Consideration and promissory estoppel

Consideration is the doctrinal price of a contract: a promise is enforceable as a contract only if the promisor receives, in exchange, something the law treats as valuable. The doctrine has been the backbone of English contract law since the seventeenth century and the principal counterpoint to the alternative model of cause used in civilian systems. It explains why bare promises (gratuitous promises by deed apart) are unenforceable, why settlement of debts at less than face value can be problematic, and why one-sided variations of contracts have generated a rich body of case-law from Stilk v Myrick (1809) to Williams v Roffey Bros [1991] 1 QB 1.

This week studies consideration in three layers. First, the basic doctrine — Currie v Misa (1875), the requirement that consideration be sufficient but need not be adequate, the rules on past consideration, and the existing-duty problem. Secondly, the modern reformulation of the existing-duty rule — Williams v Roffey Bros and the practical-benefit doctrine; Foakes v Beer (1884) and the Pinnel''s case rule on payment of part for whole; the post-Re Selectmove and post-MWB v Rock Advertising state of the law on debt settlement. Thirdly, promissory estoppel — Hughes v Metropolitan Railway (1877); Central London Property Trust v High Trees House [1947] KB 130 (Denning J); Combe v Combe [1951] 2 KB 215 (sword v shield); D & C Builders v Rees [1966] 2 QB 617 (clean hands).

The topic connects to W1 (offer and acceptance — what makes a promise contractual), W4 (terms — what makes a promise enforceable as a term), W11 (discharge by performance — performance of existing duty as consideration for variation), and W13 (damages — the consideration question recurs in remedy analysis).

Consideration emerged in the late sixteenth and seventeenth centuries as the action of assumpsit developed to enforce informal promises. Slade''s Case (1602) 4 Co Rep 92b held that assumpsit would lie on an executory promise where consideration had been given, displacing the older action of debt. The early case-law (Pillans v Van Mierop (1765) 3 Burr 1663 — Lord Mansfield doubting whether consideration was needed for written promises) was unsettled, but by the early nineteenth century the doctrine was firm.

The nineteenth century articulated the modern rules. Currie v Misa (1875) LR 10 Ex 153 supplied the standard formulation: ''a valuable consideration ... may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other''. Stilk v Myrick (1809) 2 Camp 317 established the existing-duty rule (no consideration where promisee already bound). Pinnel''s Case (1602) 5 Co Rep 117a established the rule that part-payment of a debt does not discharge the debt. Foakes v Beer (1884) 9 App Cas 605 confirmed Pinnel''s rule despite acknowledging its potential injustice.

The twentieth century introduced softening. Hughes v Metropolitan Railway (1877) 2 App Cas 439 articulated the equitable principle that became promissory estoppel. Central London Property Trust v High Trees House [1947] KB 130 brought Hughes into modern doctrine. Combe v Combe [1951] 2 KB 215 limited promissory estoppel to a defence (sword v shield). The doctrine has continued to develop into the twenty-first century: Williams v Roffey Bros [1991] 1 QB 1 reformulated the existing-duty rule for variation cases; MWB Business Exchange Centres v Rock Advertising [2018] UKSC 24 held by majority that Foakes v Beer still applied to part-payment of debt despite the Supreme Court''s reservations.

The modern doctrine is therefore a layered construction: a basic rule on consideration; a series of qualifications and refinements; an equitable softening through estoppel; and ongoing judicial reconsideration.

(1) Consideration must move from the promisee. Only the person who provides consideration can enforce the promise. Tweddle v Atkinson (1861) 1 B & S 393 — a third-party beneficiary cannot enforce in the absence of consideration. The Contracts (Rights of Third Parties) Act 1999 has substantially modified this in cases where the contract identifies a third-party beneficiary, but the underlying privity rule remains.

(2) Consideration must be sufficient but need not be adequate. Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87 — chocolate-bar wrappers (worthless in themselves but valuable to Nestle for promotional purposes) were sufficient consideration. Thomas v Thomas (1842) 2 QB 851 — payment of £1 a year ground-rent was sufficient. The court does not police the value of the consideration; the parties decide what it is worth to them. The principle preserves freedom of contract from judicial second-guessing of bargain value.

Five graded practice questions are provided in the panel below — two foundation questions on the basic doctrine of consideration and the Williams v Roffey test, two standard questions on Foakes v Beer and promissory estoppel, and one challenge question on the abolition / retention debate.

See the Further Reading panel for Treitel, Peel, Atiyah, Coote, Smith, the recent Supreme Court analyses, and the Law Revision Committee report.