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Understanding Consideration in Contract Law

Question from hkhjhk, Understanding Consideration in Contract Law

Answer from AI:

Consideration is a fundamental concept in contract law, particularly within the jurisdiction of the United Kingdom. It refers to something of value that is exchanged between parties as part of an agreement. Understanding the nuances of consideration is crucial for anyone studying or practicing law, as it forms the backbone of enforceable contracts. This guide will delve into the definition, types, rules, and exceptions of consideration, highlighting relevant cases, statutes, and other pertinent information.

Definition of Consideration

Consideration in contract law is defined as the price paid for the promise of the other party. It can be anything of value, which can include money, an act, or an abstention from acting. The essential point is that it must be something of legal value that is given in exchange for a promise. The case of Currie v Misa (1875) provided a classic definition, stating that consideration is a benefit to the promisor or a detriment to the promisee.

Types of Consideration

Consideration can be categorized into two main types:

  1. Executed Consideration: This occurs when the consideration is provided at the same time as the promise. For example, payment for goods upon delivery.
  2. Executory Consideration: This type of consideration involves a promise to do something in the future. For instance, a promise to deliver goods at a future date in exchange for a promise to pay upon delivery.

Rules of Consideration

Several key rules govern the concept of consideration in contract law:

  • Must Be Sufficient but Need Not Be Adequate: The law does not measure the adequacy of consideration as long as it is of some value. The case of Thomas v Thomas (1842) illustrates this principle.
  • Past Consideration is Not Good Consideration: For consideration to be valid, it must be given in exchange for the promise at the time the promise is made. A past act done before the promise was made is not valid consideration. An exception to this rule is if the act was done at the promisor’s request, with the understanding that it would be compensated, as seen in Lampleigh v Brathwait (1615).
  • Consideration Must Move from the Promisee: Only the parties involved in the agreement can enforce the contract, indicating that consideration must come from the promisee.

Exceptions to the Rule of Consideration

There are notable exceptions to the general rule that consideration is necessary for a contract to be enforceable:

  • Contracts under Seal: Traditionally, contracts made under seal (deeds) do not require consideration to be binding.
  • Promissory Estoppel: This doctrine can be invoked in certain circumstances to prevent a party from going back on a promise, even if there is no consideration. The case of Central London Property Trust Ltd v High Trees House Ltd (1947) is a landmark case that established this principle.

Relevant Statutes

While much of contract law is based on case law, certain statutes may impact the application of consideration, such as the Contracts (Rights of Third Parties) Act 1999. This act allows for third parties to enforce contractual terms in certain situations, even if they have not provided consideration themselves.


Consideration is a cornerstone of contract law in the UK, ensuring that contracts are based on an exchange of value. Understanding its rules, types, and exceptions is essential for anyone studying or practicing law. However, the complexities of legal principles and their application mean that specific advice should be sought from a legal professional for individual cases.

For further reading and to deepen your understanding, consulting primary sources such as case law and legal textbooks on contract law is recommended. Additionally, the UK Legislation website provides access to relevant statutes that can offer more insights into how consideration and other contract law principles are applied in the UK.

Remember, this guide is intended to provide a general overview and should not be taken as legal advice. For specific queries or legal issues, consulting with a legal professional is always the best course of action.

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