Consideration in Contract Law — Rules, Cases and Exceptions

Consideration in contract lawis the price of a promise — the thing each party gives, or promises to give, in exchange for the other side’s promise. Under English law, a simple (non-deed) contract is not binding unless it is supported by consideration. This guide sets out the core rules, the key distinctions examiners test, and the leading cases, with links to full briefs you can drill.

The classic definition. Consideration was defined in Currie v Misa (1875) as “some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.” In modern terms, consideration is the element of bargain or exchange: a promise given for nothing in return (a gratuitous promise) is unenforceable unless made by deed.

Consideration must be sufficient but need not be adequate. The courts will enforce a bargain even where what one side gives is of trivial economic value — they ask only whether it has some value in the eye of the law (sufficiency), not whether it is a fair price (adequacy). The classic illustration is that even nominal consideration can bind a promise, which is why peppercorn rents and £1 sale prices appear in practice. Sufficiency is a legal test; adequacy is left to the parties.

Past consideration is not good consideration. Something already done before a promise is made cannot be the consideration for that promise, because it was not given in exchange for it. The general rule has a long-recognised exception (the rule in Lampleigh v Brathwait / Pao On v Lau Yiu Long): where the past act was done at the promisor’s request and both parties understood it would be paid for, a later promise to pay can be enforced.

Performance of an existing duty. Performing a duty you are already bound to perform is generally not fresh consideration. In Stilk v Myrick (1809), sailors who completed a voyage after two crew deserted could not enforce a promise of extra pay — they were already contractually bound to sail. But where the claimant does more than the existing duty, that is good consideration: Hartley v Ponsonby (1857) (so many desertions that the voyage became dangerous, taking the crew beyond their original undertaking).

The practical-benefit doctrine. The modern softening of Stilk v Myrick came in Williams v Roffey Bros (1991): where one party promises extra payment to secure completion of an existing obligation and thereby obtains a practical benefit (here, avoiding a penalty clause and the cost of finding a new contractor), that practical benefit can constitute consideration, provided the promise was not given under duress. This is one of the most heavily examined points in contract law.

Part payment of a debt. At common law, payment of a smaller sum does not discharge a larger debt — the rule in Pinnel’s Case (1602), affirmed by the House of Lords in Foakes v Beer (1884). A creditor who accepts part payment can still sue for the balance, because the debtor gives no fresh consideration for the waiver. The equitable doctrine of promissory estoppel can, in limited circumstances, prevent the creditor from going back on a promise to accept less — though it operates as a shield, not a sword.

Consideration must move from the promisee. Only a person who has provided consideration can enforce a promise. This rule historically tied into privity of contract, although the Contracts (Rights of Third Parties) Act 1999 now allows some third parties to enforce terms made for their benefit.

How to use this in an exam. Consideration sits inside the wider topic of contract formation, alongside offer, acceptance and intention to create legal relations. In a problem question, identify the promise being enforced, then ask: was anything given in exchange for it? Is it past? Is it just an existing duty? If part payment of a debt is involved, run Foakes v Beer and then consider promissory estoppel. Read this alongside our offer and acceptance guide and the Contract Law topic hub.

Drill the leading authorities with our 50 must-know contract cases guide and contract flashcards, then test application on our past papers.