In English law, enforceability of a promise made under contract is unenforceable unless met with consideration, hence a contract as it relates to promises contained within it but which are unsupported by consideration is void ab initio. Valid consideration is characterized by the following:
a. The person making the offer must be expecting something in return.
b. It may be something of value (however negatory) to the offeror – the person making the
contract -, or something detrimental to the offeree – the person accepting the contract.
c. Consideration must be sufficient in Law but it need not be sensible in fact.
d. It must usually impose an obligation in the future. it is usually inadequate to base an
offer on some consideration that was gained in the past (Kevin’s collaborative English law
glossary, Consideration, 30 Mar 2005).
The fact that past consideration is not good consideration is borne out by the facts of the Eastwood v Kenyon case. In this case a loan was raised by the guardian of a young girl in order to educate her and thus improve her marriage prospects. Although after her marriage, her husband promised to pay off the loan, it was held by the court that the guardian could not enforce the promise as taking out the loan to raise and educate the girl was past consideration, which was completed before the husband had promised to repay it.
The exception to the rule that past consideration is not good consideration is subject to conditions discussed by the Privy Council in Pau On v Lau Yiu Long, wherein their Lordships held that this was admissible whenever:
(1) the promisee had performed the original act at the request of the promisor.
(2) it was clearly understood or implied between the parties that the promisee would be
rewarded for doing the act. and,
(3) the actual promise made, if made before the promisee provided the consideration, must be
capable of being enforced, i.e. of giving rise to a legally binding contract.
In Williams v Roffey, it was decided by the court that performance of an existing
contractual obligation is good consideration based on the following observations:
(i) since it avoids breaching a contract with a third party.
(ii) since it avoids the trouble and expense of engaging a third party to carry out the work.
(iii) since it avoids incurring a penalty clause incorporated into a contract with a third party.
The practical benefit resulting out of the fulfilment of the existing obligation is the consideration. the court deemed the consideration to be valid.
Whether, part payment of an existing debt is valid consideration for a promise has been decided in the Pinnel’s case. In this case, Cole owed Pinnel 8-10s-0d (8.50) which was due on 11 November. At Pinnel’s request, Cole paid 5-2s-2d (5.11) on 1 October, which Pinnel accepted in full settlement of the debt. Subsequently, Pinnel sued Cole for the amount owed. It was held that part payment in itself was not consideration. However, it was held that the agreement to accept part payment would be binding if the debtor, at the creditor’s request, provided some fresh consideration (Pinnel’s Case,1602).
If the promisee has done or has promised to do more than what he was obliged to do then this amounts to consideration for a fresh promise given to the promisor (Hanson v Royden).
From the foregoing it can be concluded that, under certain circumstances, past consideration is held to be valid. The doctrine of promissory estoppel comes into operation, whenever the promisor gets practical benefit out of fulfilment of the existing contract. the promisee has done more than he was obliged to do relying on the promise made by the promisor.But the doctrine of Promissory estoppel is to be used as shield and not as a sword.
List of References
Eastwood V. Kenyon. 1840.
Kevin’s collaborative English law glossary. Consideration. Retrieved 30 Mar 2005,
Pau On v Lau Yiu Long. 1980.
Williams v Roffey Bros. and Nicholls (Contractors) Ltd (1991) 1 QB 1.
Hanson V. Royden.