TRANSCRIPTS
consent is not essential to a charge of theft. I can give you something willingly, but you may have still stolen it from me!
LEILA: Correct!
Unit 7, Lesson 2, Exercise B 1.29 Part 1
Good morning, everyone. What I’m going to talk about today is one of the key elements in the formation of a contract under English law: consideration. Consideration is the requirement that for parties to be able to enforce a promise, something must be given or promised in exchange or return for the promise. Firstly, we’re going to look at what is known as the doctrine of consideration. That is, where, how and why consideration is applied in the formation of a contract. Then we’re going to look at how consideration is used to make a contract enforceable. A contract is enforceable where parties can be compelled to fulfil their obligations through the legal process. Next we’re going to look at what are known as executory and executed contracts and how they relate to the doctrine of consideration. An executory contract occurs when someone promises to do something. For example, X promises that he’ll mend Y’s car next week and charge the usual hourly rate. An executed contract occurs when the work which the parties agreed to has been carried out. Y does not pay X the usual hourly rate until the car has been mended. However, the amount of money or the consideration for the work was agreed before the work was started. This is very important in legal terms. For example, X agrees to mend Y’s car because he enjoys mending cars and initially says he does not want any payment. He completes the work and then demands that Y gives him the usual hourly rate. In this situation the consideration is now past, as the work has already been completed. Finally, we will look at the case law to see how judges have interpreted the ways in which consideration is applied.
The doctrine of consideration applies only within the English legal system. In other words, consideration is not a strict requirement for the formation of a contract under other common law jurisdictions such as Scottish, Australian or United States law. Bearing in mind that this doctrine is initially difficult to grasp, plus the complex case law that relates to it, let us look at exactly what consideration is. As I said at the beginning of the lecture, consideration is the requirement that for
parties to be able to enforce a promise, something must be given or promised in exchange or return for the promise. This is also known as the quid pro quo. What I mean is, the contract must be met with or supported by consideration. It’s often in the form of monetary benefit. However, the consideration must not just be a gratuitous promise where someone promises something that is obviously not intended to be legally binding. I’m sure we’ve all said things when we’re desperate, like ‘If you can mend my car, I’ll give you a million pounds.’ The court is extremely unlikely to hold that this statement would result in the formation of a contract.
The general rule is that the promisor obtains or will obtain some right, interest, profit or benefit which is a direct result of some forbearance, detriment, loss or responsibility suffered or undertaken by the promisee. X promises to mend Y’s car. If X gets the car to work, Y agrees to drive X wherever he wants for the next month. X gets the benefit of free car journeys and Y has to give up his time and money in order to provide the service he has agreed to. Y suffers a detriment. The quid pro quo is, of course, that Y gets his car mended.
Unit 7, Lesson 2, Exercise C 1.30 Part 2
As we’ve seen in the introduction to this lecture, consideration is a requirement for the formation of a contract under English law. It can be thought of in simple terms as getting something back for what you’ve done. As we know, people rarely do something for nothing! Remember, another term for this is the Latin phrase quid pro quo. As well as consideration there must, of course, be the offer, acceptance and the intention to form legal relations. In other words, for a legal contract to be formed, all of these elements must be in place.
The importance of consideration in the formation of a contract is illustrated in Roscorla v Thomas (1842) 3 QB 234. In this case, Roscorla bought a horse from Thomas. After the sale was completed, Thomas promised that the horse was ‘sound’; that is, in good condition. The horse turned out to be a vicious, nasty beast. It was held that Roscorla could not enforce the promise made by Thomas, as the consideration for entering into the contract had been completed by the time the promise that the horse was sound had been made. In order for this promise to be enforceable Roscorla would need to offer fresh consideration. So, the consideration
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