Search

ENGLISH CONTRACT LAW: 'CONSIDERATION' - An Outline Part 1 (B2)

In order to form a valid and legally binding contract under English law, four ‘elements’ must be present:


· An offer;

· An acceptance of the offer;

· Consideration; and

· Intention to create legal relations.


If any of these 'elements' are not present, there will not be a legally binding contract under English law.


The element of ‘consideration’ is sometimes difficult for non-English lawyers and law students to understand. Why? Because it is a ‘common law’ concept. It is not a concept used in civil law jurisdictions (at least, not in the same way). Because of that, ‘consideration’ has developed through decisions of judges and courts over hundreds of years.


In this series of three posts, we will give a brief outline of the English common law ‘doctrine’ of consideration. We will try and put the doctrine in a historical context. We will also try and highlight some of the legal issues involved with consideration. Hopefully, that will help you to understand the idea of the very important element of ‘consideration’ in English contract law.

Historical Background

What we now understand as ‘the doctrine of consideration’ is the result of several centuries of legal evolution. That evolution is the result of many complex factors and legal developments. These developments mainly occurred between the Norman Conquest of England (in 1066) and the 16th century. During that time, the King’s courts gradually played a greater role in administering justice and resolving disputes.

The complex factors include, among others, how the King’s courts operated, both in terms of their procedural rules and the evidence required to prove a case. For a long period, the King’s courts were mainly interested in disputes which directly concerned the King, and in particular ‘keeping the peace’ and maintaining social order. Procedural requirements for having a dispute heard in the King’s courts had to be strictly followed. These strict rules of procedure were accompanied by similar strict rules about how to prove a case; in other words, rules of evidence and proof.

In relation to contracts (namely, agreements between individuals for the buying and selling of goods or the provision of services), a rule developed in the King’s courts that the contract had to be in writing (in the form of a ‘deed’) in order to be enforceable. This requirement was certainly established by 1321, as can be seen in The Case of the Waltham Carrier.

The facts of that case were that a carrier had agreed to carry some hay from Waltham to London - a distance of about 15 kilometres. The carrier had taken delivery of the hay, but then refused to carry it to London. The other party brought legal proceedings against the carrier for not performing the agreement. The action failed. The court said there was no deed (a deed is a kind of written agreement). The claimant’s lawyer argued that surely it was not necessary to have a written agreement for a cartload of hay. The judge in the case, Herle J, responded, however, by saying that the courts would ‘not undo the law for a cartload of hay.’

It is not known how the requirement for a deed (writing) arose. However, during those early centuries, the courts resisted allowing any claims that relied on words alone. A deed was clear evidence of something. Mere words were not enough. Many agreements – then, as now – were never reduced to writing, for several reasons. However, if the only ‘evidence’ of an agreement was oral (word of mouth), your claim would not succeed in the royal courts. Of course, this could – and did – cause injustice.

Also during this early period, the royal courts made a distinction between doing something wrongly (called 'misfeasance') and not doing something at all – even if you had promised to do it ('non-feasance'). For example, if the Waltham Carrier had started to perform the agreement and, by some wrongful act, had caused damage to the hay, the claimant would have had a claim, in an action called ‘trespass’. As strict procedural requirements were relaxed, cases of this kind were brought in a legal action called ‘assumpsit’ (meaning ‘to take upon yourself’). In other words, one party took upon themselves to perform something they had agreed to do, but performed it badly.

By the middle of the 15th century, the King’s courts had started to accept that ‘assumpsit’ could be used, not just for misfeasance (doing something badly), but also for non-feasance (not doing what you had promised). In Doige’s Case (1442), the defendant had agreed to sell land to the claimant. The defendant then sold the land to a third party who had offered her more money. The court considered that the defendant had been deceitful. In deciding the case, the judge began to use the language of ‘quid pro quo’ (a favour or advantage given in return for something) to justify it. Here, the parties had entered into a bargain and the heart of a bargain was that it was a reciprocal (two-way) arrangement. Therefore, by 1442, we can see the real beginnings of the concept which we would now call ‘consideration’.

It was still the case that a mere promise to do something, without anything being given in return, was not enforceable. In this situation, there is no ‘bargain’. However, by 1565, the English lawyer and theorist Edmund Plowden, was able to say:


“…because words are often spoken or uttered by a man without great advisement or deliberation [in other words, without thinking very carefully about them], the law has provided that a contract by words shall not bind without consideration”. [1]

Therefore, by the middle of the 16th century, English law was using the term ‘consideration’ in a sense that would certainly be understood by English lawyers today. Additionally, the consideration did not have to be money in return for a promise. In the case of Lucy v Walwyn (1561), the court was able to say that a promise given in return for another promise was ‘good consideration’.

In the next post, we will give an outline of some important developments in the doctrine of consideration, and offer some commentary about them.

Footnote.

[1] Sharington v Strotton [1565]

12 views0 comments