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.
Our legal experts have been busy sharing valuable expertise in their first series of free webinars for employers, and businesses across the county who missed the live events can now…
The Coronavirus Business Interruption Loan Scheme (CBILS) has thrown a much-needed lifeline to businesses experiencing cashflow difficulties as a result of the coronavirus outbreak. 17 December 2020 Today, Rishi Sunak…
The global outbreak of coronavirus (COVID-19) and the government’s resulting emergency measures have had severe implications for many businesses. Read on for answers to some frequently-asked questions on corporate &…
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL cookies.
This website uses cookies to improve your experience while you navigate through our website. Out of these cookies, the cookies that are categorised as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyse and understand how you use our website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies but it may affect your browsing experience on our website. You can find our cookie policy here.
Necessary cookies are absolutely essential for our website to function and enable core functionality such as security and accessibility. These cookies do not store any personal information. You can block these cookies by changing your browser settings, but this may affect how the website functions.
We use performance cookies such as Google Analytics to help us count the number of visitors and to see how visitors move around our website when they are using it. This helps us to improve the way our website works, for example, by ensuring that users are finding what they are looking for easily. The cookies collect information in a way that does not directly identify anyone. For more information on how these cookies work, please see our cookie policy.