Consideration in Contract

In common law systems, consideration is one of the essential elements required to form a legally enforceable contract, alongside offer, acceptance, and intent to create legal relations. It refers to something of value that each party gives up or promises in exchange for the other party's promise. Without consideration, a promise is generally treated as a gratuitous undertaking and is not enforceable in court.

Consideration can take many forms: paying money, delivering goods, performing a service, refraining from a legal right (forbearance), or simply making a return promise. The classic English case Currie v Misa (1875) described consideration as consisting of "some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other."

Several doctrines shape how courts evaluate consideration:

• Bargained-for exchange: The benefit or detriment must be the price of the promise, not a coincidental act. This was central in Hamer v Sidway (1891), where a nephew's forbearance from drinking and smoking was held to be valid consideration.
• Adequacy vs. sufficiency: Courts require consideration to be sufficient (have some legal value) but will not weigh whether it is adequate (a fair market price). A peppercorn can suffice.
• Past consideration is not good consideration: An act performed before a promise was made cannot support that promise (Roscorla v Thomas, 1842).
• Pre-existing duty rule: Performing what one is already legally bound to do is generally not fresh consideration (Stilk v Myrick, 1809), though this was softened in Williams v Roffey Bros (1990) where practical benefit could suffice.

Civil law jurisdictions such as France and Germany do not require consideration; they instead rely on concepts like cause or causa. The doctrine of promissory estoppel can sometimes enforce promises lacking consideration where reliance has occurred.