Love Stories

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Consideration and Promissory Estoppel The Formation of a Contract

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Consideration and Promissory Estoppel
1. CONSIDERATION
In general, agreements or promises are contractually binding in English law only if supported by consideration. The requirement of consideration means that each party must receive or be promised something in return for giving or promising something. Consideration is, therefore, the legal description of the element of exchange and its practical effect is to ensure that gratuitous promises are not binding whereas bargains are. So if A promises B £1000, B cannot enforce that promise because B has provided no consideration (nothing in exchange) for it. It is traditional to define consideration as a benefit to the promisor or a detriment to the promisee. So in Currie v Misa (1875) LR 10 Ex 153, 162 Lush J stated, ‘A valuable consideration, in the sense of the law, 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.’ This definition can be misleading unless one emphasises, in line with the need for an exchange, that the detriment to the promisee must be requested by the promisor. So if A promises B £1000 and B, in reliance on receiving that money, buys a car, that may constitute detrimental reliance by B but B has not thereby provided any consideration for A’s promise. In contrast, if A promises B £1000 in return for B’s car (ie A requests the car), B’s transfer of the car, or promise to transfer it, is consideration for A’s promise. In a bilateral contract which has not yet been performed (ie where the consideration is ‘executory’) each party’s promise is consideration for the other. In a unilateral contract the promisee’s performance of the requested act is the consideration for the promise; and the promise is the…...

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