CONTRACTS: SOME LEADING CASES ON CONSIDERATION

The courts have developed the law on consideration in several landmark cases. However, as the idea of consideration existed before the clarity provided by the courts in Curie v Misa (1875), the cases below pre-date it. When a modern court hears a case that shares strong similarities to one of those below, it can ‘distinguish’ the more recent case from the earlier one. This means that a judge can decide that the modern case has some material difference and therefore the legal reasoning of the precedent case will not apply.

(A) Stilk v Myrick (1809) Stilk was one of eleven sailors contracted to provide services on a ship owned by Myrick which was sailing from London to the Baltic and back again. In return for working on board the ship for the full voyage and doing “all that he could in an emergency”, Stilk agreed to a payment of £5 per month. When the ship reached the Russian port of Kronstadt, two of the sailors deserted the ship. The captain was unable to find replacements and he offered the nine remaining men a share of the deserters’ pay if they would get the ship safely back to London. They did so. However, upon arrival, the captain refused to pay the extra amount on the basis that the nine men had already been under an existing duty. The question before the court was whether or not the work provided between Kronstadt and London was good consideration for a new contract to have been formed. The court held that an agreement arising out of a pre-existing duty was void for lack of consideration and found for the defendant, Myrick.

(B) Thomas v Thomas (1842) Before he died, Mr John Thomas stated that his wife, Eleanor, was to be allowed to live in his house (1) ….. her death. This was vital (2) ….. Mrs Thomas, as this was (3) ….. the Married Women’s Property Act (1882), which allowed married women to own real property. The executor of the will, Samuel Thomas, therefore entered (4) ….. a lease agreement with Eleanor, allowing her to occupy the house in return for her promise (i) to pay £1 a year and (ii) to keep the house (5) ….. good repair. Eleanor lived in the house (6) ..... several years. However, the death of Samuel Thomas resulted in her having a dispute with the executor of his will, Benjamin Thomas. He claimed that Eleanor’s consideration of £1 a year and her promise to keep the house in good condition was not equivalent in value to the benefit that she was receiving. The court found in favour of Eleanor Thomas. It confirmed that consideration must be “something of value in the eyes of the law” but that there is no requirement for the consideration exchanged to be of equal value. The legal principle here is that “consideration must be sufficient, but it need not be adequate”. Without the £1 and the promise to keep the property in good repair, there would have been no contract. However, because this nominal amount was provided, a binding contract was formed.

(C) Tweddle v Atkinson (1861) A young man named William Tweddle was about to be married. His father, John Tweddle, entered into a pre-marriage contract with the father of the bride, William Guy. The two parents each promised the other in a written agreement that they would pay a sum of money to William Tweddle by 21 August 1855. John Tweddle promised to pay £100 and William Guy promised to pay £200. However, William Guy died before making payment. The executor of William Guy’s will, Mr Atkinson, refused to make payment of the promised sum so William Tweddle sued for the payment of the £200. The claim failed for two reasons: (i) the claimant William Tweddle was not a party to the agreement and therefore could not sue or be sued under it according to the doctrine of privity of contract, and additionally; (ii) the claimant had not provided any consideration and had not therefore benefitted anyone or suffered any detriment himself. The court confirmed in this case that “consideration must flow from the promisee” in order to create a binding contract.