{"id":2165,"date":"2017-10-28T03:16:19","date_gmt":"2017-10-28T03:16:19","guid":{"rendered":"https:\/\/askanacademic.com\/uncategorized\/what-is-the-significance-of-consideration-in-a-contract-883\/"},"modified":"2019-09-24T10:45:15","modified_gmt":"2019-09-24T10:45:15","slug":"what-is-the-significance-of-consideration-in-a-contract-883","status":"publish","type":"post","link":"https:\/\/askanacademic.com\/law\/what-is-the-significance-of-consideration-in-a-contract-883\/","title":{"rendered":"What is the significance of consideration in a contract?"},"content":{"rendered":"<h2>Question<\/h2>\n<p>What is the significance of consideration in a contract?<\/p>\n<h2>Answer<\/h2>\n<p>In English law, a promisee must, in return, provide to the promisor consideration in order to turn an otherwise <strong>unenforceable promise<\/strong> into a <strong>legally binding contract<\/strong>. The definition of what constitutes consideration is to be found in case law. Lord Dunedin endorsed the following definition in <em>Dunlop v Selfridge [1915] AC 847<\/em>:<\/p>\n<p>An act of forbearance of the promise thereof is the <strong>price<\/strong> for which the promise of the other is bought, and the promise thus given for value is enforceable.<\/p>\n<p>There are a number of rules regarding the operation of consideration that can also be found in the case law:<\/p>\n<ul>\n<li>Consideration must move from the promisee (and so not, for example, from a third party); <em>Tweddle v Atkinson (1861) 121 ER 762<\/em>.<\/li>\n<li>Consideration must not be \u2018past\u2019 (and so not, for example, work done before any promise of payment is discussed); <em>Re McArdle [1951] Ch 669<\/em>.<\/li>\n<li>Consideration must be sufficient, but need not be adequate (and so the consideration has at least some value); <em>Thomas v Thomas (1842) 2 QB 851<\/em>. This value may be more than simply pecuniary; worthless items (<em>Chappell &amp; Co v Nestle [1960] AC 87<\/em>) and promises to care for someone (<em>Ward v Byham [1956] 1 WLR 496<\/em>) have been held to be sufficient. Generally, performance of an existing duty is not good consideration for a new promise (<em>Collins v Godefroy (1831) 109 ER 1040<\/em>), but there are exceptions to this rule.<\/li>\n<\/ul>\n<p>Consideration may not be required under the <strong>doctrine of promissory estoppel<\/strong> (<em>Central London Property Trust v High Trees House [1947] KB 130<\/em>). Case law has shown that such a scenario shall only arise where:<\/p>\n<ul>\n<li>There is a clear promise or representation;<\/li>\n<li>Which is intended to affect the parties\u2019 legal relationship;<\/li>\n<li>To the effect that the promisor will not insist upon his strict legal rights against the promisee;<\/li>\n<li>Which induces <strong>detrimental reliance<\/strong> from the promisee; and thus<\/li>\n<li>It would be <strong>inequitable<\/strong> for the promisor to rescind his promise.<\/li>\n<\/ul>\n<h2>References<\/h2>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content --><!-- AddThis Related Posts generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Question What is the significance of consideration in a contract? Answer In English law, a promisee must, in return, provide to the promisor consideration in order to turn an otherwise unenforceable promise into a legally binding contract. The definition of what constitutes consideration is to be found in case law. Lord Dunedin endorsed the following &hellip;<\/p>\n","protected":false},"author":1,"featured_media":1938,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is the significance of consideration in a contract?<\/title>\n<meta name=\"description\" content=\"Question What is the significance of consideration in a contract? 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