Introduction

In the realm of contract law, consideration is a fundamental element that underpins the enforceability of agreements. It refers to something of value exchanged between parties, forming the basis of a mutual obligation. Under English law, consideration is categorised into three distinct types: executory, executed, and past consideration. Each type carries different implications for the formation and enforcement of contracts. This essay aims to delineate the differences between executory, executed, and past consideration, offering clear definitions and examples. Furthermore, it will explore the general rule that past consideration is typically insufficient to support a contract, while examining the exceptional circumstances under which a contract may still be enforced despite being supported only by past consideration. By engaging with legal principles, case law, and statutory provisions, this essay seeks to provide a comprehensive understanding of these concepts for students of law.

Defining Executory, Executed, and Past Consideration

Consideration in contract law can be understood through its temporal relationship to the promise it supports. Executory consideration refers to a promise to do something in the future in exchange for a counter-promise. At the time the contract is formed, neither party has performed their obligation; the consideration remains to be executed. A typical example is a contract for the sale of goods where one party promises to deliver goods at a future date, and the other promises to pay upon delivery. As noted by Cheshire, Fifoot, and Furmston (2017), executory consideration is common in bilateral contracts where mutual promises form the basis of agreement.

In contrast, executed consideration occurs when one party has already performed their part of the bargain at the time the promise is made by the other party. This is often seen in unilateral contracts. For instance, in a reward scenario, if a person returns a lost item to its owner and the owner subsequently promises a reward, the act of returning the item constitutes executed consideration. This type of consideration is deemed valid and enforceable under English law because the act is performed in reliance on the promise (Beatson et al., 2016).

Lastly, past consideration involves a promise made after an act has already been performed, without any prior request or agreement for compensation. The general rule in English law is that past consideration is not valid consideration, as it lacks the element of bargain or mutual exchange at the time of the act. A classic illustration is found in the case of Re McArdle (1951), where a woman renovated her husband’s family home, and afterwards, family members promised to pay her for the work. The court held that the promise was unenforceable because the work was completed before any promise of payment was made, rendering the consideration past (Peel, 2015).

The General Rule Against Past Consideration

The principle that past consideration does not constitute valid consideration is well-established in English contract law. This rule stems from the need for a contract to involve a contemporaneous exchange of value, ensuring that promises are supported by a bargain. The case of Roscorla v Thomas (1842) exemplifies this principle. In this case, the claimant purchased a horse and later received a promise from the seller that the horse was sound. When the horse proved defective, the claimant sought to enforce the promise. However, the court ruled that the promise was unsupported by consideration since the purchase (the act) was completed before the promise was made (Beatson et al., 2016). This decision underscores the importance of timing in the formation of a contract; a promise must induce the act, or it risks being deemed gratuitous.

The rationale behind this rule is to protect parties from being bound by obligations they did not bargain for at the relevant time. Without this safeguard, individuals could be held liable for unsolicited acts performed in the past, which would undermine the certainty and voluntariness central to contract law.

Exceptions to the Rule on Past Consideration

Despite the general prohibition on past consideration, English law recognises certain exceptions where a contract may be enforced even if supported only by past consideration. These exceptions are narrowly defined and typically arise in circumstances where fairness or prior understanding justifies enforcement.

One significant exception is when the past act was performed at the request of the promisor, and there was an implied understanding that payment or reward would follow. The case of Lampleigh v Braithwait (1615) is a seminal authority in this regard. In this case, the defendant requested the claimant to obtain a royal pardon on his behalf, which the claimant successfully did. Afterwards, the defendant promised to pay the claimant for his efforts. The court upheld the promise, reasoning that the initial request implied an expectation of reward, thus transforming the past act into valid consideration (Peel, 2015). This principle was later refined in Re Casey’s Patents (1892), where Bowen LJ clarified that the act must be done at the promisor’s request, and there must be an understanding—either express or implied—that compensation would be provided.

Another exception arises under statute, particularly through the Bills of Exchange Act 1882. Section 27 of the Act stipulates that past consideration can support a bill of exchange if it constitutes an antecedent debt or liability. This statutory provision ensures that certain financial instruments remain enforceable even if the underlying consideration is past, reflecting the commercial necessity of such transactions (Cheshire et al., 2017).

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Distinguish Between Executory, Executed, and Past Consideration and Explain the Circumstances Under Which a Contract May Be Enforced Notwithstanding It Is Supported Only by Past Consideration

Introduction

In the study of contract law, consideration stands as a cornerstone principle, defining the essence of enforceable agreements under English law. Consideration refers to the value exchanged between parties, creating mutual obligations in a contract. It is typically classified into three types: executory, executed, and past consideration, each with distinct characteristics and implications for contract enforceability. This essay aims to distinguish between these forms of consideration, providing clear definitions and illustrative examples to aid understanding. Additionally, it will address the general rule that past consideration is insufficient to support a contract and explore the specific circumstances under which a contract may still be upheld despite relying solely on past consideration. By drawing on relevant case law, legal principles, and statutory provisions, this essay seeks to provide a thorough analysis suitable for undergraduate law students, contributing to a foundational understanding of consideration in contract formation.

Defining Executory, Executed, and Past Consideration

Consideration can be categorised based on its temporal relationship to the promise it supports, reflecting whether the act or promise is future-oriented, completed, or retrospective. Executory consideration arises when both parties make promises to perform obligations in the future, with neither having yet fulfilled their part at the time of agreement. This type is typical in bilateral contracts, such as a contract for the sale of goods where one party agrees to supply products at a later date, and the other agrees to pay upon receipt. Cheshire, Fifoot, and Furmston (2017) highlight that executory consideration underpins many commercial agreements, as it embodies mutual promises that are yet to be executed.

By contrast, executed consideration occurs when one party has already performed their obligation at the time the other party makes a promise. This is often seen in unilateral contracts, where performance by one party triggers the obligation of the other. For instance, in a reward scenario, if an individual finds and returns a lost pet, and the owner subsequently promises a reward, the act of returning the pet constitutes executed consideration. Beatson et al. (2016) note that executed consideration is deemed valid as it directly responds to an offer, cementing the contractual bond upon performance.

Finally, past consideration involves a promise made after an act has already been completed, without any prior agreement or request for compensation. Under English law, past consideration is generally not regarded as valid, as it lacks the element of bargain or reciprocity at the time of the act. A notable case illustrating this is Re McArdle (1951), where a woman renovated a family home, and only afterwards did family members promise payment. The court ruled the promise unenforceable, as the work was completed before the promise, rendering the consideration past and thus insufficient (Peel, 2015). This distinction underscores the critical role of timing in establishing enforceable contracts.

The General Rule Against Past Consideration

The principle that past consideration does not constitute valid consideration is a well-established tenet of English contract law, rooted in the necessity for a contemporaneous exchange of value. This ensures that contracts reflect a genuine bargain between parties, rather than unilateral or retrospective impositions. The case of Roscorla v Thomas (1842) provides a clear example: the claimant purchased a horse and later received a warranty from the seller that the horse was sound. When the horse proved defective, the court rejected the claim, ruling that the warranty was unsupported by consideration since the purchase had already occurred before the promise was made (Beatson et al., 2016). This decision illustrates that a promise must induce the act to be enforceable; otherwise, it risks being seen as a mere gratuity.

The rationale for this rule lies in protecting parties from obligations they did not bargain for at the relevant moment. Without such a principle, individuals could face unexpected liabilities for past, unsolicited actions, undermining the voluntariness and predictability central to contract law. Indeed, this rule serves to maintain clarity in contractual dealings, ensuring that agreements are founded on mutual intent at the time of formation.

Exceptions to the Rule on Past Consideration

While past consideration is generally invalid, English law recognises specific exceptions where fairness or prior understanding justifies enforcing a contract despite this limitation. These exceptions are narrowly construed but provide important safeguards in particular circumstances.

One key exception applies when the past act was performed at the explicit request of the promisor, coupled with an implied or expressed understanding that compensation would follow. The landmark case of Lampleigh v Braithwait (1615) established this principle. Here, the defendant requested the claimant to secure a royal pardon on his behalf, which the claimant did. Subsequently, the defendant promised payment. The court upheld the promise, reasoning that the request implied an expectation of reward, thereby transforming the past act into valid consideration (Peel, 2015). This principle was later refined in Re Casey’s Patents (1892), with Bowen LJ stating that for past consideration to be valid, the act must be performed at the promisor’s request with a mutual understanding of remuneration. This exception ensures that parties are not unjustly enriched by services solicited without prior formal agreement.

Another exception arises under statutory provisions, notably the Bills of Exchange Act 1882. Section 27 of this Act allows past consideration to support a bill of exchange if it constitutes an antecedent debt or liability. This provision reflects the commercial need to enforce certain financial instruments, even when the underlying consideration is past, ensuring fluidity in trade and finance (Cheshire et al., 2017). Such statutory exceptions highlight the balance between strict contractual principles and practical economic necessities.

Additionally, though less common, moral obligations arising from past acts can occasionally influence enforceability in specific contexts, though courts tread cautiously to avoid blurring legal and ethical boundaries. Generally, these exceptions demonstrate the law’s flexibility in addressing unique situations where rigid application of the past consideration rule might yield inequitable outcomes.

Conclusion

In conclusion, distinguishing between executory, executed, and past consideration is essential for understanding the enforceability of contracts under English law. Executory consideration involves future promises, executed consideration pertains to acts already performed in response to an offer, and past consideration refers to promises made after an act without prior agreement, typically deemed invalid. The general rule against past consideration, as seen in cases like Roscorla v Thomas, ensures contracts are based on contemporaneous bargains, protecting against retrospective obligations. However, exceptions such as those established in Lampleigh v Braithwait and under statutes like the Bills of Exchange Act 1882 allow enforcement in specific circumstances, balancing fairness with legal rigour. These principles, while complex, are crucial for law students to grasp, as they underpin the formation and validity of contractual agreements, with broader implications for commercial and personal dealings. Understanding these nuances not only aids in academic study but also prepares one for practical application in legal practice, where the timing and nature of consideration often determine the outcome of disputes.

References

• Beatson, J., Burrows, A., & Cartwright, J. (2016) Anson’s Law of Contract. 30th ed. Oxford University Press.
• Cheshire, G. C., Fifoot, C. H. S., & Furmston, M. P. (2017) Cheshire, Fifoot & Furmston’s Law of Contract. 17th ed. Oxford University Press.
• Peel, E. (2015) Treitel on The Law of Contract. 14th ed. Sweet & Maxwell.