Executed and executory consideration
Consideration can take the form of an act or a promise, and is said to be
executed, which is when the act of transfer of goods has been carried out, or
executory, when a party has made a promise, but it has not yet been carried out.
In the above example, A and B have both yet to fulfil their promises when the
contract is made, so the consideration from both parties is executory. If C
offers £20 for the return of her lost diamond ring, and D returns it in response
to the offer, D’s consideration would be executed, because his side of the
bargain would be completed. Whether the consideration is in the form of goods
which have been handed over, or is merely a promise to do something (and
therefore executory), does not affect its validity. A contract based on promises
is just as binding as one based on immediate delivery.
Consideration must be sufficient but need not be adequate
The words sufficient and adequate, although having very similar meanings in
everyday language, have rather different meanings when applied to
consideration, and should be learned (see below). For consideration to be
considered sufficient, it must be of some value to the other party, however
slight or trivial. If a pen is offered in exchange for a new Porsche car, however
unlikely, if it is meant seriously, then that is sufficient in the eyes of the law.
There is something which is of some value on each side of the bargain, and
the courts do not concern themselves with the market price, or adequacy, of
the bargain. This supports the idea of freedom to contract, leaving parties to
make their own bargains, whether in their favour or not. The following case
is the usual authority for the court’s requirement of sufficiency.
Two interesting cases follow which illustrate sufficiency and adequacy of
consideration.
Consideration 47Thomas v Thomas (1842)
A husband wanted his wife, when he died, to have the right to live in
the house owned by him, so he formed a contract under which she paid
£1 per year rent. This was held to be sufficient consideration to enforce
the agreement, even though it was clearly not adequate, as it was far
below the market value.Bainbridge v Firmstone (1838)
The need arose to know the weight of some boilers. It was agreed that if
the boilers were taken away for weighing, they would be returned in good
condition. On return they were damaged, and it was held that payment