70 4: Formation of contract II Part B The law of obligations
Chapter Roundup
Consideration is an essential part of most contracts. It is what each party brings to the contract.
Consideration may be executed (an act in return for a promise) or executory (a promise in return for a
promise). It may not be past, unless one of three recognised exceptions applies.
The long-established rule is that consideration need not be adequate but it must be sufficient.
The principle of promissory estoppel was developed in Central London Property Trust v High Trees House- It means that in some cases where someone has made a promise they can be prevented from
denying it.
Various cases give us a set of rules to apply when determining whether the parties to a contract intended
to be legally bound by it.
As a general rule, only a person who is a party to a contract has enforceable rights or obligations under it.
This is the doctrine of privity of contract. The Contracts (Rights of Third Parties) Act 1999 has had a
fundamental effect on the doctrine.
The pace of technological change raises issues for modern contract law. Problems arise as contracts are
often electronic, are digitally signed, are accepted by email and consideration is often provided by credit
card.