Get in Touch Menu

‘Considerations’ – terms that crop in the courts

08 November 2011

The notion of ‘consideration’ is a fundamental aspect of English contractual law but like so many well-used legal terms, it has proved to be a fuzzy concept that has given rise to masses of case law. Willans looks into the different types of consideration that crop up in the courts.

The idea of ‘benefit’ and ‘detriment’ still underpin much of consideration case law – meaning that each party must, at the request of its counterparty, either provide a benefit to the other, or incur a detriment itself.

  • Adequate consideration is an area where judges have tried to resist involvement. This is because the fact a bargain appears one-sided does not mean that insufficient consideration has been given. However, the semantic difference between ‘adequate’ and ‘trifling’ consideration is hard to discern as, in the case of Chappel v Nestlé (1959), the courts ruled that while chocolate wrappers formed part of the consideration, they were worthless or, in their words, “trifling.”
  • Nominal consideration is often used by lawyers (such as a peppercorn or £1) as a device to support an otherwise gratuitous (and so unenforceable) promise with consideration. It is nothing more than a token consideration. But such a device is effective in creating binding obligations, breach of which will result in damages. This is in contrast to Equity, where the equitable remedy of specific performance requires valuable consideration. Such a notion hinges on the facts of each case, and as such, does little to clarify this area.
  • Discretionary consideration is rare, It can apply where an exclusion clause is so widely drafted that it excuses one party from any liability for failure to deliver, since such a clause essentially excuses that party from performance. Courts are understandably keen to avoid such a prospect, since it will have the effect of destroying the whole contract. They prefer a narrow interpretation of the clause, thereby ensuring that there is consideration.
  • Past consideration is a term often used but only in so far as to discount its validity. This is because consideration is seen as an exchange. If the proffered ‘consideration’ has been completed before the parties enter into their agreement, it cannot be said to have been as a result of that exchange.

Although all types of consideration will have certain core elements, there will also be considerable differences depending on the purpose for which consideration is being asserted. As a result, although key principles can be extrapolated, there will always be issues which can only be resolved by the courts.

If you need clear and pragmatic legal advice, we’re here to help so please get in touch.

Contact us

Disclaimer: All legal information is correct at the time of publication but please be aware that laws may change over time. This article contains general legal information but should not be relied upon as legal advice. Please seek professional legal advice about your specific situation - contact us; we’d be delighted to help.
Chris Wills LLB (Hons)
View profile
Related services
Share this article
Resources to help

Related articles

Changes to company law – what businesses need to know


This week, initial changes to company law – including the biggest changes to Companies House since it began – will start to take effect. Here, our corporate and commercial team…

Chris Wills LLB (Hons)

Unearthing the implicit duty of cooperation in commercial contracts


In the world of business, contracts are the bedrock upon which deals are built. These carefully crafted documents are a testament to the mutual understanding between parties, outlining their respective…

Richard Holland BA (Hons)
Senior associate, solicitor

Why sole director companies should check articles of association


A recent case has highlighted the importance of ensuring a company is incorporated with carefully drafted articles of association, if there is only one director. All limited companies must have…

Helen Howes LLM
Associate, solicitor
Contact us