081 enforceability. Naturally there were attempts et more concrete definition. Seiibe in Stone v Whipol'® Coke argued that ‘every consideration that Zorn charge the defendant in an ascumpsit, must be to the benefit of che ‘Rfendane or charge of the plainaiff, ancl no case can be put out of this Soon This early, suggestion that + legally sufficient" consideration ‘Aecesatly involved benefit to the defendant-promisor or deciment to the ‘lain promises has had an enduring influence. [206] Lord Mansficld’s attempts to modify the rule. Although the [eine that English law enforced only promises supported by ‘Goosderstion” was accepted in the seventeenth century and the frst half ‘habe eighteenth centary, Lord Mansfield, who Became Chief Justice of the King’ Bench in 1756, did not acquiesce, ‘in Pills © Van Mierop'® he suggested that consideration was no more than one forin of evidence of an intention that a promise was to be legally banding. On this view consideration was essential only where i afforded the only cridence of an intention to create legal relations. According, Ba in periculae, ia promise was in writing or was evidenced by writings fhe wating ight serve asap evidentiary eubsdtute for consideration. But Jn Rann 0 Plugher'® ie was sai!” (A contmcis are... dltingubbed lato aretments by speciahy, amd ‘getinente by parol nor dbece any such hed ces soem f the counsel due endeavoured to msinin, a conus in rng. If they be merely Arsen tnd nor specials, they ate Parl, and a consideration must be prove. Tk wos also decided that the Statue of Freuds 1677 (Imp) did not take away the necessity for consideration. '® ‘Lord, Mansfeld’s second assault on the doctrine which, if it had succeeded, "would have effectively emptied the requiement of Consideration of any force, was his suggestion that a pre-existing moral ‘obligation was @ good consideration fora late promise to discharge that ‘bligation. Thus, in 1782 he suc: ‘Where » sna i under « mors obligation, which no Cour of Law of Equity (an inforee, and. promiee, the honest) and sectimae of the thing i = ‘Gnsiderain. [The Hes of Coasclence upon an upright mind te & ‘lilet consideration Jn the nineteenth century the courts began 10 define the concept in a smote decrinal way. Thos, jt was said? that any ‘act of the pain, ‘howeren from which the defendant derives a benefit or advantage, or any gage mw mm aeons er a i it tlw a ttn Scala en ce ret a tne Sop ates ates onc So Beier Regie ra HE is ihre te ana ea Mees nian ia erm ont cease 2 LR ER baat ition ee o08) FORMATION OF ConTRACT Tebour, detriment, or inconvenience sustsined by the pleintify ip a sufficient consideration to support a promice’. Lord Mansfield’s view, ‘hough rtcsed in the meanwhile, was only authoritatively rejected io 1840 in Hasrwcad » Kenyon" The plaintilf (Exetvood) wat the exeestor of the will of ene Jobn Sutsife. At the time of his death, Sutelife had ‘owned some cottages. The person entitled to the cottages after Sutclife’s death was his daughter Sarah, who was under 21 years of age and therefore lacked contractual capicity“? The pleinuff was her guardian. He benefited her in three ways: he paid for her maintenance and education: he paid for improvement ofthe cottages; nd he peid the interest falling due under the mortgage securing money which he had borrowed 0 improve the cowages. The plaintiff hed also borrowed £140 from one Blackburn and gave him x promissory note for that sum. After Sarah turned 21 she promised the plaintiff to pay the £140 and in fat did pay fone year's interest on that amount 0 Blackburn. Afterwards Sarah married the defendant who, koowing the above fats, also promised the plaintiff to pay the amount of the promissory note. In giving the judgment of the Queen's Bench, Lord Denman CJ said thet f Lord Mansfeld td indeed considered the rule against enforcement ff gratuitous promises too narrow and maintained that all promises deliberately mace ought to be held binding, this ‘would annibilate the necessity for any consideration at ally in at much as the mere fect of giving ‘8 promise creates moral obligation to perform it Lord Denman observed “The enforcement of such promises by lav, however pleuyeeconcled by the dee effect all consiations engagements night beaten With ‘minchievoun consequences to sede, auc af hick weuld be the frequent preference of voluntary underakings to cts fer jus deb. Swks would {hereby be multiplied, and voluntary undertangs would alo be malipted, to the prejudice of real creditor. The tempons of exeeurors would De ‘uch fncresed by the prevalence of such doctine, sad the fal ‘Sischarge ofthele dry be rendered move dif Describing the consideration propounded in the instant case as pa ‘consideration and not requested by either the defendant or by his wife before ther marriage, the cour: distinguished the caze fom those in wich the promisor had previously requested the expenditure in question and subsequently promised to pay the amount expended”? © Definition 1307] Introduction, When the existence or validity of a propounded ‘consideration is in question, what was iq fact the agreement ofthe parce ‘ust frst be determined. Tc is only once itis determined chat what th plain propounds se consideration did indeed form part of the part Cargain, that its eflectveness as consideration will ‘need to. be 21 om 11 Aa B19; «13 BR a, 22 See (on), (eats. 25 Gt ampli © Bods (3613) Hob 105, 90 BR 253 and see Saher (S13)-1814, Ba o CONSIDERATION vo serine? Convetely, 2 promi ie ot rendered Binding bythe fact See rest bad seine pe whi would have sere 2 Bod that Gerrans if in fact ue wast the Agreed pice a indated y the com tagrecnent, Hvng Scented the ngreement between he pate pare fetta of consideration to be epplied to determine whet eos agreed dove indeed count az consideration in law Mal detains ofthe concopt import the nodon ofa onsierton for ane pars proms or ban of promises. Consideration may be od ten PoP somine, (or «bude of promis) bat nny forthe oer iy unortaking (or undrebings) tn fie not acute conceive oF Pa feonadaraton jor a comace The baie contest nthe definitors ‘Betisnd below i beren s focus on t bargain theory and consideration it of bencit and derimeat. We sagget tht tay consideration sate dane me act forbearance tring lea denne to the ieee emi ch eee ey rons She cbeed is. ‘This defiion dives attention to two Secw r cotsiceraton: Gat that it must have been agree upon asthe SES of a promise; and second, Wat fIne pices wpred upon wil ot Eve svn coasiderron [B08], DeGnition in terms of benefit and detriment. In Gur © ‘Misa it was suggested: ‘alse conserro, ne ene of the ns ay consi er sr Sgec'oweens prot r bercit aununa he ole pur, oF me ieee dena, so repugnant tyaeeuee “This definition has the appeal of simplicicy, but it suifers from the defect that it does not require consideration to be causally connected with the promise which it i propounded to sipport. A person may suffer & Reiriment, or confer 4 benefit, without being asked to do 40, Such a petson docs not make « berpain, although there may be a hope, oF Expectation, that something wil be received from the person or whom the benefit was conferred, or that someone vill reverse the detriment. So there i at least « need to imply, or infer, an element of cause and effect between the promise and the consideration Its clear that benefit tothe promisor isnot essential; the promisor may hve stipalsted forthe promises benefiting a thied pary. For exarmple, in the case ofa guarantee, the consideration for the promise of the guarantor (promise) isthe advancing of money or eredit by the principal creditor (promises) to the principal debtor (thied party). Detsiment incurred by a promises is valid consideration whether or not i involves benefit to the Promisor. ‘The fact that it usually does so may be seen ax merely fxplaning why the promisar wanted the promisee to incur the partial Setriment in question. Can consideration be adequately defined simpy terms of detriment to the promisee? Ici certainly not required dha the 26 See anes Ll» Rey (191) 22. NSWLR 119 at fener ISDE). Dat fe ter ua ent stb. tiny ie HE ACUG2. Ce Thoma Theme (1942). 2 QB 491 at 899; 114 ER 390 335-4, 33 Cr Reins bebe (90 {9 NOWLR 6a wt 4 Sehr 9spon) FORMATION OF CONTRACT. promisee should have been ‘actually worse off a8 4 result of furnishing consideration. If A promises to pay B money in consideration of B's refiaining from drinking, using tobacco, sweating and playing cards or billiards for money until B becomes 21 years of age, Be refeaining may be ‘good consideration although itmay infact have benefited B (and not A). On the other hand Professor Williston, in reference 20 unileterl ‘contracts! doseribed™ ‘a9 accurate as a bref general statement ca be! the statement thatthe requirement ordinary sited for the sufficiency for consdersion (Gometimes stated as the ‘really’ of consideration) 0 sopport a promise [mubeance,« detriment incured bythe prince or 8 bene reseved UY ‘he promisce ar he requet ofthe promo. ‘The introduction of an element of request i an improvement on the Curie © Misa definicon, but Wiliston recognised thet hit ‘definition’ requited some modification in its application to bilateral contract. The reason for this is that, as was ilusiated esrliee® a promise eull to be performed Cexecutory promise’) is a recognised form of consideration feven though it i extremely dificult co ses how the mere making of @ promise may be a detiment incurred of a benefit conferred. [309] Definition in terms of bargain. Sir Frederick Pollock put forward the following definition: ‘An act or forbearance of the one party, for the promise thereof is the price for which che promise is bought’ Te tlogance, end approval by the House of Lords in Dunlop Pnesmatie Tyre Co Lid v Selfridge & Co Lud assored this definition of & very prominent place in the modern law of contract. American law embraced the bargain theory of consideration with complete entinusiaam. Thus, the Restatement ofthe Lets of Contracts (1932), §75(1) defined consideration a fllowar Consieration fora promis it (@) an ct other than promise or () a brtearance, 0 (© the crenion, modication or destin of eas relation, or (@) atewen promise ‘barutned for and ten fe eachange for Ue promia, On the other hand, Corbin sefrined from attempting a dogmatic ‘definition of consideration, preferring te beg the question BY saying™® that consideration is ‘one of those factors thet have been held, more or less ‘Benezally o be suficient to make a promise enforceable "The definition in the Restatement (2i) Contracts (1979), §71 is more slaborate than its predecessor, but to the same effect in emphasising © necessary clement af bargain. Te stetes: 39 Hee = Si 124 NY 538 37 NE 256 160), 31 Seen the enn ecco 21 32 Fon 6 Caren, Yat $1 pp 973-6. Cf Moan v Bu 1959] SR Qt 33 See on, 34 Ph Png of Comrac 8 19114 19. CE Saloon and Wiliams, vine ‘te tow of Gomes nd 1845; 101 35 [fous] AC O47 m 958, 58 Cnn Cr, VoL $10,402 % eee reenter anes reer ier me Te cna onion peoees oe rie met be (@) Aperformance of return promise ie bargained for if ii sought by the [femaor in exchange for ns prome and is piven by the promies ia Brehange fo that promise (G) "The performance may consi of (am sct other than a pom, oF (@) 8 forbearance, oF (2 the creation, moekcacon, or destruction of legal reaon, (4) The performance a rerun promise may be gen co the promisce oF to {Sms other peton [310] Consideration as the ‘reason’ for enforcement. Criticisms of ' definition of consideration as the ‘price’ of a promise apply a forior! 10 4 definidon’ of consideration suggested by Professor Atyah™ as ‘a reason, for enforcement’ of a promise. ‘The vagueness of this concept scarcely needs to be pointed out. Professor Treitel observes)” in his erque of ‘Atyah’s analysis ‘to say that consideretion is a reason for enforcing a ‘promise, end that court will enforce promises whea the jastce of the esse equirs it points to a difficalty, but i does not solve any problems’. To ‘Geserbe consideration a2 2 reason for enforcement acknowledges the [purpose of and difficulties with the doctrine of consideration but offers othing in ts place, BUI] Conclusion. Auscmlian cours have embraced the bargain theory of consideration, slthough not as strongly as the American ‘courts A definition of consideration as a price furnished for « promise it Lunobjectionable, but how far doce it go in empleining the modem doctrine? Its genecality safeguards it from the kinds of exter which can. be made of the more explicit benefi-dettiment approach, The later tempts, albeit unauecesfuly, to specify those characteristics which an factor forbearance must posses: if itis to be a good consideration. “Price” orecdy insists thet the partes! agreemeat ‘on the particular act oF forbearance at she consideration for the promise is eatental, but eaye rothing st (0 the qualtes which a particular act or forbearance must possess in order ro be accepted by the courts ata valid consideration. BUt ‘there ssl the problem of how the promises under an executory contract, ‘ean be consideration for one anather. 1k isthe presence or absence of consideration as at the time of the ‘making ofthe agreement that is in issue. An exzcutory contract cerefore ‘ses the question, how does a promise made by A support a reciprocal promise by B, where A has done nothing at shat dime beyond furnishing @ ‘promise in ceturn for B's promise? Ir enanot be answered that itis bocasne B's promise is legally binding on B since whether this is so will depend on ‘whether A's promise is good consideration for B's. The only altemative 0 3 Kay" gen by de promis ce by some ot pen’ bath dora peat ‘umetins fu se 9 38 Aint Conti ts Cone A Punkomenl Remon, SG Here, “Consents 4 Cal hana of Prtane Ai Reunen 97) 30.419 430s 848 $0 Ate Woke ts Py Lal The Caner (1956 92 CLR24, 4 Beco te (IDR) 13 NSWIRR Ld 7FORMATION OF CONTRACT promises have en institutional backing — the law of contract — and are binding because of each promisor's assumption of contractual (as distint from, for example, ‘oral responsibilty tthe other forthe promise: (@) Consideration mot Required for Deods {312] Simple contracts and specialties. Ic ia well established that, According to the common law, consideration ie an essential element of & ‘Simple’ ‘parol’ or ‘informal’ contract. This chapter is concemed with sample contracts, nor with formal ones, and references in this chapter to ‘contract’ must be understood as limited in thie way. ‘Consideration is not required for formal contracts under seal, These exe ‘form of ‘specialty’ or ‘deed? and are enforceable as such. Promises under Seal are called ‘covenants’ and are enforceable although considerston was fot given for them. ‘The solemnity of ‘form’ may be seen a5 a justification {or enforcement of « promise which the law secepts a8 an alternative to ‘consideration Formal contracts may be conceived of as documents which are sealed and delivered and intended to take effect ax deeds. Legislation impinges fn the general law requirements. For example, + 38 of the Coneryancng ez 1919 (NSW) requites thet every deed be signed ss well as seied and ‘bevatiested by at least one wimest not a pary to the deed; provides for what is a ‘Suflicient signing: and provides that ‘every’ instrument ‘expressed to be an indenture ot deed, oF to be sealed which i signed and uested in accordance with this section, shall be deemed to be sealed’. ‘That section does aot affect the exccution of deeds Uy corporations but 5A of the same Act contains special provisions in that respect. ‘A document mey be executed under seal yer operate only as an informal agreement (and as uch have to satisfy the requirement of consideration) ‘because it was not intended co take effect aa deed.** This possibly ‘more Likely to. suggest itself’ where the party in question is a body ‘corporate than in other eases. (@) Executory and Executed Consideration [313] Promise as consideration. Many contracts involve a bundle of promises (rather than a single promise) on the part of each party 10 be Performed at different times. The promises, or some of them, furnished by the contracting partes may fall duc for performance concurrently. On the other hand thers may be no concurrence of peiformance between the promises or betwoon any two of the promises of the respective parties Some promises may be due for performance almost immediately eter the ‘aking of the contract and othere mich later, But lmporanty, exch arty’ promis represents the consideration for thote of the other. 12 Sethe mais Brin Cot, “Te Hence of Cant — Po (089) 1 JOE occurs ith oon 4 Se det ney seg Noro De 2nd e128 reno (197 58 A299, tte; io) 30-446 od hand Mr Jee Nes, Desk os {ised fda lo tes 4s Se haar Bok Go Day (1900 39 NSW 64 15 Ree nd Buen ¢ Conan ef ang (54) HTD) SSR, 98 covstpenaion ws tn tes svatone he promi os pay becomes tnding the time svt! modes if supported by conidernon, rather than When the ether era ds une Tb the moe he ole ae Ee ocmants sige ht the consierton excavated ‘Be dononcs se descr as Start Bec ta greet ford fh escange of mal or repre promises, Common exams até Stns a mplomeny conics fo the mona und cee fr Sie ae of goo inte commercial context, where peyment an dcliery axe commonly postponed, [S14] Actor forbearance as consideration, Where th proper view [ihe 8 peaon hor berger an seer forbes foe he Somsiderton fora promt, be pom sigs congta fo be bound by the promie upgn he doing ofthe ator tie ging of tae forbearance, tnd'uo before? Assune that te omocs of Tot des promis» reward fers rtucs, No one contact bound to snc forte tial, But if fer enim he dog in acegpiance ofthe off, te owners bound to py the evar“ Aa ican, the content ade exeotory oo tor ide (he cwners) only, he cosifcraon ta the alc side (ie ais beg enoste st ih te: Pon th psnpetne fe coma s ‘Stl, there Bing ony one execuary protec "The wos! ‘xtcted i omcwsat amigos in tbe present content it ayant at reqaed a enti afomte to eal for pesorsnce Ste promuor ate dig ofthe act, Rater tan aking «promis the mace poidesconsicro or the pone b at fbearny oreo D Referabitvy of Consideration [15], Motive and consideration. Ie is usually tad that motive and Consideration are not the same thing.% But such statemente must be treated with eaution. Afterall, consideration for a promise # the very ‘hing that will motivate the ‘making of « promise and the provision of ‘consideration * Bur it Is nevertheless tre that a geod and proper motive for making a promise dees not amount to consideration for the promise Genecaly, each party 0 a contract enters into it in the hope and ‘apectation of deriving some benefit from it. So, A, when entering into « fantract, may hope and expect that a benefit will be derived by reason of Bs participation. Yet the obtaining of that benefit, while it may be A's ‘motive, is not the consideration for A’s promise. Analysis of the ‘ircumstances may reveal hat the agreed” upon consideration was something else, the benefit being only what one or both parties expected A ‘would derive ftom performance ofthe contract. Seem oe tree bet en ee porte BSA ete Smt 102) 100 25 ee 6, w Sez Tomar Pama (1842.28 851 4 850-60) 14 BR 390 0 338-4, Bor be Sele coat of cna Sch e Joa (1970 119 CLR 397 a 4d 31 Giese (10H?) TS NSWLR 12 TA Aad os Sem ly Baa sd Non taigain Fron (1988) 18 WALR 11 »ps) FORMATION OF conTaACT ‘The discussion of motive is one say of introducing an clement of considerable significance in the law of coasideraton, namely, the ‘lerabiliy of consideration to the promise which is sought to be enforced. I is no consileration “to retain from « course of conduct which it was eyes puree’ There mut be se canacion Been 2 Frome which ia sought to be enforced and the considerstion which ic Elleged to support the promise, Although ic is not necessary that ‘Propounded consideration should have been the only inducement for = promise, itis necessary that ie was ay inducement The converse must furely be true sso. Ones i appears that a requested act or forbearance follows « request, inducement is presumed, the onus of establishing the ‘contrary being upon the promisor.* “The sve of referability ix most frequently saised in the context of ‘unilateral contracts, and attempts to distinguish concractual promises fom conditional git promises. [316] Conditional gift promises and contracts. A promise in the font wil do ace and when vet oscun’ appears to be & {ratuitous promise, the performance of which is contingent on the ‘occurrence of the event. A clear example isa promise by X to pay ¥ $100 if has this ammount in his or her pocket on returning from a shopping tip. Buta promise inthe form ‘Iwill do act Aifand when event B occurs? JS not converted into a contract merely by reason of the fact that the person to whom the promise is made has the capaciry to bring nbout event B. Thus, if¥ accompanies X on the shopping tip, the mere fact that Y is jn a position to pay for X's purchases docs not give X's statement ‘contractual force. ‘Although it ie necessarily assumed chat Y has not provided consideration by promising that event B will cecu, this is not of ite = feason for denying that the promite is enforceable as « contract by the promisee. On the other hand, cases like Carl Carbolie Smoke Ball Go’ Hlustrate thar a promisce may provide consideration by doing an act, The fact mutt (¢t lest) be requested by the promisor. So, for example, ‘Iwill ‘pay $20 10 any penton who returns my lost dog 10 me i @ promise which may be found to be supported by consideration, Equally, however, the presence of & request is not conclusive. For example, common sense tells fa ehat a promise by X to ¥ that ¥ may have X's celevision set if Y cars it on is not 4 contract. The act of tuming on the television sct is not Consideration fr the prom’ promis, even dough requested bythe Dromisor. The promise is still no more than a promise to make agi ‘ifticulty lie in explaining thia by reference to consideration itself. The Form of the promize cannot be conclusive. A promise in the form 'T mill fe $20 to the frat member of the class who ralees ns or her hand? wil be onstrued es 2 conditional promise ofa gift, wheress one in the form, ‘T tril pay $20 to the fit person who removes 2 load of rubbish from my 58 ral w Cain Cn gimrng Lat [106] 1 Cys Rep Sa 108. Av Wane # ‘Eos Soh Lau fe Aree clan (90911 CL. 2, Bes fine id or 7 6 98, 39 Beg an ae Gee te. ci Ry Sin KS anne SW 3 100 ‘CONSIDERATION om seve more ely be nee a ero set a a ie cn stor th net cee son Re lena pens eat ake Sr alee he pan wera oe ees Se et na one Be, sa sstate meee SOP) Atmnce of abun bene or deinen. The ale an: eran ae erie, 35, Mee ec tact nme ae eae Be cient Taal ene ae een eee Erato rag we neni ede td Seat oad Noises eran age ee Star of Be pen wae ote cannes etn iors Riealing Ste oes ea - sat ny ae Fa taht este ine ean a ees feochy Snir a's Se eves aaa See oe ‘diese oa Se bed Seesamenay Sita ii eS Cc ea Ne th horace andar sane, peel a HESS IOU IE Talat ie eer ole ee ae anal eT meh ce at ec hab Alpaca ne ote ce ae irc gg denen oe wena mene Serta tot FE fu retake, BILE heel Sr Set ee ee ae rina te etre yas one 0 ioc ging sar ap heretee kD a SSSR ae eed nee ee fe te Sar lia tina Senescence ett Saal Met ate ulm eae SERS aoe me to te Se Duss Che Wot i cae Ain ete Py a The Conmonesih the plants, » taniourey st wortes Gay rec tel Sf we Cae a a ey Toe cant ie Canchnoen ae eth es fe at se ty ee oa ee Satta Seon aps eta THe tincy tenga bp fg te Send Wott Wa se SESE aa ab See We ee ih evenont ranteAne ol apwin e SUGRTRE SPL on tni tty ose9 26m tsk 2 es tenets sus yo Mh onan et witli worom FORMATION OF CONTRACT exception of wool required for local manufacture. A local manufacturer, Sch as the plaitif, which required wool wee foreed to purchase (fom the government rather than from growers. Growers received a subsidy and Tocal manufacturers benefited for lower prices. A retuen t0 normal woo! sale practices — auction sale to local and overseat manufaceurers — was {take place ia 1947. Market forces would almost certainly push prices up to the disadvantage of local manafacricers such ar the plnintif. So the ‘Comnmonwealth devised a subsidy plan the sim ef which was to maintain the price of wool purchased by Atstralian mantfactarers for domestic use, In June and August 1946 the Prices Commissioner announced that the amount ofthe subsidy was to be calculated by reference co the diference ‘between the current basic price of wool for domestic production and the average market price for each auction series, ‘The amounc was (0 be determined by the Australian Wool Realisation Commission. Sub- ‘sequently, the subsidy scheme was discontinued, ‘The plaintiff alleged a promise by the Commonwealth hat in ‘consideration that the plaindif would purchase woo! for domestic consumption, the Commonwealth would pay a subsidy. 1c was alleged that the plaintiff made purchases of wool “in pursuance of the said agseement. ‘The High Court sad:#* 1h cate of this cats ik ie necesary, in order that a contract may be ‘rabid, that ould be mace (© sppeor thar de taternent oe ‘moouncerent which is led oo os 2 prame was really offered ‘consideration forthe ding of the acy and thatthe act wes realy done fa ‘consideration of a potential. promise inherent in the stmement or Scnouneement. Renween the sitement or announcement, which tt Pot forward a a ee eapableofacepcanc: by the doing oo act and the act ‘whi Is put forwards the eecuted consideaton forthe alleged prose, there mr subi, 20 fo apes the ration of = quid pro quo. One siaple mpl ol sufice co aeae ti A in Seley, syn to B in Mebourne: ‘Trl pay sou £1000 on your arial i Sydney: The nett day 1 goes (0 Sydney. If tes fects alone are proved tis perfec cleat tht ho contrac. ‘lading Atopy £1000 to Bis enable, er ll at appeas there aay be to ration whatever between A' statement end Bsr leis quite consi ‘wah te acs proved thar lntenced topo to Sydney snyhovt, a that As ‘merely announcing tht and when B aries Sydney, he wil make wait {o hin The accesry felacen Is not ahowa ro ext beoween Ue stinouncertent and the a Poot of funher fact, however, might nice (sain a cantare For exnmple, it might be proved that Ay on the doy Defoe the £1000 was mestoned, hed end B bat fe was a fatter of ial poner to i (A) hat B should come to Spey forth ad tat jected that to go 10 Spaney at the mamene might invaive hin i Eaanell Tots. These fasher ces throw a diferent light onthe statement on which B slits sean ofr acrepied by his going to Sydney. They are nox necessary foncusie but i now posse to afer (a) chert ncteene Ue £1000 ‘wosld be paid to B on arial ta Syaney was intended as an oft of & Promise, (thet the promise was offered ae the cousderatan forthe dain ‘fan act by B, and (thatthe dolng of the act was atone the aseptance ff an ofler sad the providing of an executed consHenon for a promise. “The nectsatry connection or feletion beoveen Uae aanouncesnen cod he act {a provided if the inference I drab hat A hae eget B to go to Syne. ‘consiperarion wen ‘Turning tothe fats before the court it was sak to be “imponsible to find anywhere anything i the natore of a request oe cwtation to purchase ‘woo! Nor was there anything to suggest ‘thatthe payment of subsidy was fp foreard in onder (induce any manufacturer to purchase wool And eve was no evidence "hat the payment of subsidy and the purchase of rool were regarded as related in such a way that the one won & ‘Smidertion for the other. Applying the sutnent quoted above, the High Court said He a ohte ik the lad ins usin) wheter ie a eons feed fa conseaion othe doing of an, meu pe which eo ES pad ic he doing ofan acts we eat fad such &protiee No eleton of gail pro guo beter poms and eo setcan be red. ‘An appest to the Privy Council was dismissed. 2 Consideration Must Move from the Promisee [319] The, rule, It was well cxubihed by the mid-nineteenth emu if not cacien chat consideration’ snus move fromthe promace!” Accordingly itis aot enough that «promise suoui have be Sade to tho person seeking to snfoee i it helo required that dat ‘eran should bave gten consideration forthe promise, [320] Relation with privity of contract re, It might be thought thee regen that @ penon seeing 19 enfre an agreement ve bean a pary (othe promise” ihe privy ils) ans party © the “usa he eoderaton ul) ac i uth one and the te owevet, a person to whom a promise bay been nade may not have fimished conidertion, and’ since a peron may have finished consideration for « promis yet not be de perun 10 whom that promise {asmde the te requirements ere csinct The csc mpport be ew that privy "andthe reguizement thet conshication move fom the promsce ae to seated but dent rues [221] Consideration eed not move to the promisor, As hat akacy been luted there iano rae dt he promnne most rcrre the beni of the consideraton provided by # promise, OF course, fe sex cates the promisee will bave provided consideration, for the Dromisor’s benefit But when the rule of eonskertan requtes Tet & ary secking to enforee 4 prose provide cnsKlertion i does nat ato feaute that te promisor be tie peson who received the constdcrion, 5S0,Amight make a promibe wo deliver goods co iB wiley he prcero BSG 09 cup Se, Tomar» Tas (164) 2 QD 991 a 848, 16 [2 330 wt 333-4; Tee © ‘iio (oe) | BSS 398.90, ABR eae ee & Gr an (15) 2 Wee So 94 TS SER 99 86 erect ata 3, Ey Poa ye Ce Li Se 6 Go ad USI RC4t, ove La iin creat 19a} AC Shei Saget ‘ety ed De Crd M8) 119 CLR 4 Pay La Heh 97] TLR 8 See oon oe on, waon FORMATION OF CONTRACT ‘rng ae 8 te ree re en Cer ee lg ioe Fei, gis aac Sem Semen neice eae tay fastens Cos Du es ond To Bl ee mc, eat 9 ts ee Ta fa Cra 0 SOP en vay he ser eal gay mys ie ape town ser abe ee cot al mae mec i Werte teas erage as ceed tt th See hee wee ns area cans pe er ene aes Sa ee A mle aS ol Se ee ee cate eared Sea Fe a er apps 0 coms ad nae Sea a te nee So eS ae aan Stine eth are he de hee GS Siete peepee Se re. rater eh pened Fee a a ae re Me east aad One Ce a a rad Freed aepee teers r Sere ere be fons Wado mesa ceva Se ie mpd Som oD et a Sogn peenin mal fob B t EMU race nmatenc tent Liretigeeer opty ers mer i ear cadens Sad amas Soc taaran gerne nee See rere a cle ete teats ic ropect ea cemnrunncnena secret ‘Tha, the requirement that consideration must move ftom the promisee is satiadied if consideration moves from one or tome ef joint promivees. A ‘octio if ated where the plains furnishes part ofthe consideration, the rest being furnished by the co-joint promisees.© “cave 109 cr 460, 1 hears, 02-3, ‘7 ac toe MeTionan} epee na onion ass 7 Soe Ratoaoe 0047) 1B 58,154 ER 193; Moning w Bon of Nas Zein [1805] 108 | | 3 The Sufficiency Rule (@) General [p13] The rule. ‘The rule that consideration must be sulle both Eecbsve and exclae. fe ecutca tt what is put food ae omidraion pasa tvesbol fel ocogitan: But ono ts thecal Spal no navi i eeqused into how valuable the consteson {hom the ule fequeny erased nthe fo cosiderson me be Soticent but need aor Be adeguse-® Suffcstcomidcron en Saeed ae ood" or "ahi cnaderaion. The sufloncy ee itor prompts the quesuon: Whar dos th a recogar se abe ‘The simple answer that arding which not unlawh ay Cou ridin he ofthe av Where eam ptf Conddeation it must be such tat «cour aye aed apo wo dee eich promi The rule requiring suliceney of consleraion applies both consideration inthe frm of tn exccry prose tnd. caeeted Sasa the oem ofan ace Tey whe teeing hee ore comers te prorinewl not be pre a hat promise wat consideration f he perfocance of he promise eu soc be alsa’ a undertocd in scomene nn OEE NOME Many ofthe ‘ules" of cosidron invave the application of a rae shat conideraon must be aficeat We went thse under seers beating [924] Consideration must be tepal, Since he tw cannoc Svs Cosieron wich ee he's « neal teguiement thatthe consideration pot foward supports promise Imus at leas be ‘leg ‘Whee performance sf 8° promise maid tetsurly be ileal ea thst frome sno. contdeeston Pee Same conac ler could heey pur forward the peter of ae cbigation ees Iealy' vad cnsdcration to enbrce the mocieed one aLIBie se sn, tough es ompeing remo whe Brome & merely wienbceale om puble poly grewnsh Wee s Krtnger thse tie The employe, by lence prmie¢ eed Sater ployed by them shat on hs fuente) Would pay bs ¢ ‘fein or emmanraton” of £200 por year poded he dud aoe et she woo rade and "nothig at ny "ime 1 [el devine Cae Suis competion excepted) Two constuciony of se lees Coe eae Ee het as +p of pemeat ett ft rin contingencies; an. second tat i me prom of payee ‘otdeatin af pric bythe enlaye nto ener the wou a ad 5 injure the employer inher butoes, On te bar tthe inet view vat conc, the court coiled the emp’ prom net 15 Re esas sopping Gh epeaach He Walt a» Rly (1981) 23 NSWL 1 Poms lows item 28 65185; 14 ER 39053084 wospa FORMATION OF CONTRACT enforceable pecrse the employe’ promises were unenforceable sin Sheer os ot ae : TE ilegity ener the pctre only by reison of the manner performance which the pli os chosen, the contact Chena cape at Tsing performed lee) ix valid, bet public policy tay prevent the Pain Hoo eaforene > However, where the contact i fete by ate, the contact may have to be tesced ev llega fom iv tery inception ence ics ber pefomed in wn lege way 0 a in sense Comderaon whi was once aid becomes intel ) Adequacy 1325] Consideration need not be ‘adequate’. It is well established thac the “inadequacy’ of consideration is no ground of objection ™ ‘Adequacy’ has conventionally denoted ‘adequacy in valve’ of & con- sideration, by comperisoa with the (objective) value of the promise which it support. On the other hand, ‘suliiency’ af consideration has been conventionally used as to mean ‘legally aulficient’, that is, 85 & synonym for its “validity” or ‘effectiveness Thus, a propounded consideration ‘which satisfies all those tests hich it must saisy in order to make « promise legally binding ie ‘suficient’ nd ie does not matter that its value fe nor ‘adequate’ to the value of that promise. For example, if Janice decides to sell her motor car to Fred for $1000, her promise to sll i= bulficient consideration for Fred's promise to purchase even though the ‘vehicle bas a market valne of $900. The consideration provided by Janice is sufficient even thovgh, objectively, we might regard i as inadequate. [526] ‘Situations where adequacy is relevant. Although the law [Roverning the formation of contracts not concerned with the adequacy (of consideration, and inadequacy a5 such does not negate the validity of Consideration, fe may be relevant to fuer of ezonomic duress, uodue {influence and unconsconsbilty) as well as the availabilty of the remedy of specific performance ® 1327) Nominal consideration. It clearly follows from the lack of ‘concern with adequacy that parely nominal consideration will suffice to ineke 4 promise binding, Payment often dollars (or @ promise to pay that mount) y often used in commercial contracts to support quite onerous promises, The parties o such en agreement are preferring to invoke s ‘orice which the law allows in order to render binding a promite which i in efter gratuitous, rather than another device which the law allows 10 schieve that purpore, namely the formality of a deed or specialty 1 ee 113 35 Sr Lent. or te inn of negra me 200-20) {0 sec Holo. Onne erence ot ob Po al promien e 1729), (1301, 174). See ts Rov 65 Ro oP pf ee (iste te CL te a Sece 3 a Sg La 3 See Meher, Germ and etn, i: Dae ond Rodi, 1052, pet 105 ee eee rene nn nn —mn ‘CONSIDERATION bey In Thomas » Thomas¥é the evening before he died John “Thomas said thar he wanted his widow to have his house end its contents or (100 [ascad, A few days Imer his exeewtorsbeneficases agreed in wring with the widow that in consideration of teir desire to carry out the deveassd’s ‘wishes and of the widow's undertaking to pay £1 per year towards the ind rent and to keep the house fa repair, they would transfer the house {her for lie upon her eequest. 1 was held thatthe widow's agreement to poy £1 per annum and to keep the premises in repair was @ good onideration forthe promise (0 convey. An argument that on the proper onstruction of the agreement the widow's promise was a mere prove CF ‘condition attached to a promise ofa gift by the executor, was Tejected, ‘Whether the promiser actually places & value on what represents & nominal consideration is also relevent. Ths, ia Chappel © Co v Neste & Co Lil" Chappells owned the copyright in x popular tune, "Rockin ‘Shoe, and Nesilés manufactured chocolates, Nestle offered the public ‘records’ ofthe tune (actually thin Sime of exlulose acetate mounted on cardboard) in rotara for payment of In 6d and production ofthe wrappers fiom theee bors of their chocolate. Under copyright legislation it was permible for Nestés to use the copyright provided the copyright owner fret paid certain percentage of the “ordinary getail selling price’ of the fecord. Chappell angued that this contemplated seling price consisting ‘f money alone, with the result that the section did not permit News to do what it had done. Nesles argued that the selling price in the instant fase did consist of money elone, namely one shilling and sixpence, the fupply of the three wrappers being merely a qualifying condition to be saute by persons wishing to buy the records, The Hlotse of Loeds, by & tee to two majority rejected chis contention, holding tat since Nestes! ‘purpose was to increase the sale of its chocolate, the supply of the three ‘etppeconsiudng evidence of such als tonne pre the 4 Past Consideration (@ The General Rule [G28], Past consideration no consideration. In Roar © Thomas®® the plants pleadings alleged that ‘in consideration thatthe plait at the request ofthe defendant, had bought ofthe defendant a cerain howe, at and fora cermin pee, the defendant promised the pail thet the Seid horse was sound un free from vice’. They went onto complain Ghat ‘Re horse was not sound and fee from vice. What consieition had the lait, on. this pleading, Sormiabed for the promise. Coarranty3? Geetinly not the buying ofthe horse since that ttneacton preceded the tiving ofthe wernt: that was held tobe o pst consideralan, ot ners ‘eowtutely, no considertion Te war ao Held that 8 wares © eae eee we 1 2) 2.98 54 114 BR, Com is Bone 4 [bd Go 5a daw 208 te ey eae! Stace gts ‘teers of aotr ida ne me sar on mae By Used} acer. 3 8) 3 Gena 19 ees. wortom FORMATION OF CONTRACT. soundness and freedom fiom vice was not an implied term of the contract of sale tell, the consideration for which would have been the plaints promise to accept the goods and pay their price There being no onsideration fr the wacranty, che plaintiff fied. ‘Assume thet A, being already indebted to B, promises to pay on a future dete. The only consideration for A's promise, the antecedent debt, js “past consideration” which is 0 consideration.% Instead of or in ‘tddtion to the promise ro pay, there may be s giving of security, for which Tikewise the part considersticn is no consideration, However, in some such cases it tay be legitimase to infer that there was a promise to forbear ‘om enforcing the original legal lability. If this isso, ancl was the agreed ‘consideration forthe promise or security, che promise is binding.* ® Bsecuted Consideration [529] The concept. Executed contderaton and pst consideration ae Eipanct, In the sace of erecued consieron the actor erberance Shuplied i « pvt of the ume tepncion su the promitesboght fo be Snfrecd, In be cate of pan conserason the promise mde efter an {dependeniy sonseatet aod conch’ ranettion, ‘Tha transaction ‘hay coplain the promsore motive of grautide. or sense of mora “Solyation in ing the subsequen promise, but thi egal irclevan. SoriFA fncs nd ornare foods tod B then romiscs As reward he ‘elu of te goods» pat consideration for Bs promise, Bur B had versed a reward forthe return ofthe goods and Ahad ceumed the foods relying onthe edvercement, A would ave fried an erected fEuidcrdon. ‘he case exept ofan exected conidrsion fe Coil, Carel Sate Bal Co {530} Request for performance. In Lempligh e Brave? Brathwets having commited murder, asked Lampleg to use his best, Gore t proces pardon fom the King. Lamegh wan active and feared elpense to it end, ant later Brathvat promised to pay his {Eld0. He id not pep. in Laropleighs action i aoromps, Beth ‘oved that he prom ta pay bad Been gatos, the ony eoesderaten ierbe found being part Hut the cout rected thie argument. TRe ‘easing ofthe cour" agents thet what ruc i he fat tha te nee did aot spontanevly provide the services but did 0. eponse 10 the promocs requet ‘The court seems to have ented Telus, rexponae and. ronise of peyicat as ll part of the seme ansation, ber than texting the Bar two as a Closed transection {Slowed ty the promise of peyment. "3 promi given ate eet ofthe defendant pir to dhe ending of services and onthe ndstanding that the woman to be pay a tn a raps he cap ih we be decided deel eday under ies fg KEgition For ter imped thereby ae (637 eH). 60 Hponin vapor (38) 3 W 24 191 BR 10S Yor a sats exception a 13 See 31, 22 Lesa) 198-256 Gee se. 95 Leis) ob 105; ER 293, 3 Arob ER 255 108 r | | | covswenmion pan npport a subsequent premise by the requesting feness rendered [331] Implied promise to pay for services rendered Lamgleich o Barret was decided in 1615, tome oro contues before the teat 2eecton of moral obligation "asa ood considerstion.” Two ‘Gkonlsaons have emerged in modern times of» promisar’s Baby on ‘promise eo poy an amount for services which were ear fequerted ‘hers that the fequest followed by the meeting of creates an implied ontract © pay a zeavonable aunt. A subsequent promite 0 pay & Scpulated aiouat then serves es ceidence against the promisoeof whats & feysonsble amount According fh explanation the consideration for the promise isthe actual supply of the services. The other rationaation {Piatt oval request and response impor. an egezment to pay 3 noun yetto be aged bythe pars sod thatthe aul agresing on at mount fice thot emount Under thi approach there i Gates) coma the coundertion fr which i found inthe sewemene of the quantum of Ise ne Ons Pate Stare w Cate owners of patent eights agreed tole their manager a one-hird interest ia the potent in conabertion of sence: In working the patent was argued that on He tre onstruction, the agreement was one to reward for pat servos only, Both ‘f the analjies summarised sbove ae present In the following Pastage fom the judgment ef Bowen 1)" ‘Now, he tof ps serie mts an npn that the ne was Faded watt Be pido andy wat a eric ich wf be pad ‘Br mben you ge i the hubrguent document a promise fay, at brovlae may be wowed ther ean adain whieh erence a 8 fostte tpi wich fc the aca of at reaonae remaon Se fats of which the sie sas original tendered So that here fr par ‘Eres tres apie fration In the pombe fo ee tid sae Where ics imposible to apply either analysis, but i is lear shat the secvices bave not been rendered pretulously, te repent ofthe benef of the services may come under an obligaton to ake resution. [332] Accord and satsfuction, Another analsie of fact sitions ‘where # promise is made in consideration of the performance of & ‘onuracy, that he promise forms part ofan accord and astafnction, the bares agesing on the emount specie! in aubettton for thei rights fod duties uneer the alrendy existing contract:© On thi view, the party,to pay for the 95 Bue On w Law Yi Lone [198] AC 614 (ie (49D. ee ao Re Deas Bs pre ‘Stok ish) ATC 4st cepa rae 34 GS ti 295 Ge toe, 38 Se ST Sta, “Me Condens of Reged 1980)» MULE 34 38 Se inc nn (186) 19 Cts oF, 105 BR orate Ot {GECK Way asi [957] 3A BR 750 and we fre Chapter 23 iby based on ht een 103 Sener ea 109bo FORMATION OF CONTRACT consideration for the promise is the promisee's releasing oF agreeing to release rights under the existing contrac, © Exceptions [333] _Bitls of exchange. In order that a holder of «bill of exchange should enjoy the special rights and protection available to a ‘holder for value," it is neceseary that the holder should have given) valuable ‘consideration for it. Section 32(1) of the Bilt of Exchange Act 1909 (Cit) provides that ‘valuable consideration for 2 bill may be constituted by (8) any consideration sufficient t support a simple contract; or (6) en sntocedent debt or liabiliy’. Paragraph (b) signifies a ‘past considerstion™ ‘which i for this purpose as effective as sulicient consideration, ‘The antecedent debt or liability must, in general, be that of the promisor or drawer of the bil ather than that ofa third pany." At least ‘where the antecedent debt or liability i thet of dhird pary, uaere must be fom reltionship between the seceipt of the bill and the third pare’s antecedent debt or liability. For example, the promisor or drawer may Ihave oblsined the recipient's forbearance or promise to forbear from suing the third parey. Even where there exists m entscedent debt or liability, + “consideration suficient to cupport a simple contract’ would exit ifthe Dill was truly given in recur for a promi to forbear from enforcing that debt of ibility. “Where there has been a contract forthe supply of goods of services for 4 price and the price has not been paid but a cheque has been given for the amount of the price and nor honoured on presentation, the supplie is usually eniled to sue ether on the erginal cantract or on the cheque, ‘The supplier will usualy sue on the cheque because defences relating to the goads or services are only available 1 aa uetion on the dishoncured cheque ifthey establish total failure of the consideration! for which the cheque was given, They are available to an action for the contract price even if there was no total fllure of consideration.” [334] Acknowledgment of debt. In the case of a debt, recovery of ‘which would otherwise be barred by te relevant statute of limitations) an acknowledgment of the debt (including an acknowledgment by part ‘syment) by the debtor ‘revived’ the eau of action so thatthe Kiitaton period commenced eo run as from the time of the acknowledgment. This rule, developed by the cours, was sud to be sustained by the view that the ackiowledgment imported a promise to pay the debt. Such an implied promise, being given without consideretion, could not itelf be sued pon ss a contract; but what justification could be offered for having. Timitation period, in respect of a cause of action which had accrued Perhaps years previously, run from the time of that later promise? Any need to resolve this dificult is now obviated by legislative provisions ‘which dispense with the requirement of consideration or provide that the 104 Fir» Dai (1940) RA 727 Has» Win (977 1 Lays Rep 10s Seer, “er Toa Se goa (306 [br senna no inne | ‘coNsiDARATION bs cause of action is deemed to have accrued on and aot before the date of the acknowledgment or last payment [35]. Ratification by minor. At common law, voidable consracta ofa fhinor could be rendered binding by being ratified by the minor once the ‘minor avained majority Thus, by vieae ofa gratuitous unilateral ach a person became liable on a promise on which he or she had not been lable previously, cither during infancy or after majority “and before faction 5 Musory Consideration P36] The concept, Sometimes it is said that a propounded ‘conidcration is no’ consideration because itis ‘ilusory”. The characterisation of a consideradion as ‘illusory’ obscures rather than, latifies, und the word bas been used to refer to conceptaaly diferent ‘Bings. Thus, a promise which, i weenspires, ie nothing more then ¢ ‘promise ro perform contractual daty already owed to the otuer pany"! fad a promise to do something which the faw declares to be egal"? could be ‘called latory considerations, Other illustrations might. be promises agreed to be binding in honour only and nat st liv!" oF Dromises accompanied by an exchaion ofall laity for eny breast! Tf the expression, ‘ilusory consideration’ has any uty it it in describing a promise, performance of which would be at the sole discretion of the promisor. Because of the ceervaton of discretion, the promise cannot be regarded 26 a sufficient consideration. Itty also, perhaps, useful in describing uncertain promives which it would be Impossible to enforce.""® [337] Relevance mainly to executory considerution, It is erecurory fiber than executed considerations which are usually described as ‘ilusory. The promise will have been formulated in language by the Dart and wil eed oe so fonlsed by the plait a a o be cadings. Analysis of the partet’ language or the attempt to plead the fonsideraton may reveal ‘vague’ promise. Jatt ax the defendaa’s promise must be suicendy certain in meaning to be enforceabe!'” 39 ‘st the plaints own promise whichis put forwards consideration." 18 408 358 gnealy ACT: Limon Aa 1985, «32; NSW: Linton Ae 1960, 54 NEL “ts 961, 4 Qh Lenn of Acti tes Its 3508 $A Eonar ‘At fe 596, «Most Lita tt 197% 49) Ms Lite of tos Ae {oan 24), WA: Linton de 935054, 10 ee ft HO Fr legatine room sc (824), (871-897) 1 Se gal Bae). ase fa 13 See Hoel Ha ereea HS ec Hee fe Hse 75 WRCE Cphon 9 Si Lack Cums) Lal (981) 8 NSWLR BF at 94 (PC) (eam 16 ‘Suerte not amides) mrag FORMATION OF CONTRACT [338] Discretionary promises. In Placer Deudopment Led 0 The Conmonvealsh"? there Was a written agreement berween the Common ‘alth end the plaintiff company (Plat) which contemplated that Placer ‘would form a company (the Timber Compan) to produce plywood and ‘other timber products in what vab then the ‘Tertitory of Papua and New Guinea, Tt contained the following clause: $f estoms daty is ps upon the iporeatin iota Australia of the plywood, veneers logs and ‘ther products of the ‘Timber Company, end is not ‘emied the Commonimenth wil pry ro dhe Tanber Company a wabidy ‘pon the expertaion of these products tren the Teroty for enty ints ‘Attia of sn amount oe sta snte determined bythe Commocrata fram, {Ueto dine, bur the xnount of subsidy paid shall nt exeeed the mount of ‘isto duty paid and not reed ‘The High Court held by « three to two majority that the agreement did pot oblige the Commonwealth to devermine an smount or rate of subsidy, fo pay a subsidy of an amount of rate sulficlent to recoup the custome uty paid and not emitted, or indeed, to pay any subsidy a all. Kit J, ‘who delivered ane of the majority judgments, seid? (T]he general principles etatned wich Vanghan Wim LJ in Lafu © Rote!" exrested in words that were rubmequenty adopted by Lecd ‘Weeabury, 8 Buckley J, 0 Brome v Speak! Ie tat wheterer words which by’ themiches haste m promise ae accompanied by words ‘Showing tat the promise i to ave &ducretion ot optia a to whether he ‘wl cary out that whieh purports to be the rome, the ren tat there Jno contact on which sn aion can be trough at al. The succioc: Statement of the pancple fe Leake om Contac des p 3 Prominton ‘expcesions Tiering av option ar to the perormance do not create contract was approved by the Lard Justice, atc water by Lov Wega ‘Hilas © Co bad v Areas Lad On the other hand, Menzies J (one of the dissentients) said: 1k appears to me that two interpretions of the clause are open. ls hat t ‘retes no logal obligation at ll beenuae what fe provides an ily Dromise os the part ofthe Commonwealth The second tne toes eeate fin obliaion when the condone stated ee falled (1) to determine & ‘subsidy within the ini ad (2) o pay the subsidy determined. ‘According to the forme lterpreuton, ifthe Cassmouweakth were t eternine & Subsidy upon intpored produc % would il be under 20 ‘hligaion to pay the subsidy so determined; eecording to the later dhe ‘Commonwealth's abigation # bed ta determine what the sub to be sd then to pay is preference wos for the later interpretation. And the case was clessly fone in which much could be asid in favour of both views. However, it ‘oes litle credit to w government to make a promise in\a commercial 119 1960) 121 GLE 353, See ao Sih Bie Fy La » Orr Ths Pry Lat {190} VER 16; Bch Acta Ry adv Par (198) 18 NOWLER ID 3 3 (002) 18 TRS 834, 22 [1903] On S86 a 598 125 (330) ta tao) a 817 12 09g) 121 CLR 3580903, Cro 370-1 i | | | constenarion om ext and then be permitted to say that the promise was merely ill Sega ease to inte he poms shld ae Teed os entrceabi 39] Vague and uncertain promises, As noted carlier,!®" motive is a fom enendeton. Bot aurea he’ conadeton SSpmunded by a promisce i «promise to thow love and affection ov 4 ropgae not to complain. Are uth promics of no value inthe ee of ie Posen they are of no scontmic value? A pertinent Qoeton lav per uch a promise could be enforceable inthe rene thet damages TO be awe for ite brsch: No authority w kaon to deny fuck 8 $Setay in pone, it even nominal damages would be awarded the Tonite shotld serve at good consideration fast av promise to Pay 8 oyna sm doe In Duomo Danton =a major of te Pall Cot "Fave Supreme Cour of Vitra held’ 1o bea vad consideration b ‘Toma's promise to he former husband nota any te to Comma “ry chery she or Det former husband) shal or tay Become subjected {© personal ate, contempy or ridicule, and to “conduct here with Soon, and in a respectable orderly and vireaoue manner and wih all reaper er former husband. Hood J, casentng, would have bel ibe Wave promise too indefinite to''be' enforceable nd. theere be Cekictation Whie Bec!™ is sometimes cited as an isttion of tasory commierton. The defendant vm sued by his te far exceutor ont Sromirory note which he ha gven to is fate in repo oun. The Eclnce wis that he had had jae grownde 10 complain ofthe distiotion Which his father had made ois property among hi hildren and that Nt [Sher had ected the asics of his complain, that twat agrecd by and tecween the suid J Ben ihe father} and the defendant that the xendons should fever cease to make uch complains nd that in enideration ofthat agreement, the father pred to dscherge he fom icing on the note and te ese of acon in rape of tf The court Connitred the plead coosideraen to be no conLeraon, Pollock CB Servet that tnce the son had no loa ight to challenge tne tors ‘Saeution, ‘he son's abstaining ffor doing what he ha no pt todo an be no consideraon' Pollock CB and Alteran B noted i eect hat Sine anyone could complain about anything, a conrrybolding woud teen thet a cosidctan wotld always e fend co Be fated and ‘ald ito secs to suppor any promi Precsly why (except for olcy Texsons) & promise to desist from Late Damir © Sul Ge Lad 19091 AC 25, 133 Macondton Bare Supply Co ine Cinder (901) 2 Ch 79. Sach conten ny be {teu under Tea tae de 1974 (C8 7 34 Dowty Bava (1889) 28 ChB 895, 135 Ss th Ep Pe Py Yad» Cd Theses Py ad 1043] WER. 163, 38 See AG Davy Pete to Pett an Eun Dut (1936) 6 Camb £202 1531 Se generally on ation (35, 3) ue CONSIDERATION oe ‘tv general principle was stated by Maton Jia Wigan 0 Bewands® in hese er” neal nie hat 8 promie wo perform an exning duty is 9 ‘ostcrcon, a enn when te promie made by spar toe precxog cont we ks toad ote promi under tar cnc, tna 1 40 eet tha the promise Bound to do unde tha contac. Te Tle the eoeepe thatthe new promis, idsieulsable re the oe ‘Slntery consideration. Ande ghs ne eafon toa party wh by rey fhretcning« breach of cont ace t9 secure tn ddional const {Berne the ser pay the cng te ft pes new pom ‘Pyeronnance wil provide rosie concertos fe tat beet “The statement implicitly recognises two exceptions: the rule does not iy’ whan the promise is made fo + third party: and consideration TPEzar where the plsins exstng legal duty 8 excesded. ‘These a iper exeeptions are considered later." More generally, the words “at {fae ncicae that Mason ] wat confident of the Tule’ opertion only tein # narrow sphere. Th fact the rule es been questioned and come nder so much cries that its scope and vai are now matter of Eomvorsble doubt. Te is convenient te consider the decided cases in ‘tegors of pre-existing dacs. ne EE my (©) Pablie Duties [Bh] Ts a promise to perform publle dury consideration? In ener the cous have treated the promise to perform» public duty as ot being suiient consideration. Thusy in Calin Godsfey'™" the hina sued te recover compensision for fis loss of tise in attending ‘ut under subpoena as witness forthe defendant. Tt as held that Since dhe law imposed 4 duty on a person subpoenaed to atend at the ‘our tne tome to give evidence, a promiv to temunerate bim for Sling so wae without consideration. Asvuming ie validity, the principle {Splits equally to promises nos to do tht which the genera aw probs ‘Bio proms to do tat which & compel” However, in several caes the rule has been avoided, and its validicy socstoned: Alcading cane i Ward v Byham.' The unmarried parents of 8 cid separned end the mother became houtekeaper to aman who, with ‘router, was ceed to let tae ci live wth them. The mother wrote f0 tbe Suber taking thet she Ive the child and that he pay her the £1 pet ‘beck he wt already paying neighbour to maintnn tke cd. The father ‘rote agreeing “providing you can prev that she will be wel ooked ater End happy and aio that she i allored to die for here whether oF not She wishes to come and Ive with you The child went ro live with the ‘other to who the father paid £1 week unt, some asven month Inte the mother marie, whereupon the fther ceased paying. In he 138 4975) € ALR S86 {Bb hes Wate peed, See [ah (43) Bs) (94) 4860, "1 GHD1) 1B aa 0, i UR 0, 14a Vung Brin 1699) LR 1 Ee 5 £239). 9 195019 AI ER 318 usber FORMATION OF CONTRACT father's appeal against @ judgment based on failure to. perform the agreement, Morris and Darker EJ, in bret judgments, scem to have held that by the terms of the lets? the mother’s obligation Wak to prove something tothe father and that this was to do more than to perform Her Statutory duty to maintain the child and that the fathers promise way ‘therefore supported by considersion,!™" However, Lord Denning MR ssid" 1 approach the case. om the footing chat, o ooking ter the chil the ‘other i only ding what he etal botn to do Even sy Thnk da there was suficiene consderaven ta tuppors the promise, have always {thoughe thats promise co perfoom an existing Sty, the pevfornace of should be regarded an good consideration, becaise it's beneft to Me ‘etson to whom its even. Take this very cae tf as Much t Dene Or the father io have the child locked afer bythe mothe: ts byw aceiooue TE he gets the bent fr which he supalited, be ought to honour his pemise, ‘ade ought not mo avo thy saying wat the mother was herself wader & ‘Gury eo maintain te cal, milacy, in Wika w Wiliams!" while s majority of the English Court of Appeal was able to find (or perhaps invent) consideration, ia the dy ‘being exceeded, Lord Denning MR reiterated his view that @ promise perform an existing duty is sufficient consideration to support promize, ‘eo long as tere is nothing in the transaction which is Contry to the Public iterea’."” Tn Pepi v Popiw'"® Hudson J accepted whet Lord Denning had sti in these cases at a correct statement ofthe law, but he ‘was alo able to find (or invent) consideration. [343] Promise to exceed duty good consideration. The leading ase Glasbook Bros Lit 0 Gi County Counc? while acknowledging the rule, illustrates that chere will be good consideration if the person subject to the public duty promise to do more than what tat duty calls for, ‘There was 2 strike at the plaintiff company’s mine and the maneger requested thatthe defendant council provice a resent garrison of police in order to ennure the protection of the ‘safety mea’. The pele thoeght this to be unnecessary and that adequate protection could be provided i ther ways, But atthe manager's insistence, the council agreed and the ‘manager promised to pay the cost of rationing the garrison snd far ts services at specified rates. The Council's action to recover: £2200 succeeded, since the supply of the garrison went beyond the protection which the police were Bound by lew to provide ee 1441 mig here been potibe e ilcnatecon io id pre by oe mtbr eee ie tig wae rt tes (i ac Ind or say te ceed vo eng ch peceings ed be ee Ie ar ero bring then eo he cen fe be ing Noms 140 [957s wom ae [1931 VR oe 499231 AC 270 Se Shashen 6 Wien Rebion ud Canpnation Co (1900) [ i | consipaRATION tw © Contractual Dusies (9 Gove res 1] Promise o perform contractual duty not consideration. In it NGneh ®t ston ener hoe wip cee eet dd the capsin, eing ‘unable to find replacemeatn, promised fee Femaining eight members ofthe erew Gncuding the plain) ro dvi the awh ede wol ave cr sng ten won he ‘orig the vesel home. The pliaif completed te voyage aid sued fey fix sare. By hi orginal employment contac he pln was a be peed ‘Eber month and was bouta todo all he could under ihe crseoereiee ot the voyage. Lord Blenborough held that tere wat no conncepation fon ihe promiae sine the postion renatng ftom the desetion of the tee sailors was as mc ‘an emergency ofthe voyage ae their dente would hve been, Since the plainti was already bound by bis cnieact to de al shat be could to work she ship home, his promise to do this wat a0 onsideration forthe promise of extra payne ‘Although the decision may actually have been bated on considerations of pubic policy, viy that to allow the action might reward exiaion: te aur hes been tAken as authorty for the proposteon thar melts Performance of, nor promite to perform, x contact! duty tirendy Swed tthe promis, i god consideration for de promise bythe nes [245] Promise or performance beyond existing duty as consideration. Decisions such st Silk © Mynck wil Bed Snguishabl if the plainti has made promise which in some way gone ‘ond the preextingconcactul dy: Simla te exining oy Sele lot apoly if the duty has been exceeded. Thuy in aodey Pavan 38 shorege of crew. made ® perour to conioue the rpage ‘rth the resle thatthe remaining erew were not bound to costie fo sere and a contact for additional payment if they did so man hel ‘ining (9 Bxiptons [346] Promises with: different contents. In Larkin » Girvan'® Jordan CY observed thet therein a special tats of ce in wher ie ecetey to see Hf conideration wos farniahed by dhe prince wel se by the promises, namely “were the promise sought to be elarced ie {land to be a promise to do something which the promisor i areegy ‘ound to do by a prior enforceable contact withthe promise’ In dee {238 & landowner (the paint contacted for a bulder (he defendant) vo bulla house for het. There were dispute over alleged deft and ‘Bint dhretened to rele: the dspute to abit under te ing ‘enact. The builder promised to remedy any defect within ax monte ——O—av—S—aNXue 130 4840 3 Gowp 317, 170 BR 2148, 1311809) 2 Comp 317,70 BR {Lee Gee B44p, OD EB UP et Stn mere Dam In R 6 ont Herd Spine Co st» Cain ls ad 1915] | NEL S25 Roh Caen SES Eat «nda Contrain Co Lad (dente Bern) 09) GSTSbey FORMATION OF CONTRACT she would not resort to arbitration. She agreed and later sued for breach of the builders undertaking. Jordan CJ apparentiy had 20 difcuhy in regarding the conten ofthe promise to forbear torn arbitrating ae having Jegal value, but observed that if the builder's promise had rot gone beyond the duty which he alreedy owed vo the owner, mutuality would hhave been lacking with the result that the promise to remedy defects within six months would aot have been binding, and, premumably, the ‘owner's only remedy would have been to sue on the original contract, However, he ssid that the builder had furnished consideration by sdmiting the owner's claim which he bad previously disputed, thereby faving her the trouble end expense of arbitration, B47} Termination of the contract. ‘The principle thet a promise to perform a contractual obligation already owed to the other party & no ‘consideration for ¢ retum promise by the latter es no eppliition where the cerlier ‘obligation is, as part of the agreement, terminated oe dlscharged." In other words, if the existing duty is discharged by ‘contract wich includes @ promise with the tame content ae the crigital promise, the promise will be regarded as binding because consideration is present in the partis’ agreement that the orginal duty isto be discharged, Nor, generally, will the principle apply if the fst agreement cen be lawfully tecminated. For example, assume that an employes demands higher wages for work which & being done under a contract of employment terminable by one week's notice by ether party. Assume eve tht, although agreeing to-do so, the employer doce nat pay the increase. Cleaty, if the employee had terminated the original contract by one week's notice, a ffesh contract importing the new wage rate for the future ‘would be binding. Unies the circumstances are sch that i is impossitle fo interpret the second contract as a termination ofthe fist, + court will cise sn implied agreement fo terminate the original contract and ‘consieration will be present. [348] Factual benefit to promisor, In Willams v Roffey Bros @ Nichols (Coniracion) Led" the Boglish Court of Appeal held thar the existing dty rule will not apply ifthe promisor receives factual benefits from the performance of the duty, or the promisor avoids a 'disbencfi| Which might have resulted from the other pary’s failure 20 pecform. ‘The plaintiff was a cespenter who hed contracted to do carpentry work (0n 27 flats in a block whicn the defendants had contracted to refurbish, ‘The agreed price was £20,000. Of this £16,200 had been paid when the financial diftculties ofthe plaintiff proropted the defendants to promise to pay an exten cum of 10,300, payable at the rate of (575 for each ft in Fespect of which the carpentry work was completed. Te seems that there wat a promise to complete the work. Between the making of this agreement and the plaintiff's abendonment of the work some eight more fas were completed. Subject to 4 deduction for certain defect ia the ‘work, the court held thatthe plainif was ented to recover £4600. The 134 Se tbe (350-1955), 1388. 133 [1991] gB 1. See Btn Cote Cenarion and Bent in Fat ond in Law (1990) 2 JCL 2s Jet Aba er wns (99) 99 MER 3 ee Pe, ne | | ‘CONSIDERATION bay obvious objection to this decision ie chat the plaintiff did less than is oatraetuel duty in performing the work. ‘The work which was done ebuld ‘everdblese have been regarded as guficient consideratcm had the second fgreement been inthe form of a termination ofthe old end aubstitution of the new,?™ but the triel judge said this was not the intention of the es. How then did the court find consideration tobe present? “Glidewall LJ expressed the law inthis way." (@) if A bas encerd into contract with B to do work fo, of to supply oods or sevioes to, Bn eta forthe pays by By and (Ge seme stage before hes compleey performed bis obligation uncer the contr has reaton to dovbe whether A wily or wil be ese to, ‘complete hi sie ofthe argny and (i) 8 thereupon promiaes A an addtional payment in remes for As promise to perform his contzacualobiatons on ine; and (i) ma rena of giving hi promise, B obtaoe « practical benefit, oF ‘brates 4 csbeneiy and (9) B'spromie is not given as a result of economic dares or fraud om the pareof Ay chen (0) the benefit to B is capable of being considerstin for B's promize, #0 ‘atthe promise wil be legally bing. ‘The benefits which the defendants wore said to have obtained (and ‘debeneiia’ which they may have avoided) were a measure of protection against the csk that es a result of the main contract to refurbish they would be liable to pay liquidated damages and the avoidance of the trouble and expense of finding a replacement for the. plaintift. "This pragmatic approach to consideration was also adopted by Rustell and Purchas Lif, "The former was prepared to adopt!™ such an appreech Where the promisor grins an advantage arising ot of the continuing feltionship. with the promises, and. the latter emphasced!™” ihe ‘commercial advantage co both sides inthe agreement. ‘With respect is it dificult co reconcile thie approach with the prior case law. Moreover, if factual benefit is eapable of being regarded 26 ‘Another, ako faily fundamental question, is whether contract lew should not develop the enforcement of promises without a requizement of fonideration being satisfied, This point was alluded to carlier in the (Gscustion of contract theory! Ie may also be pointed ovt thar Amesican law, under dhe guidance of the Restatments™* has got on quite well with ‘ody ofiaw dealing with the enforcement of promises not supported by consideration.” “There isan air of unrealiy to many of the rules discussed above, and tncr operation has been etitcied, For example, ia Wand » Byhain™ [Lord Deaning MR accepted asa general proposition chat performance of fora promise to perform an existing legal duty of any class should be ‘egarded at good consideration bectuse™* it isu bene to the person to ‘whom ic is given’, end if person ‘gets the benefit for which he stipulated the ought fo bonetr his promise. ‘We concentrate on the existing duty rules as those most in need of reform. There is, however, a more general epproach co the law which should be mentioned, namely, the adoption of « subjective notion of ‘consideration 2% [362] Public policy. The distinction between a promise to performs an casting duty owed 9 a party to a contract and one owed to a third party ‘Seems ilogieal particularly where (as in Pao On © Lau Yiu Long) the ‘defendant asa financial interest in the performance ofthe contract with the third pary. The promite is tl to do precisely what is required under tn esting obligation. There i no public policy objection to regarding the ‘romine ab a suficient consideration, particularly when regard & had to the concept of economic duress 26 Similarly, the dstinetion beqween a promise to perform a public ducy sand a promise to perform 2 private (contractual) duty & arifcil. Consideration is an inappropriate mechanism far controlling she promises of those subject to a duty owed to the publica lege. While it would, for trample, be egeine the public interest fo permst a public officer to recover 4 promised reward for carrying out official duties, no comparable ‘considerations apply in the case of a promise to perform contractual cbligations owed to's party to « contract Thus, we agree with the view ‘hat promise 10 perform a public duty should be regarded as sufficient consideration.© But the enforcement of the promise which it supports should be denied if public policy so requires 2% 220 Ct Smet Si, Bin and Non trpn Pr (185) 18 WAL Bi Seta, Bikes fb 7 Gomis eae. $B bec Suet Sy gpl sh Canc Tay (1990 3 $C Be hose Saga sta er BED. Bini ipsa Bi iceme pases {BS Rey wee en what yen he igh approche 5. £0 ME gncly oo pt ply eto 0) kebor FORMATION OF CONTRAGT [B63] Economie duress, Given that promisr (A) has regarded 4 ‘Promise by Bo perform ea exiting diy a consideration for 8 promise Sn A's part che law serves no useful purpone in denying the enforscrbity Of A’s promise on the basis that vad not given for value What Ino toncera to the law is that As promine should not have been obained by extoron. ‘Thu, A's promise to pay B entra money 8 wil do thet wi Bris abeady conacually bound to A to do may tase the specue of esonomie duress. Why would A make or promise tn aisond payment Unless B wor Fefesng to perform withou Ifthe crcumseaness tatty the tests for operave economic durah™ the contract wil be vidable by ‘A‘een if eosideration presen, {tis suggested that public policy has no ret relevance othe contactal

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