Consideration

Consideration is a concept of English common law and is a necessity for simple contracts but not for special contracts (contracts by deed). The concept has been adopted by other common law jurisdictions, including the US.

Definition

The court in Currie v Misa declared consideration to be a “Right, Interest, Profit, Benefit, or Forbearance, Detriment, Loss, Responsibility”. Thus, consideration is a promise of something of value given by a promissor in exchange for something of value given by a promisee; and typically the thing of value is goods, money, or an act. Forbearance to act, such as an adult promising to refrain from smoking, is enforceable only if one is thereby surrendering a legal right.

Consideration in contract law

In contract law, consideration is required as an inducement to enter into a contract that is enforceable in the courts. It is an essential element for the formation of a contract. What constitutes sufficient consideration, however, has been the subject of continuing legal debate.

Types of consideration

There are various types of consideration. Some of them include:

• Executory consideration: This is a promise to do something in the future.
• Executed consideration: This is when the promise has been performed.
• Past consideration: This is something that has been done or given before the promise is made.

Legal rules regarding consideration

There are several legal rules regarding the use and sufficiency of consideration in contract law. These include:

• Consideration must be sufficient but need not be adequate.
• Consideration must not be from the past.
• Consideration must move from the promisee.
• An existing public duty will not amount to valid consideration.
• An existing contractual duty will not amount to valid consideration.

Criticisms of consideration

Consideration has been a subject of criticism as it does not always truly reflect the reason for the parties to enter into the contract. Moreover, the doctrine of consideration is somewhat arbitrary in its requirement that a promise be met with some form of counter-performance in order to be legally binding.

See also

• Contract
• Contract law
• Promise
• Forbearance

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