54 Chapter 2Making a contract
Consideration can be defined as a benefit given by one party or a loss suffered by the
other. Usually, consideration is both a benefit to one party and a loss to the other. For
example, if I buy a car from a garage, the garage’s promise to give me ownership of the
car is a benefit to me and a loss to the garage. Conversely, my promise to pay the money is
a benefit to the garage and a loss to me.consideration Executed, executory and past
Executory considerationconsists of a promise to do something in the future. The consider-
ation is called executory because when the contract is made the promisor has not yet
performed (executed) his consideration. If we examine a typical bilateral contract, for
example Nicolene Ltdv Simmondson p. 47, we see that the consideration of both parties
was executory. The defendants promised that they would deliver the 3,000 tons of steel
bars, and the claimants promised that they would pay for them.
Executed considerationoccurs when one of the parties makes the offer or the acceptance
in such a way that he has completely fulfilled his liability under the contract. The only con-
tractual liability remaining is that of the other party. A seller of goods, for example, might
ask the buyer to send cash with his order. If the buyer does this then his consideration is
executed. Executed consideration is found in the acceptance of unilateral offers, where the
acceptance is made by performing some action rather than by promising to do something
in the future. For example, in Carlillv The Carbolic Smoke Ball CompanyMrs Carlill’s
consideration was executed. She did not promise to use a smoke ball and catch flu, she just
did it. The consideration of the smoke ball company, being a promise, was executory.
It is not possible to give as consideration a promise to do some act which has already
been done. Past considerationis no consideration. This seems sensible enough, because to
promise to do something which has already been done is to promise nothing at all. For
example, in Re McArdle (1951)the claimant lived in a house which she did not own, and
spent a considerable amount of money on having the house repaired. The owners had not
asked her to do this. After the claimant had done this, the owners of the house signed an
agreement to pay the claimant £488 in consideration of her having had the repairs done. The
owners did not have to pay. When the promise to pay was made the claimant had already
had the repairs done.
Despite the rule that past consideration is no consideration, a past act can be good con-
sideration if two conditions are satisfied. First, the other party must have requested that the
act be performed. Second, both parties must all the time have contemplated that payment
would be made. The following case provides an example.Lampleigh vBrathwaite (1615)The defendant had killed another man and needed to get a pardon from the King. He asked
the claimant to get him a pardon. The claimant managed, at considerable personal
expense, to obtain the necessary pardon. Upon hearing that the pardon had been granted,
the defendant agreed to pay the claimant £100 for what he had done. Later, the defendant
grew less grateful and refused to pay. The claimant sued for breach of contract.
HeldThe defendant had to pay the £100. Both of the conditions were satisfied. First, the
defendant had asked the claimant to get the pardon. Second, both parties had contem-
plated that the claimant would be paid for his services.