TOPIC 5: THE DOCTRINE OF

CONSIDERATION

SLW 105

SR.KILATU-LSOSF
THE DOCTRINE OF CONSIDERATION
Definition
• Consideration is the incentive, price or
motive that causes a party to enter into
an agreement or contract.
• It may take the form of money, physical
object, services, promised action,
abstinence from the future action,

SR.KILATU-LSOSF
 At common Law
• The word consideration at common law
revolves around exchange of values
embedded in goods or services.
• A person who parts with some value
must be given some value in return.
• It is something of value that is given in
exchange for receiving something from
another person.(‘quid pro
quo’=something for something)
SR.KILATU-LSOSF
 Cont...
• The definition of consideration has been
modified from time to time.
• In 1942 in the case of Thomas v. Thomas
[1842]2QB 851
Consideration was defined as something
which is of some value in the eyes of the
law. It may be some benefit to the
plaintiff or of detriment to the
defendant.
SR.KILATU-LSOSF
 Cont...
• Later in the Case of Currie v. Misa (1875)
L.R.10 Ex 153 it was decided that a
valuable consideration in the sense of
the Law may consist either in some right,
interest, profit or benefit accruing to the
one part or some forbearance,
detriment, loss or responsibility given,
suffered or undertaken by the other.

SR.KILATU-LSOSF
 Cont...
• In Dunlop Pneumatic Tyre Co.Ltd v. Self-
fridge Ltd [1915] A.C 847 the house of
Lords agreed with the definition of Sir
Frederick Pollock who simplified the
definition of consideration. In this case
consideration was defined as the price
for which the promise is bought.

SR.KILATU-LSOSF
 Under the Law of Contract Act
• S.2(1)(d) of the Law of Contract Act, Cap
345 [R.E 2019] defines consideration as
follows;
• “when, at the desire of the promisor, the
promisee or any other person has done or
abstained from doing, or does or abstains
from doing, or promises to do or to abstain
from doing, something, such act or abstinence
or promise is called a consideration for the
promise”
SR.KILATU-LSOSF
 Cont...
• The definition suggest that consideration should
be for the promise given.
• It can be an act, an abstinence or a promise.
• Further analysis of S.2(1)(d) propose;
i) Consideration for the promise may be furnished
at the desire of the promisor
ii) Consideration must move from either the
promisee or any other person
iii) Consideration may have been executed or in the
process of execution or to be executed in future.

SR.KILATU-LSOSF
 Historical development and importance of consideration in a contract

• The element of consideration is vital to the English

concept of contract per the case of Thomas v.
Thomas [1842]2QB 851 above.
• According to English law for an agreement to have
legal force it must either be under seal or must be
supported by some consideration.
• One of the problem surrounding the development
of the doctrine of consideration was its definition,
the other was one of recognizing consideration as
an essential element of a contract.
SR.KILATU-LSOSF
 Cont...
• When Lord Mansfield became chief justice of the
Kings bench he challenged the need for
consideration as merely evidence of the parties
intention to create legal relations.
• Hr asserted that such intention could be
ascertained by other means, eg, presence of
writing, then consideration was unnecessary to
make the agreement binding. In Pillans v. Van
Mierop(1756)Burr 1663 that “consideration is
only one of several modes of supplying evidence
of the promisor’s intention to bind himself...”
SR.KILATU-LSOSF
 Cont...
• The legal proposition by Lord Mansfield
survived for 22 years. In 1778 in Rann v. Hughes
H.L (1778)7 T.L.346 the House of Lords repelled
Lord Mansfield’s assault on the doctrine of
consideration pointing out that all simple
contracts,[i.e contracts not under seal whether
written or not] must be supported by
consideration. The court pointed that;
• “all contracts are by law of England
distinguished into agreements by speciality and
agreements by parol...”
SR.KILATU-LSOSF
 Cont...
• After Rann’s Case consideration became an
essential ingredient of simple contract.
• Lord Mansfield accepted this position but he
sought to define consideration in terms of
moral obligation. He asserts that the ties of
conscience upon an upright mind are a
sufficient consideration.
• Mansfield’s equation of consideration with
moral obligation survived for 60 years.

SR.KILATU-LSOSF
 Cont...
• It was thrown in 1940 in Eastwood v. Kenyon,
113 E.R 482 the court held that moral obligation
to fulfil a promise was insufficient where
consideration was wholly past.
• The place of consideration in the English
Common Law of contract today was enunciated
during the capitalist perfect competition era in
Rann v. Hughes H.L (1778)7 T.L.346 where the
court said “it is undoubtedly true that every
man is by law of nature bound to fulfil his
engagements.
SR.KILATU-LSOSF
 Cont...
• It is equally true that the law of the country
supplies no means, nor affords any remedy, to
compel performance of an agreement made
without sufficient consideration.”
• Contract law in Tanzania, as a general rule, an
agreement made without consideration is
void.
• This means consideration is an essential
ingredient in all simple contracts concluded in
Tanzanaia
SR.KILATU-LSOSF
Types of consideration
• At Common Law Consideration may be either
executory or executed or past.
• Since past consideration does not meet the
test of contemporaneity, as a general rule
English law treats past consideration as mo
consideration at all.
• S.2(1)(d) of Cap 345 provide for two(2) types
of consideration, not clear about past
consideration, i.e Executed and executor
consideration.
SR.KILATU-LSOSF
 Executed Consideration
• Executed Consideration -An act has been
done by one or two parties in response to the
promise. e.g e person may have done or...
• Where A promises a reward to anyone who
finds his lost article he does not expect those
who intend to look for the lost article to
promise him that they are prepared to find
the article. B may find the article and take it to
A. B’s act mount to both acceptance and
consideration for A’s promise.
SR.KILATU-LSOSF
 Cont...
• The consideration in this case has already
been executed by B. A, on his part has
yet to perform his promise by giving the
reward to B.
• A’s consideration remains executory
while B’s is executed consideration.
• Calill v Carbolic Smoke Ball Co(1893)1
QB 256
SR.KILATU-LSOSF
 Executory consideration
• Executory consideration –this is the exchange of
promises, something to be done later. Eg. A
person may promise to do or abstain ...
• Consideration for promise is executory in that
liability to perform is outstanding in the case of
both parties.
• A contract of sale of goods may be a good
illustration.
• A contract has been concluded, delivery of good
and payment of the price will take place in future
SR.KILATU-LSOSF
 Past consideration
• Past consideration- refers to an act or abstinence which
was done before the promise was made and not in
response to, or induced by the subsequent promise.
 At Common Law:
• Past consideration is not consideration at all.
• In Roscorla v. Thomas [1842]3Q.B 284 after completion
of the sale of horse the seller promised the buyer that
the horse was sound. In fact the horse was vicious. The
buyer sued the seller on the promise arguing that the
buying of horse constituted consideration for the seller’s
subsequent promise. Held: the sell of horse was past
consideration which could not support sellers’ promise.
SR.KILATU-LSOSF
 Cont...
 The position under the Law of Contract Act
• Section 2(1)(d) of LCA the word has done or
abstained... Though not very clear, it denoted
past consideration.
• Section 25 (1)(b) of LCA provides that “An
agreement made without consideration is void
unless- it is a promise to compensate, wholly or
in part, a person who has already voluntarily
done something for the promisor, or something
which the promisor was legally compellable to
do; “
SR.KILATU-LSOSF
Who may furnish consideration
 The position at common Law
• The english common law requires that consideration must be
furnished by the promisee and the promisee only.
• This position begun to hod in 19thC, before that time it appears
what mattered was the main object of arrangement
• In Dutton v Poole(1667) 83 E.R 523, a father intended to sell
his woods to provide his daughter with a marriage portion. His
son, the defendant, promised that if his father forbore to sell
at his request, he would pay the daughter 1000 Euros. The
defendant did not pay the amount. He contended that the
plaintiff was neither a party to the contract nor interested in
the consideration. It was held that the defendant was liable to
pay as the whole object of the agreement was to provide the
daughter with a portion
SR.KILATU-LSOSF
 Cont...
• In 1861 the court refused to follow the principle under
Dutton v Poole Case. In the case of Tweedle v Atkinson
[1861]123 E.R 762, an agreement was made between a
man’s father and his father-in-law that if the man and the
woman get married, both the father and father-in-law will
give the man a sum of money. The father-in-law died
without paying his share. The man sued the father in Law
executor. It was held that since the boy was not a party to
the contract, the defendant was not liable to pay him.
• A contract is an agreement between the parties only and no
third parties can sue upon it even if made for their benefit.
• This case laid the foundation of the doctrine of ‘privity of
contract’
SR.KILATU-LSOSF
 Cont...
• In Dunlop Pneumatic Tyre v Selfridge &
Co[1915]A.C 847 Lord Viscount Haldane declared
that;
• In the law of English certain principles are
fundamental. One is that only a person who is a
party to a contract can sue on it… a second
principle is that if a person with whom a contract
not under seal has been made is to be able to
enforce it consideration must have been given by
him.
• Thus a party to a contract must furnish
consideration by himself. 3rd part can not enforce
SR.KILATU-LSOSF
 Cont...
 The Position under the Law of Contract Act
• Consideration may be furnished either by the
promisor or any other person. If there is a
consideration for a promise, it is immaterial
who has provided it. The same position apply
to India which is different from common law.
• Section 2(1)(d) of LCA when, at the desire of
the promisor, the promisee or any other
person has done or abstained.

SR.KILATU-LSOSF
 Cont...
• In East Africa the question who may furnish
consideration was discussed in Tarlock Singh Nayar &
Another v. Sterling General Insurance Co. Ltd
[1966]E.A 144(K). Parties to the contract were the
Insurer (Insurance Co.) and the insured(1st plaintiff).
The authorised driver was not part to the insurance
contract though beneficiary under the contract. The
question was whether the 2nd claimant was covered
under the insurance policy? Could he sue under
contract? Held: the driver was part to the contract
and could sue because consideration had been
furnished by a 3rd party.
SR.KILATU-LSOSF
 Cont...
• Note: the person who is not party to the
contract cannot sue on the contract even
though he may have furnished
consideration.
• Furnishing consideration by itself does
not entitle a person to sue on the
contract.

SR.KILATU-LSOSF
 Rules Governing Consideration
I) Consideration must move from the promisee
• this means that a person to whom a promise
is made can only enforce the promise if they
have provided consideration for it.
• The rule relate to the doctrine of privity to
contract
• At Common law consideration must be
furnished by the promisee and the promisee
only. See Dutton’s Case and Tweedles’s Cae.
SR.KILATU-LSOSF
 II) Consideration must be Legal
• Court may not entertain an action where
consideration is against the law, public policies
or it is immoral.
• Section 24 of LCA provides that agreements
void if considerations and objects are unlawful
in part
• Also section 23 (a-e)of Cap 345 provided for
conditions for consideration or object of an
agreement is lawful.
SR.KILATU-LSOSF
 Cont...
• (a) It is forbidden by law or defeat the
purpose of the law.
• (b) it is of such a nature that, if
permitted, it would defeat the provisions
of any law
• (c) it is fraudulent
• (d) it involves or implies injury to the
person or property of another
SR.KILATU-LSOSF
 III) Consideration must not be in the Past
• Past Consideration refers to an act or abstinence
which was done before the promise was made
and not in response to the subsequent promise.
• Past consideration is regarded as no consideration
at all. If the part voluntarily performs an act and
the other part then makes a promise, the
consideration for the act is said to be past.
• If John gave a lift to Mary, then Mary felt to give
John 5000 for fuel. Then later John can not
enforce that promise.
SR.KILATU-LSOSF
 Cont...
• In Re McArdle (1951) A wife and her three
grown-up children lived together in a house.
The wife of one of the children did some
improvement and later the children promised
to pay her £488 and they signed a document
to this effect. It was held that the promise was
unenforceable as all the work had been
done before the promise was made and was
therefore past consideration.

SR.KILATU-LSOSF
Exception to the Rule where Past Consideration
is Binding under the Common Law

i)Past service rendered at the promisor’s request.

In Lampleigh v. Brathwaite(1615)LtoB 1052,
The Defendant killed a person and asked the
plaintiff to do and obtain pardon, he incurred
some expenses and got pardon. Then Braithwait
promised to pay Lampleigh £100 for his trouble.
• Held: done at the request by way of business,
therefore binding.
SR.KILATU-LSOSF
 Cont...
• In Re Casey’s Patent (1892); Stewart v. Casey(1892)
Ch.104 A and B owned a patent and C was the
manager who had worked on it for two years. A and B
then promised C a one-third share in the invention for
his help in developing it. The patents were transferred
to C but A and B then claimed their return.
• It was held that C could rely on the agreement. Even
though C’s consideration was in the past, it had been
done in a business situation, at the request of A and B
and it was understood by both sides that C would be
paid and the subsequent promise to pay merely fixed
the amount.
SR.KILATU-LSOSF
 Cont...
• In Pao On v Lau Yiu Long (1779)WLR434 Lord Scarman
said: “An act done before the giving of a promise to
make a payment or to confer some other benefit can
sometimes be consideration for the promise if;
i)The act must have been done at the promisors’ request
ii)the parties must have understood that the act was to
be remunerated either by a payment or
the conferment of some other benefit
iii) payment, or the conferment of a benefit, must have
been legally enforceable had it been promised in
advance.”

SR.KILATU-LSOSF
 Cont...
ii) Acknowledgement of time barred debts
• According to the English Limitation Act of
1980, there is no need of the existence of any
promise by the debtor to the creditor, no
consideration is needed, the
acknowledgement alone is enough and
sufficient to make such debts enforceable.
However, the acknowledgement must be;
• a) in writing

SR.KILATU-LSOSF
 Cont...
b) signed by a person making it
C) The person must admit legal liability to pay
the sum claimed by the creditor
The acknowledgement must relate to the debt
or other liquidated sum

SR.KILATU-LSOSF
 Cont...
iii) Negotiable instruments e.g checks,
promissory notes e.t.c. thus any debt under
negotiable instrument is valid.
• The English Bill of exchange Act 1882 under
section 27(1) provide that an antecedent debt
or liability may constitute valuable
consideration for a bill.

SR.KILATU-LSOSF
Exception to the Rule where Past
Consideration is Binding under the Law of
Contract Act
It is not clearly stated, therefore the position in Common
Law is presumed in Tanzania.
The following are exceptions;
a) A past act/abstinence done at the request of the
promisor
b) A promise to compensate for past act; S.25(1)(b) of LCA
c) A promise to pay time-barred debts. Section 25(1)(c) of
LCA
d) Antecedent liability or debt in relation to negotiable
instruments as provided by bill of Exchange Act.
SR.KILATU-LSOSF
IV)Adequacy and sufficiency of
consideration
 Consideration must be sufficient but need not
be adequate.
• It is a must to attach some value to the
consideration but there is no requirement that
bargaining should be strictly commercial.
• A contract is a consensual agreement.
• Both at common law and the position under the
LCA provide that “Consideration for a promise
need not be adequate, however, it must be
sufficient to support a promise.
SR.KILATU-LSOSF
 Cont...
• In Thomas v. Thomas(1842)2Q.B 851 it was
held that payment of 1 pound was a valid
consideration. In this case consideration was
defined as something of value in the eye of
the law.
• Section 25(3) of the LCA provide that an
agreement where the consent is freely given is
not void merely because the consideration is
inadequate.

SR.KILATU-LSOSF
Factors Guiding courts in Determining Sufficiency of
Consideration.
i) Nominal Consideration
• The term nominal literally mean the sum of
money very small below the real value or cost.
• It is something of a token value.
• E.g consideration of 10,000/=Tshs as a price of
TV worth 500,000/= is valuable consideration
although it is not adequate.
• The rationale is to evade consideration and
make gratuitous promises enforceable.
SR.KILATU-LSOSF
 Cont...
ii) Things with no economic value
• E.g love and affection
• Section 25(1)(a) of the LCA “... is made on
account of natural love and affection
between parties standing in a near
relation to each other”
• Natural love and affection are of no
economic value.

SR.KILATU-LSOSF
 Cont...
iii) Trivial Acts
• Since consideration need not to be adequate,
acts or omissions which are of little value or
importance, may constitute consideration.
• In the case of Chappell & Co. Ltd v. Nestle
[1960] A.C 87(HL)The chocolate manufacturer
sold records for one shillings and six pence
plus three wrappers from their six penny
Chocolate bars. It was held that wrappers
formed part of consideration, though they
were of little value.
SR.KILATU-LSOSF
 Cont...
iv) Forbearance and Compromise
I: Forbearance –literally means abstinence.
• A party may forbearer to sue or enforce a claim
(a) forbearance to sue
• in order for forbearance to sue to constitute
consideration the plaintiff must have a course of
action against the defendant,
• where the claim is invalid forbearance to enforce
such claim will not constitute a consideration.

SR.KILATU-LSOSF
 Cont...
• Both under Common Law and LCA
forbearance to sue is a good consideration.
• Section 2(1)(d) of LCA the word abstinence is
used instead of the word forbearance.
• In Patel Bros v. Hasmani 19EACA 170 it was
held that a promise to forbear to sue is good
consideration and that actual forbearance at
the request of the defendant, be it express or
implied is good consideration.

SR.KILATU-LSOSF
 Cont...

b) forbearance to enforce a claim or right

• Where a debtor fails to pay his debt on a
due date and promises the creditor to
pay him in a higher interest if he does
not enforce his right in the due date,
actual forbearance not to enforce his
claim constitute consideration.
• The promise may either be express or
implied
SR.KILATU-LSOSF
 Cont...
• In the case of Alliance Bank v. Broom(1864) 62
ER 631 the defendant had a debt with the bank,
the bank demanded security for the debt. The
defendant promised to give security, but the
bank did not promise to sue him, but later he
defendant did not give security as promised.
When the defendant was sued he argued that
the bank did not furnish consideration. It was
held that the bank did furnish consideration
because the bank did actually forbear to sue.
(Impliedly)
SR.KILATU-LSOSF
 Cont...
II: Compromise
• A compromise is an agreement between
parties to a dispute to settle their dispute out
of the court.
• Compromise is good consideration
• Read the case of Mohamedali Virji Walji v.
Shinyanga African Trading Co. (1963) HCD
n.401

SR.KILATU-LSOSF
 V) Performance of an existing duty.
• A person who promises to carry out a duty
which he was required to do there is no
consideration unless the promise involve
something beyond what he is bound to do
there may constitute sufficient consideration.
• Also the promise may involve performance of
a contractual obligation or public duty
imposed by the law.

SR.KILATU-LSOSF
 Cont...
• In the case of Collins v. Godfrey (1831)
109 ER 1040 Collins was subpoena to give
evidence in the case which Godfrey was a
party. Godfrey promised to pay 6 guineas
for Collins attendance to give evidence.
Collins sued Godfrey to recover the
remaining money.
• It was held that he had a legal duty to do
so.
SR.KILATU-LSOSF
 Cont...
• In Stilk v. Myrick (1809)170 ER 1168, Silk was
contracted to work on a ship owned by Myrick,
promising to do anything needed in the voyage.
In the course of voyage two of the crew
abandoned the ship. The captain offered the
remaining crew an equally divided share of the
deserted seamen’s salary if they could return
sail the ship o London with reduced crew. Upon
return additional payment was not made:
• Held: performance of an existing duty is no
consideration.
SR.KILATU-LSOSF
 VI) Rescission, Variation and Waiver
a) Rescission- aims at releasing the parties from
a contract, there must be an agreement
between the parties on rescission.
• The agreement is based on reciprocal
promises that generates its own
consideration.
• Where it does not generate its own
consideration it must be supported by a
separate consideration.

SR.KILATU-LSOSF
 Cont...
b) Variation -means a change/slight
difference in condition.
• It involves a definite alteration in a
contract by mutual agreement of the
parties
• Consideration for variations can be
traced in the mutual undertaking of the
parties to perform the contract as varied.

SR.KILATU-LSOSF
 Cont...
c) Waiver- is an act or instance of waiving a
right or claim, where for the convenience
and at the request of one part, the other
forbear to insist on the precise mode of
performance or time of performance
specified in the contract.
• Waiver does not constitute variation
since the contract itself remains
unaffected.
SR.KILATU-LSOSF
 Cont...
• Under the LCA section 62 and 63 provide
for the effect of novations, rescission and
alteration of contract and the promise
may dispense with or remit performance
of promise respectively.
• Read the case of Nanji Trading Co. Ltd v.
Survakant &Bros [1967] HCD no.427

SR.KILATU-LSOSF
 VII) Part payment of debt under the
doctrine of Promissory Estoppels
(Rule in Pinnel’s Case)
• At common Law the general rule states that an
agreement to accept a lesser sum is not
binding unless supported by fresh
consideration.
• In other words, a creditor is not bound by an
undertaking to accept part payment in full
settlement of a debt

SR.KILATU-LSOSF
 Cont...
• The rule was adopted in the year 1602 in Pinnel’s
Case(1602) 5Co.Rep.II(a)
• It is also known as the Pennel’s Case rule.
Facts: Pinnel sued Cole in debt for $ 810s due on a
bond on 11th November, 1600. Cole’s defence was
that, at Pinnel’s request, he had paid him $52s .6d.
On 1st October and that Pinnel had accepted this
payment in full satisfaction of the whole:
Held; Payment of lesser sum on the day in
satisfaction of a greater was no satisfaction of the
whole.
SR.KILATU-LSOSF
 Cont...
• The decision in Pinnel’s Case was upheld in the case
of Foakes v. Beer(1884) 9 AC 605 in the case,
Mrs.Beer had obtained judgment for a debt against
Foakes. She agreed that she would take no further
action in the matter if Foakes paid 500 pounds
immediately and the rest by half yearly instalments of
150 pounds judgment debts however carries interest,
although Foakes did keep his side of the agreement,
the House of Lords held that Mrs. Beer was entitled
to 360 pounds interest which had accrued since
Foakes did not give consideration for the promise to
take no further action on the judgement.
SR.KILATU-LSOSF
 Cont...
 Exception to the Rule at Common Law
• The equitable rule was developed by Denning
J, in the High Trees Case.
• In Central London Property Trust Ltd v. High
Trees House Ltd (1947) K.B.130, the Plaintiff
granted a 99 years lease on a block of Flats in
London to the defendant at an annual rent of
2,500 pounds. In 1939 there was an outbreak
of war, it was difficult to find tenants and
therefore it was agreed that the rent should
SR.KILATU-LSOSF
 Cont...
• Be reduced to 1,250 pounds. By 1945 the
flats were full again, the plaintiff sued to
recover the arrears of rent as fixed by the
1939 agreement. Denning J, said
i) The rule does not apply to composition
agreement. This is where the debtor
honours the agreement, a creditor
cannot sue for any outstanding sum.

SR.KILATU-LSOSF
 Cont...
ii)If the creditor promise to accept part
payment. This can be early payment of a
smaller sum at the request of the creditor
is considered for a promise to release the
balance
iii)If payment is made by 3rd part and
accepted by the creditor . the debtor have
a good defence if sued for the balance

SR.KILATU-LSOSF
Exceptions to the requirement of
consideration
The following are exceptions;
a) Nutural love and affection
b) A past act/abstinence done at the request of the
promisor
c) A promise to compensate for past act; S.25(1)(b) of LCA
d) A promise to pay time-barred debts. Section 25(1)(c) of
LCA
e) Gifts
f) charity
g) Antecedent liability or debt in relation to negotiable
instruments as provided by bill of Exchange Act.
SR.KILATU-LSOSF
SR.KILATU-LSOSF