Assignment 01

Submitted to
Barrister Ishtiaque Ahmed
Faculty Member School of Business

Submitted by
M Mostafizur Rahman
Id No: 081262030 Course: Law 200 Section: 05

North South University

October 25, 2011

Consideration is an essential element of contract. For a promise to be enforceable as a contract some consideration must be given in exchange for the promise that is the promisor must receive a benefit or the promise must suffer a detriment. A gratuitous promise is not enforceable as a contract in English law. An agreement must either be made under seal or the promisee must have provided consideration. The recipient of a gratuitous promise may in certain especial circumstances have rights and be able to enforce the promise despite not having provided consideration in the strict sense. Traditionally, its said that a valuable consideration in the sense of the law may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given suffered or undertaken by the other. There are some essential factors of consideration. They are as follows: Desire of the promisor is essential: The act done or loss suffered by the promise must have been done or suffered at the desire of the promisor. An act done without any request is a voluntary act and doesnt come within the definition of consideration. The consideration must be real: The consideration must have some value in the eye of law. It must not be sham or illusory. The impossible acts and illusory or non-existing goods cant support a contract. Therefore, real consideration comes from good consideration. Consideration cant be under public duty: Performance of a duty already owed under law is not a valid consideration. Where the promise is already under an existing public duty, an express promise to perform, or performance of that duty wont amount to consideration. Promise to a stranger can be enforceable: A promise made to stranger to perform an existing contract is enforceable because the promisor undertakes a new obligation upon himself which can be enforced by the stranger. Consideration must be sufficient but need not be adequate: An agreement to which the consent of the party is freely given isnt void merely because the consideration is inadequate but the in adequacy of the consideration may be taken into account by the court in determining the question whether the consent of the promisor was freely given because its impossible for the court to decide what is adequate. The consideration must not be illegal, immoral or opposed to the public policy: If either the consideration of the object of the agreement is illegal, the agreement cannot be enforced. The same principle applies if the consideration is immoral or opposed to the public policy. The consideration may be present, past or future: According to English law, past consideration is no consideration but according to Indian law, it is a good consideration.

Consideration may move from the promisee or from any other person: According to English law, consideration must move from the promise but according to Indian law, it may move from the promise or any other person.

Subject to the above essential factors a good consideration can be physical goods, services, forbearance, arbitration or compromise of disputed claims and settlement or composition with creditors. The present rules on compromises of claim, omissions and agreeing to perform existing legal duties are unsatisfactory. In the following incidents there are some factors where some evidence of an intention to be bound by a clear promise is necessary. Its clear that natural affection of itself isnt a sufficient consideration. For example; a sons promise not to bore his father with complaints about the fathers distribution of his property among his children was held not to be good consideration for the fathers promise not to sue the son on a debt owed by the son to the father.

The son hadnt provided any consideration as he had not provided any consideration as he had no right to complain and so in giving up his habit of complaining, he had not provided any consideration. However, the decision is open to attack on two possible grounds. The first one is that it ignored the practical benefit which the father obtained in being freed from the complaints of his son. The second ground is that the son did act to his detriment in refraining from making complaints. He was doing nothing wrong in complaining to his father so in that sense he did have a right to complain and in giving up that right he provided consideration. The important factor is that its not consideration to refrain from a course of conduct which it was never intended to pursue. A promise not to enforceable a valid claim is good consideration for a promise given in return as is a promise not to enforce a claim which is doubtful in law. On the other hand, its clear that a promise not to enforce a claim which is known to be invalid is not good consideration for a promise given in return.

The difficulty lies when the claim is clearly bad in law but is believed by the promise to be good. For example; the claimants honestly believed that the defendant was under a statutory obligation to reimburse them in respect of certain expenditure in which they had incurred in work on a street adjoining the house in which the defendant was residing. The defendant denied that he was under such an obligation but he eventually promised to pay a reduced a sum after he was threatened with litigation if he didnt pay. When the defendant discovered that he was not under a statutory obligation to pay, he refused it. He maintained that his promise was not supported by consideration. However, the court held that the promise was supported by consideration and that he was liable to pay. Nevertheless, its difficult to find the consideration supplied by the claimants. It could be argued that the claimants honest belief in the validity of their claim provided the consideration, but consideration must actually be of value in the eyes of the law and not

merely something believed to be of value by the party. Alternatively, it could be argued that the defendant benefited because he escaped the vexation which is inherent in the litigation. Such a rationale proves too much because it could apply equally where the claim was known to be bad. The question whether performance of a duty which one is already under an obligation to perform can constitute consideration for a promise given in return is currently a very controversial one in English law.

The prior rule was generally supported on the ground that it prevented public officials extorting money in return for the performance of their existing legal duties. But in the other cases, the rule could give rise to hardship because it ignored real benefits obtained by the promisor or the real detriments incurred by the promise. So, the new rule has come under some scrutiny. Until recently the rule which English law adopted was that performance of an existing contractual duty owed to a promisor was no consideration for a fresh promise given by that promisor.

The rule was not a popular one. It was once stated that it has done the most to give consideration a bad name indeed. There is a popular case where a ship was caught by a disaster and two crews deserted. Then the seaman agreed to pay more money to back his ship to its origin. In this case, on party argues that the crews had done what they are bound to do but another party argues that the crews had extra hardship to back the ship to its origin and the seaman obviously got some extra benefits as he couldnt find anyone for the replacement. There were a lot of issue arises to carefully observe; such as, legal benefit or legal detriment, practical benefits etc. Finally, after a long deliberation, the court of appeal adopted a very pragmatic approach to the issue. They held that the defendants had obtained a practical benefit as a result of the claimants promise to complete the work on time and that practical benefit was for this purpose at least sufficient to constitute consideration. However, two immediate problems arise of which one problem was what the practical benefit is another was the process of reconcile. Above all, after analyzing various incidents discussed above the common scenery was lack of some evidence of an intention to be bound by a clear promise. So, we may conclude that to avoid conflicts we must need some evidence of an intention to be bound by a clear promise.