CONSIDERATION

In English Law, the basic proposition is that not all agreements are legally enforceable.1
According to Professor McKendrick, consideration serves as ‘a badge of enforceability’ to
agreements.2 Therefore, apart from offer, acceptance and intention to create legal relations3,
consideration is also required for the formation of a legally binding contract,4 allowing us to
distinguish between a gratuitous promise and a bargain.5 The traditional approach to define
consideration is based on the idea of ‘reciprocity’6: a promise is received in exchange for a
promise being given.7 Both of which are respectively beneficial to the parties.8 This view was
extended by Lush J in Currie v Misa9 — that consideration need not be the conferment of
benefit to the promisor but it can also simply be some detriment or loss suffered by the
promisee or some benefit conferred to a third party. In Dunlop v Selfridge,10 the theory of
bargain11 was accepted by the House of Lords through adopting Pollock’s view of consideration
being the price the promisee pays (as requested by the promisor) for the promise in return.12

PURPOSE OF CONSIDERATION
One of the purposes of consideration is that it gives the party justification to enforce a
promise.13 This is done through the party proving that he/she has conferred some enforceable

1
M. Charman, Contract Law (4th edn, Willan Publishing 2007) 46.
2
E. McKendrick, Contract Law (12th edn, Palgrave 2017) 118.
3
Transformers and Rectifiers Ltd v Needs Ltd [2015] EWHC 269 (TCC).
4
C. M. Boardman, ‘Considering Consideration: A Critical and Comparative Analysis of the Doctrine of Consideration
in the Anglo-Canadian Common Law’ (LL.M. thesis, University of British Columbia 2013).
5
M. Giancaspro, ‘For Your Consideration: Old Rules, Practical Benefit and a New Approach to Contractual Variation’
(DPhil thesis, University of Adelaide 2014).
6
McKendrick (n2) 118.
7
B. Hough, ‘The Doctrine of Consideration: Dead or Alive in English Employment Contracts?’
<http://eprints.bournemouth.ac.uk/2898/1/78.pdf> accessed 31 December 2021.
8
ibid.
9
(1875) LR 10 Ex 153, 162.
10
[1915] AC 847, 855.
11
Charman (n1) 46.
12
J. Poole, Casebook on Contract Law (13th edn, Oxford University Press 2016) 125.
13
M. C. Wishart, ‘Consideration: Practical Benefit and the Emperor's New Clothes’ (1997) Oxford Scholarship
Online
<https://oxford.universitypressscholarship.com/view/10.1093/acprof:oso/9780198265788.001.0001/acprof-97801
98265788-chapter-5> accessed 1 January 2022.
benefit in exchange for the promise.14 Second, when seeking for remedies, consideration serves
as the basis to determine the scope of the promisor’s liability to the promise.15 Third,
consideration provides the value (price) of the promised performance, as established in Dunlop
v Selfridge.16

REQUIREMENTS UNDER THE DOCTRINE OF CONSIDERATION

To form a valid contract, there are three requirements which must all be satisfied under the
doctrine of consideration. First, ‘consideration must move from the promisee’.17 However, it
does not need to flow to the promisor. It can flow to a third party upon the promisor’s
request.18 The traditional approach only allows the promisee to enforce a promise; a third party
who did not provide consideration cannot do so.19 Nonetheless, this rule has been statutorily
amended under the Contracts (Rights of Third Parties) Act 1999, allowing a third party to sue
and enforce their third party rights without having to prove that they had provided
consideration prior to that.20 Second, consideration must be sufficient but it does not need to
be adequate.21 For consideration to be ‘sufficient’ in the eyes of the law,22 there has to be some
economic or material value23 on each side of the bargain. However, due parties’ freedom to
contract and the laissez-faire approach, the courts do not bother with the adequacy of the
consideration.24 The comparative value of the promise is not taken into account; nominal
consideration suffices.25 This is reinforced in Chappell & Co. Ltd v Nestlé Co. Ltd26 whereby
consideration of trivial economic value is still good consideration.

14
ibid.
15
ibid.
16
Dunlop v Selfridge [1915] AC 847, 855.
17
McKendrick (n2) 121.
18
Dry Bulk Handy Holding Inc v Fayette International Holdings Ltd (The Bulk Chile) [2013] EWCA Civ 184.
19
Tweddle v Atkinson (1861) 1 B&S 393, 121 ER 762 (QB).
20
Contracts (Rights of Third Parties) Act 1999.
21
McKendrick (n2) 121.
22
Poole (n12) 127.
23
White v Bluett [1853] LJ Ex 36.
24
Giancaspro (n5).
25
ibid.
26
[1960] AC 87 (HL).
Third, a promise cannot be enforceable if past consideration — which predates the promisor’s
promise — is provided.27 This is due to the concept of reciprocity; a direct correlation is needed
whereby a new promise must be supported by new consideration.28 However, an exception to
this rule is expressed under the doctrine of implied assumpsit.29 Pau on v Lau Yiu Long30 further
furnishes the three conditions which must be satisfied under this doctrine: the original act was
done with accordance to the promisor’s request, a reasonable person would have clearly
understood that the promisee would be rewarded for it and if the promise for payment was
made prior to the act, it must also be enforceable.

RELAXATION OF THE DOCTRINE OF CONSIDERATION

Regardless of the aforementioned exceptions under the doctrine of consideration, the
traditional approach to the doctrine as derived from Stilk v Myrick [1809]31 has been criticised
for its overall rigidity. In the Espinasse report32, the promise was unenforceable on grounds of
potential economic duress where a similar outcome was seen in the case of Harris v Watson33.
Garrow suggests that such judgements were made on grounds of public policy because if such
promises were held to be enforceable, it would encourage sailors to hold captains at ransom at
high sea for additional payment.34 Nonetheless, if the Espinasse report is correct, then without
the extortion, it can be argued that the promise should be enforced.35 During the time of Stilk36,
the doctrine of economic duress was yet to be formally developed thus the doctrine of
consideration was used to protect the parties from being exploited. Years after that, Lord
Hobhouse stated in The Alev37 that with the establishment of doctrine of economic duress,
courts have no reason to refuse to recognise consideration even though the bargain was
insignificant or non-mutual.

27
McKendrick (n2) 121.
28
ibid.
29
McKendrick (n2) 140.
30
[1980] AC 614.
31
(1809) 2 Camp 317, 170 ER 1168 (Campbell’s Report).
32
Stilk v Myrick (1809) 6 ESP 129 (Espinasse Report).
33
(1791) Peake 72, 170 ER 94.
34
Stilk (n32).
35
Poole (n12) 140.
36
Stilk (n32).
37
[1989] 1 Lloyd's Rep 138 (Lord Hobhouse).
In the Campbell Report for Stilk38, it states that performance of an existing contractual duty
does not constitute sufficient consideration. This is because the promisor will be receiving the
legal benefit he is entitled to receive from which the promisee does not suffer any additional
legal detriment to confer it to the promisor.39 The judgement of Williams v Roffey Bros. &
Nicholls (Contractors) Ltd [1989]40 went against this traditional rule in Stilk41. It was held that any
additional promise given to the performance of an existing contractual duty is enforceable, if
the promisor gains a practical benefit from it. This is based on the assumption that: A and B are
in an existing contract; in midst performance, A recognized that B might not be able to complete
his contractual obligations; A promises to give B additional sum for B’s promise to complete
his/her existing contractual obligation in time; A obtains a practical benefit or obviates a
disbenefit upon B’s completion of his/her contractual duty; and the additional benefit to B was
not procured by economic duress.42 Lord Justice Purchas further stated that if the contractual
variation leads to benefits being conferred to both parties, but if one party did not suffer any
additional legal detriment, it would not be ‘fatal’ to establish consideration.43 Lord Justice
Glidewell further clarified that Williams v Roffey44 ‘refine[s] and limit[s]’ the principle in Stilk v
Myrick45 but leaves that principle ‘unscathed’; Stilk46 was thus distinguished, and not overruled.

The practical benefit approach in Williams47 was commended for being ‘more flexible, less
formalistic, and closer to modern commercial practice where there is a need for fluidity to take
account of changing market condition[s]’.48 For instance, in Williams49, the practical benefits are
that the main contractors need not hire a new contractor and were assured the job would be

38
Stilk v Myrick (1809) 2 Camp 317, 170 ER 1168 (Campbell’s Report).
39
McKendrick (n2).
40
[1989] EWCA Civ 5.
41
Stilk (n38).
42
Williams v Roffey Bros. & Nicholls (Contractors) Ltd [1989] EWCA Civ 5.
43
Williams (n42).
44
Williams (n42).
45
Stilk (n38).
46
ibid.
47
Williams (n42).
48
R. Halson, ‘Sailors, Subcontractors and Consideration’ (1990) 106 Law Quarterly Review 183, 185.
49
Williams (n42).
completed by the promised date. Practical benefit will also amount to consequential benefit,
such as the formations of a more systemized payment system, the avoidance of a breach which
might damage the promisor's reputation and loss of a valuable commercial relationship with
the third party.50

With regard to the English Courts’ attempts to deviate from the rigid usage of the doctrine of
consideration, in Anangel Atlas Compania Naviera S.A. v Ishikawajima-Harima Heavy Industries
Co. Ltd. (No 2) [1990]51, Justice Hirst found that the deal between the parties was valid. Through
applying the principle in Williams52, he mentioned that the opportunity in gaining or avoiding to
lose business was consideration.53 Hence, it can be proven that the decision in Williams v
Roffey54 has later on influenced courts, making them depart from the traditional rules of
consideration to a certain extent.

LIMITATIONS OF THE PRACTICAL BENEFIT RULE

On the contrary, the law has developed different approaches to different types of contractual
variations. In an earlier case of Foakes v Beer (1884)55, the ruling of Pinnel’s Case56 was applied:
a lesser amount in payment cannot be deemed as satisfactory for the whole payment. It was
thus held in Foakes57 that the part payment of debt was not good consideration to discharge the
total debt. This is because the debtor is only performing his existing contractual duty to the
creditor.58 In Foakes59, Lord Blackburn did not side with the majority. He acknowledged that
prompt payment for part of the debt is more commercially beneficial. He consequently
acknowledged there is a practical benefit in doing so as compared to paying nothing at all.60

50
Wishart (n13).
51
[1990] 2 Lloyd's Rep. 526.
52
Williams (n42).
53
Anangel Atlas Compania Naviera S.A. v Ishikawajima-Harima Heavy Industries Co. Ltd. (No 2) [1990] 2 Lloyd's
Rep. 526 (Hirst J).
54
Williams (n42).
55
(1884) 9 App Cas 605 (HL).
56
(1602) 5 Co Rep 117am (Ct of Common Pleas).
57
Foakes v Beer (1884) 9 App Cas 605 (HL).
58
ibid.
59
Foakes (n57) (Lord Blackburn).
60
ibid.
In Re Selectmove Ltd [1995]61 (later than Williams62), the Court of Appeal held that the practical
benefit rule was only applicable in situations, such as in Williams63, where there is variation
agreement to accept more of the same.64 The rule is inapplicable for variation agreements to
accept less, such as the part payment of debts.65 It was also stated that the nature of the
contract was different in the two cases: Williams v Roffey Bros66 was about the provisions of
goods and services whereas Foakes v Beer67 was regarding debt payment. Despite
acknowledging the decision of Williams68 that the conferment of practical benefit is capable of
amounting consideration, Lord Justice Peter Gibson69 also held that the decision in Re
Selectmove Ltd70 was inevitable due to the doctrine of judicial precedent. Enforcing the promise
made to the company—regarding the suspension payment to the Revenue—would make the
decision be in conflict71 with Foakes72.

Nevertheless, these aforementioned cases were in further conflict when the ruling of Williams73
was applied in a recent case of Rock Advertising Ltd v MWB Business Exchange Centres Ltd
[2018]74. Lord Justice Kitchin recognised that MWB would receive many benefits from the
rearrangement: first, the arrears owed by Rock Advertising Limited would be repaid; second,
Rock Advertising Limited would remain in occupation so MWB does not have to find another
tenant.75 Lord Justice Arden’s judgement was similar. She mentioned that the promise to
contractual variation is enforceable if the promisor receives additional (practical) benefit as in

61
[1995] 1 WLR 474 (CA).
62
Williams (n42).
63
ibid.
64
Re Selectmove Ltd [1995] 1 WLR 474 (CA).
65
ibid.
66
Williams (n42).
67
Foakes (n57).
68
Williams (n42).
69
Re Selectmove Ltd (n64) (Gibson L.J).
70
Re Selectmove Ltd (n64).
71
ibid.
72
Foakes (n57).
73
Williams (n42).
74
[2018] UKSC 24.
75
Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24 (Kitchin LJ).
Williams.76 The Court of Appeal here did not follow the rule of Foakes v Beer77 and held that the
variation agreement was supported by consideration.

However, the decision in Rock Advertising Ltd78 was criticised for bypassing the rule of Foakes79
for applying the reasoning of ‘practical benefit’ despite that the notion (of practical benefit)
was not endorsed by the House of Lords in Foakes.80 Besides that, the decision in Rock
Advertising Ltd81 also led to uncertainty regarding the variation agreements to accept less —
whether the benefit received by the promisor was only the money payment or the money
payment was supported by some additional benefit which will suffice as consideration.82 For
instance, it is rather ambiguous and uneasy to determine why ‘avoiding the void’ alongside part
payment was good consideration in Rock Advertising Ltd83 yet payment alongside avoiding the
cost of chasing a tax debt in Re Selectmove does not amount to consideration.

CONCLUSION
The aforementioned scenarios have shown us that recently84, some courts are trying to enforce
the ‘practical benefit’ rule which will grant more flexibility to the doctrine of consideration.
However, the limitations are that this ‘practical benefit’ test has not been properly endorsed by
the House of Lords in older cases like Foakes85 nor has the rule been properly legislated in
Parliament.86 It is submitted that some decisions in cases like Re Selectmove Ltd87 reinforces that
some courts are unready to enforce this rule. Hence, the doctrine of consideration can still be

76
Rock Advertising Ltd (n75) (Arden LJ).
77
Foakes (n57).
78
Rock Advertising Ltd (n75).
79
Foakes (n57).
80
P. Davies, ‘Varying Contracts’ (2016) 75(3) Cambridge Law Journal 455, 458.
81
Rock Advertising Ltd (n75).
82
A. S. Mellors and J. Poole, ‘Recession, Changed Circumstances, and Renegotiations: the Inadequacy of Principle in
English Law’ (2018) 2 Journal of Business Law 101, 108.
83
Rock Advertising Ltd (n75).
84
ibid.
85
Foakes (n57).
86
C. Mallon, ‘Consideration Essay’ <https://chrismallonlawtutor.com/contract-law/consideration-essay/> accessed
6 January 2022.
87
Re Selectmove Ltd (n64).
arguably rigid in certain aspects. Therefore, it can be argued that Williams v Roffey88 may have
changed and relaxed the traditional rules of the doctrine but not in its entirety. On the other
hand, the establishment of the doctrine of economic duress now may aid the courts in
searching for consideration now, knowing that they can use the doctrine of economic duress as
a vitiating factor to set aside contracts.89 This also provides and refines the control mechanisms
to safeguard parties from illegitimate pressures when entering into contracts.

One of the suggestions for reforms is to replace the doctrine of consideration with a doctrine of
intention to create legal relations. This is because the case of Williams v Roffey90 seemed to shift
from the traditional practice about contractual bargains (a new promise should be enforced by
new consideration) towards the enforceability of parties’ intention, especially if the bargaining
powers are unequal. Another suggestion would be the usage of the promissory estoppel
doctrine in equity to supplement consideration. Therefore, even if the promise was made
without formal consideration, promissory estoppel can only be used as a ‘shield’ (but not
‘sword’)91 in preventing the promisor from going back on his ‘clear’ and ‘unequivocal’ promise,
provided if the promisee can prove that he has acted to his detriment to the promise.92. This will
protect the promisee’s reliance interest, as opposed to how consideration protects expectation
interests. The promisee must also adhere to the maxim of ‘com[ing] to equity’ with ‘clean
hands’; he should not be guilty of any improper conduct or violated any good faith in respect of
the claim.93

(2098 words)

88
Williams (n42).
89
McKendrick (n2).
90
Williams (n42) (Russel L.J)
91
Combe v Combe [1951] 2 KB 215.
92
Ajayi v Briscoe [1964] 1 WLR 1326.
93
D & C Builders v Rees [1966] 2 QB 617.
BIBLIOGRAPHY
Primary Sources:
Table of Cases and Statutes:
➢ Statute(s):
○ Contracts (Rights of Third Parties) Act 1999.

➢ Case(s):
○ Ajayi v Briscoe [1964] 1 WLR 1326.
○ Anangel Atlas Compania Naviera S.A. v Ishikawajima-Harima Heavy Industries
Co. Ltd. (No 2) [1990] 2 Lloyd's Rep. 526.
○ Chappell & Co. Ltd v Nestlé Co. Ltd [1960] AC 87 (HL).
○ Combe v Combe [1951] 2 KB 215.
○ Currie v Misa (1875) LR 10 Ex 153, 162.
○ D & C Builders v Rees [1966] 2 QB 617.
○ Dry Bulk Handy Holding Inc v Fayette International Holdings Ltd (The Bulk Chile)
[2013] EWCA Civ 184.
○ Dunlop v Selfridge [1915] AC 847, 855.
○ Foakes v Beer (1884) 9 App Cas 605 (HL).
○ Harris v Watson (1791) Peake 72, 170 ER 94.
○ Re Selectmove Ltd [1995] 1 WLR 474 (CA).
○ Pau on v Lau Yiu Long [1980] AC 614.
○ Pinnel’s Case (1602) 5 Co Rep 117am (Ct of Common Pleas).
○ Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24.
○ Stilk v Myrick (1809) 2 Camp 317, 170 ER 1168 (Campbell’s Report).
○ Stilk v Myrick (1809) 6 ESP 129 (Espinasse Report).
○ The Alev [1989] 1 Lloyd's Rep 138.
○ Transformers and Rectifiers Ltd v Needs Ltd [2015] EWHC 269 (TCC).
○ Tweddle v Atkinson (1861) 1 B&S 393, 121 ER 762 (QB).
○ White v Bluett [1853] LJ Ex 36.
 ○ Williams v Roffey Bros. & Nicholls (Contractors) Ltd. [1989] EWCA Civ 5.

Secondary Sources:
➢ Book(s):
○ Ewan McKendrick, Contract Law (12th edn, Palgrave 2017).
○ Guenter Heinz Treitel, The Law of Contract (11th edn, Sweet & Maxwell 2003).
○ Jill Poole, Casebook on Contract Law (13th edn, Oxford University Press 2016).
○ Mary Charman, Contract Law (4th edn, Willan Publishing 2007).

➢ Journal Article(s):
○ Adam Shaw-Mellors and Jill Poole, ‘Recession, Changed Circumstances, and
Renegotiations: the Inadequacy of Principle in English Law’ (2018) 2 Journal of
Business Law.
○ Roger Halson, ‘Sailors, Subcontractors and Consideration’ (1990) 106 Law
Quarterly Review.
○ Paul Davies, ‘Varying Contracts’ (2016) 75(3) Cambridge Law Journal 455, 458.
➢ Online Journal(s):
○ Barry Hough, ‘The Doctrine of Consideration: Dead or Alive in English
Employment Contracts?’ <http://eprints.bournemouth.ac.uk/2898/1/78.pdf>
accessed 31 December 2021.
○ Mindy Chen-Wishart, ‘Consideration: Practical Benefit and the Emperor's New
Clothes’ (1997) Oxford Scholarship Online
<https://oxford.universitypressscholarship.com/view/10.1093/acprof:oso/97801
98265788.001.0001/acprof-9780198265788-chapter-5> accessed 1 January
2022.
➢ Theses:
 ○ Charlotte Mary Boardman, ‘Considering Consideration: A Critical and
Comparative Analysis of the Doctrine of Consideration in the Anglo-Canadian
Common Law’ (LL.M. thesis, The University of British Columbia 2013).
○ Dena Valente, ‘Enforcing Promises: Consideration and Intention in the Law of
Contract’ (LL.B. thesis, University of Otago 2010).
○ Mark Giancaspro, ‘For Your Consideration: Old Rules, Practical Benefit and a New
Approach to Contractual Variation’ (DPhil thesis, The University of Adelaide
2014).
➢ Website(s):
○ Chris Mallon, ‘Consideration Essay’
<https://chrismallonlawtutor.com/contract-law/consideration-essay/> accessed 6
January 2022.