Promise Act
Jones & Co Ltd promises Fastype Ltd promises
to pay £950 when a new to deliver the computer
computer is delivered. within six weeks.
Rules governing consideration
1 Consideration must not be in the past. If one party
voluntarily performs an act, and the other party then
makes a promise, the consideration for the promise is
said to be in the past. Past consideration is regarded as
no consideration at all.
Act Promise
John gives Susan On arrival, Susan offers John £1
a lift home in his towards the petrol but, finding
car after work. that she has not got any change,
she says she will give him the
money the next day at work.
In this example, John cannot enforce Susan’s promise to
pay £1 because the consideration for the promise (giving
the lift) is in the past. John would have given Susan the
lift home without expecting payment and so there was
no bargain between the parties.
2 Consideration must move from the promisee.If
A (the promisor) makes a promise to B (the promisee),
the promise will only be enforceable (unless made in
the form of a deed) if B can show that he has provided
consideration in return for A’s promise.Part 3Business transactions
216
Re McArdle(1951)Mr McArdle died leaving a house to his wife for her life-
time and then to his children. While Mrs McArdle was still
alive, one of the children and his wife moved into the
house. The wife made a number of improvements to the
house costing £488. After the work had been completed,
all the children signed a document in which they pro-
mised to reimburse the wife when their father’s estate
was finally distributed. The Court of Appeal held that this
was a case of past consideration. The promise to pay
£488 to the wife was made after the improvements had
been completed and was, therefore, not binding.The rule about past consideration is not strictly fol-
lowed. If, for example, a person is asked to perform a
service, which he duly carries out, and later a promise to
pay is made, the promise will be binding.
Re Casey’s Patents, Stewartv Casey
(1892)
Casey agreed to promote certain patents which had
been granted to Stewart and another. (A patent gives the
holder exclusive rights to profit from an invention.) Two
years later Stewart wrote to Casey promising him a one-
third share of the patents ‘in consideration’ of Casey’s
efforts. It was held that Stewart’s original request raised
an implication that Casey’s work would be paid for. The
later letter merely fixed the amount of the payment.Tweddlev Atkinson(1861)John Tweddle and William Guy agreed that they would
pay a sum of money to Tweddle’s son, William, who had
married Guy’s daughter. William Guy died without paying
his share and William Tweddle sued his late father-in-
law’s executor (Atkinson). His claim failed because he had
not provided any consideration for the promise to pay.The rule that consideration must move from the
promisee is closely related to the doctrine of privity of
contract. This doctrine states that a person cannot be
bound by or take advantage of a contract to which he
was not a party. The doctrine of privity of contract and
the exceptions to the rule, including the recent changes
contained in the Contracts (Rights of Third Parties) Act
1999, will be examined in more detail later in this
chapter. It should be noted at this point, however,
that the 1999 Act does not change the requirement that
the promisee must show consideration to enforce any
promise not made in the form of a deed.
3 Consideration must not be illegal.The courts will
not entertain an action where the consideration is con-
trary to a rule of law or is immoral. The question of
legality will be considered in more detail later in this
chapter.4 Consideration must be sufficient but need not be
adequate.It must be possible to attach some value to
the consideration but there is no requirement for the