Introduction
This essay aims to elucidate the distinctions between executory, executed, and past consideration within the context of contract law in the UK. Consideration, a fundamental element of a valid contract, refers to something of value exchanged between parties. Understanding the different types of consideration is critical for determining a contract’s enforceability. Furthermore, the essay will explore the exceptional circumstances under which a contract supported solely by past consideration may still be enforced. Through a structured analysis, supported by legal principles and case law, this discussion will provide a sound understanding of these concepts and their practical implications for contract law.
Defining Types of Consideration
Consideration is broadly categorised into three types: executory, executed, and past. Executory consideration involves a promise to perform an act in the future in exchange for another promise. For instance, if A promises to deliver goods next month and B promises to pay upon delivery, the consideration is executory as both obligations remain unfulfilled at the time of the agreement (Adams, 2019). This type of consideration is typically enforceable as it demonstrates mutual intent to be bound.
Executed consideration, on the other hand, occurs when one party has already performed their side of the bargain at the time the contract is made. A common example is a reward offer, where a person returns lost property before being aware of the reward. Once the act is completed, the promise to pay becomes binding, as seen in cases like Carlill v Carbolic Smoke Ball Co (1893), where performance of the condition constituted executed consideration (Poole, 2016).
Past consideration, however, refers to an act performed before the promise is made, without any prior agreement for compensation. Generally, past consideration is not valid, as it lacks the element of bargain essential to contract formation. A classic illustration is Roscorla v Thomas (1842), where a promise to guarantee a horse’s quality after its sale was deemed unenforceable because the consideration (the sale) was already past (Stone and Devenney, 2020).
Exceptions to the Rule on Past Consideration
Despite the general rule that past consideration is invalid, there are specific circumstances under which a contract supported by such consideration may be enforced. One notable exception arises when the past act was performed at the promisor’s request, and there was an implied understanding that payment would follow. This principle was established in Lampleigh v Braithwait (1615), where a promise to pay for services rendered in securing a pardon was enforced because the act was done at the defendant’s request with an expectation of reward (Poole, 2016).
Additionally, under statutory provisions such as the Bills of Exchange Act 1882, past consideration can support a bill of exchange if it reflects a pre-existing debt or liability. This ensures commercial practicality and fairness in specific financial transactions (Adams, 2019). These exceptions, though limited, demonstrate the law’s flexibility in recognising equitable obligations despite the absence of contemporaneous bargain.
Critical Implications and Challenges
The distinction between types of consideration remains crucial in determining contractual validity, yet the exceptions for past consideration introduce complexity. Arguably, these exceptions prevent injustice in cases where a moral obligation aligns with the promisor’s intent. However, their limited scope means that many promises based on past acts remain unenforceable, potentially frustrating reasonable expectations. Furthermore, distinguishing between implied requests and gratuitous acts can be problematic, as courts must infer intent from ambiguous circumstances, often leading to inconsistent outcomes (Stone and Devenney, 2020).
Conclusion
In summary, executory consideration involves future promises, executed consideration pertains to completed acts at the contract’s formation, and past consideration relates to prior acts without prior agreement. While past consideration is generally invalid, exceptions exist when acts are performed at the promisor’s request with an implied expectation of reward or under specific statutory rules. These principles underscore the balance between strict legal requirements and equitable fairness in contract law. Understanding these nuances is essential for navigating contractual disputes, though the ambiguity in applying exceptions highlights the need for careful judicial interpretation. Indeed, this area of law reflects both rigidity and adaptability, shaping the enforceability of agreements in diverse contexts.
References
- Adams, A. (2019) Law for Business Students. 10th edn. Pearson Education.
- Poole, J. (2016) Textbook on Contract Law. 13th edn. Oxford University Press.
- Stone, R. and Devenney, J. (2020) The Modern Law of Contract. 13th edn. Routledge.
