"There is no real agreement about the true basis of the requirements of consideration for a valid contract; the case law often seems to turn on arbitrary distinctions". The proposition described above questions the validity of the 'doctrine of consideration' and its presence within the law of contract. The doctrine of consideration seems to have developed out of the judiciary's need to differentiate areas of contract law and produce what McKendrick (2000)1 describes as 'the badge of enforceability'.
The orthodox interpretation of the doctrine is based upon the idea of 'reciprocity' which suggests that a promisee could enforce a promise only when he has promised to give something in exchange or the promisor has obtained something in return. The classical and much recited definition of consideration can be found in Currie v. Misa2: '… 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 of responsibility given, suffered or undertaken by the other'.
Beale, (2001)3 argues that the descriptions given in Currie et al… (although much cited)… were almost certainly not meant as complete definitions, merely as sufficient to decide the points before the court. He goes on to suggest a newer definition from, Pollock (1950)4, is more complete, 'An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable'. This view is described by Richards (2002)5 as the 'modern approach' and is clearly approved by the House of Lords in Dunlop Pneumatic Tyre Co.Ltd. v. Selfridge and Co Ltd. 6 as being more representative of the doctrine of consideration.
Therefore have the judiciary failed to reach agreement about the foundations of consideration? Or has this led them, as some would argue, to advocate a more 'flexible' approach to the doctrine of consideration? Treitel (1999)7 has argued that in some cases the courts have 'invented' consideration, that is to say the courts; '… have treated some act or forbearance as consideration quite irrespective of the question whether the parties have so regarded it'.
With this in mind public policy must also play a part in the thinking of the judiciary. By seeking to find, 'where they might', consideration in a contract the manifestation of arbitrary judgements has brought about contradiction and conflict. This can be seen in Stilk v. Myrick8 where it was held that doing what one was contractually obliged to do could not amount to sufficient consideration. However this flies in the face of Harris v. Watson9, prima facia Lord Ellenborough, accepting the decision of the previous case but not its grounds, stated;
'I think Harris v. Watson was rightly decided; but I doubt whether the ground of public policy, upon which Lord Kenyon is stated to have proceeded, be the true principle on which the decision is to be supported. Here, I say, the agreement is void for want of consideration'. For want of consideration the claim failed? McKendrick (2000)10 rightly points out that the absence of 'any discussion as to whether the defendant gained benefit is of some significance given the emphasis placed by the modern judiciary upon the question of practical benefit'.
The defendant must surely have taken up some of the slack created by the loss of crew members and the additional duties must therefore follow as with Hanson v. Royden11 & Hartley v. Ponsonby12 to be seen as consideration. Analysing, as a legal scholar must, the relevant law reports it can be seen that the reporting of Stilk (which is to be relied upon) has in itself created disingenuous applications. The two law reports, created by Espinasse and Campbell, allow differing interpretations dependant upon your view and this has created flux within the world of academic law for some time.
Looking at the law reports pragmatically Stilk could be viewed, as with Espinasse; to be a case of duress alternatively in Campbell's reporting a case brought that lacked 'consideration'. Campbell's report has however won the day and the question as to whether Stilk is properly analysed was not considered fully by the judiciary until Williams v. Roffey Bros & Nicholls (Contractors) Ltd 14 which is now regarded as the leading authority. This case has brought about a wide-ranging attack on Stilk from the Court of Appeal, but it was only to cloud the waters of consideration further.
Their 'pragmatic' approach in Williams was to find in favour of the plaintiff having held that the defendants had obtained a 'practical benefit'. The problems arising from this are that the courts have failed to identify 'practical benefit' with any distinction and have seemingly taken away the need for contracting parties to be bound by their original terms. Furthermore, by 'refining'15 the position of Stilk and adopting Espinasse's view (economic duress) and then citing Campbell's report the Court of Appeal have again failed to add any coherent understanding of consideration.
The principle critic of the doctrine of consideration, Professor Atiyah16 has argued that, 'the courts use of the word 'consideration' meant no more than that there was good 'reason' for the enforcement of a promise'. However Professor Treitel has objected17 to this and with his objection has engaged in verbal tennis over the subject18. Amusing as this maybe these leading scholars do little to offer a distinct rule for future law makers to follow.
If the future is that to be found in Williams, that of being more willing to find the existence of consideration where they believe that the parties intend to be bound by their agreement, we may see greater prominence given to the doctrine of intention. However, where American and European Law seek to find alternative paths within contract law, we may yet follow.
Article 2. 101 of the Principles of European Contract Law finds no role for the doctrine of consideration and Article 3.2 of the Unidroit Statement of Principles for International Commercial Contracts goes further by stating that: '… consideration is of minimal practical importance'… and… 'that its elimination can only bring about greater certainty… ' In the United States, D. Reed Freeman Jr19 states that their position is that in the traditional legal doctrine, if one party makes a promise and the other party offers nothing in exchange for that promise, the promise is unenforceable. These gratuitous promises are said to be 'unenforceable for lack of consideration'.
However in some states, under the Rest. 2d 71; Cal. Civ. Code 1605 a gratuitous promise can be enforced if the party to whom the promise was made relied on the promise. Other states no longer require consideration for certain types of promises. (See: Earhart v. William Low Co. (1979) 25 Cal. 3d 503, 600 P. 2d 1344)
The final word must go to the bench, Lord Steyn, writing extra-judicially20 stated: 'There are few cases where even in modern times courts have decided that contractual claims must fail for want of consideration…it seems… the courts have shown a readiness to hold that the rigidity of the doctrine of consideration must yield to the practical justice and the needs of modern commerce'.
There seems to be acceptance within this view that the case law that has passed before is not binding and the courts will look 'flexibly' at each case as it appears. The ability of the bench to 'find/invent consideration' on the day continues to cloud the issue as the judiciary develop their 'practical justice' over the 'ordinary law'.