Consideration in Contract Law for SQE1

Contract Law > Consideration in Contract Law

Consideration is the price of a promise — without it, an agreement is generally not enforceable as a contract under English law. SQE1 tests your understanding of the rules on what constitutes valid consideration and the exceptions that have developed through case law. This topic sits at the heart of contract formation and frequently overlaps with other areas. Within the broader Contract Law framework, understanding consideration is critical to answering any question about whether a binding contract exists.

What Is Consideration?

Candidates frequently lose marks on SQE1 by treating past consideration as valid consideration — but the rule is simple: consideration must move at the time of the promise or after, never before. This temporal distinction is tested repeatedly.

Consideration is something of value given by each party to a contract in exchange for the other party's promise. It is the element that distinguishes a binding contract from a gratuitous promise (a gift). English law requires consideration for every simple (non-deed) contract.

The classic definition comes from Currie v Misa (1875): consideration is "some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other."

Key Principles for SQE1

Sufficiency vs. Adequacy

Consideration must be sufficient but need not be adequate.: This means:
Consideration must have some recognisable legal value — it must be something the law recognises as valuable (Thomas v Thomas, Chappell & Co v Nestle)
The court will not assess whether the exchange is fair — £1 can be consideration for a house, and the law does not intervene
Common examples: forbearance from exercising a legal right, return promises, even nominal payments

Exam tip

Students often confuse adequacy with sufficiency. Remember: the court does not care if the deal is a bad bargain. The question is whether there is recognisable value, not whether it is a fair price.

Past Consideration

Past consideration is not good consideration. If the act was performed before the promise was made, it cannot support the promise (Re McArdle).

Exception — Lampleigh v Brathwait Rule: Where the act was done at the promisor's request, the parties understood payment would follow, and payment would have been legally enforceable, past consideration may be good consideration (Pao On v Lau Yiu Long).

Performance of an Existing Contractual Duty

Traditional Rule (Stilk v Myrick): Generally, performance of an existing contractual duty is not good consideration for a new promise. If A is already contractually bound to do X, then promising to do X in exchange for payment by B gives B nothing new.

Exception: If the promisee provides something beyond the existing duty, that is valid consideration (Hartley v Ponsonby).

Practical Benefit Exception (Williams v Roffey Bros): This is the most important modern development. A promise to pay extra for performance of an existing contractual duty may be enforceable where:

The promisor obtains a practical benefit from the continued performance
There is no economic duress

This modernises the law and recognises that in construction and commercial contexts, sometimes a promise to pay more is made because the promisor genuinely benefits from ensuring completion.

Quick Comparison Table

| Scenario | Rule | Valid Consideration? | |---|---|---| | Forbearance from legal right | Sufficiency rule | Yes | | Nominal sum (£1 for house) | Adequacy irrelevant | Yes | | Act done before promise | Past consideration | No (except Lampleigh v Brathwait) | | Performance of existing duty | Stilk v Myrick | No | | Extra work beyond duty | Beyond existing duty | Yes | | Extra payment for performance + practical benefit | Williams v Roffey | Yes (if no duress) |

Part Payment of a Debt

General Rule: Payment of a lesser sum does not discharge the full debt (Pinnel's Case 1602; Foakes v Beer 1884). If A owes £100 and pays £80, the creditor can still recover the £20.

Exceptions:

Payment by a third party (different from debtor paying)
Payment in a different form (e.g., goods instead of cash)
Payment at a different time or place (agreed in advance)

Promissory Estoppel

Definition: Where a party makes a clear and unequivocal promise to waive or vary their strict legal rights, and the other party relies on that promise, the promisor may be estopped from going back on the promise (Central London Property Trust v High Trees House).

Critical Rules:

It operates as a shield, not a sword — it is a defence, not a basis for a new claim (Combe v Combe)
It is generally suspensory, not extinctive — when circumstances change, the promisor can resume full rights with reasonable notice (Tool Metal Manufacturing v Tungsten Electric)
The promisee must have relied on the promise
The promise must be clear and unequivocal

How This Appears in SQE1 Questions

SQE1 questions test whether consideration is valid in a given scenario. Examiners test this distinction repeatedly. Common traps include:

Accepting past consideration as valid — forget Lampleigh v Brathwait and you'll miss the exception
Overlooking the Williams v Roffey practical benefit rule — forgetting that modern law recognises practical benefit as consideration
Confusing promissory estoppel with consideration — estoppel is a shield (defence), not a cause of action
Missing the part payment rule — students often assume part payment discharges the debt without considering the exceptions

Common Mistakes Students Make

Treating past consideration as valid — it is not, except under the Lampleigh v Brathwait exception where the act was requested.
Forgetting Williams v Roffey Bros and assuming performance of an existing duty can never be good consideration.
Confusing promissory estoppel with consideration — estoppel is a defence, not a basis for enforcing a new promise.
Overlooking the part payment rule (Foakes v Beer) and its exceptions for third parties, different form, or different time/place.
Using promissory estoppel as a sword — it is a defence only, not a basis for claiming damages.

Want to test your understanding of consideration? Try a few SQE1-style questions below before moving on.

Quick Summary

Consideration must be sufficient but not adequate: it must have recognisable legal value, but fair market value is irrelevant.
Past consideration is not valid, except under the narrow Lampleigh v Brathwait exception (requested act where payment understood and legally enforceable).
Performance of existing duty is not good consideration (Stilk v Myrick), unless the promisee provides something extra or the promisor obtains a practical benefit (Williams v Roffey Bros).
Part payment does not discharge a debt, but exceptions exist: third-party payment, different form or different time/place.
Promissory estoppel is a shield, not a sword — it prevents the promisor from enforcing strict legal rights after making a clear promise and the promisee has relied on it, but it is generally suspensory.

Want to test this now? Try a few SQE1-style questions below before moving on.

Test Yourself

Practise Consideration In Contract Law Questions for SQE1

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