Introduction
In the context of contract law, consideration is a fundamental principle that ensures a contract is legally binding, requiring each party to provide something of value in exchange for the other’s promise. However, the concept of consideration becomes contentious when an existing duty—whether contractual, public, or otherwise—is offered as the basis for a new agreement. This essay explores why an existing duty is not always deemed a valid form of consideration under English law, particularly focusing on its implications for the enforceability of contracts. The discussion will first outline the general principles of consideration, then examine the limitations of existing duty as consideration through key case law and doctrinal debates. Finally, it will consider exceptions and policy reasons behind the rule. By critically engaging with these aspects, the essay aims to provide a comprehensive understanding of this nuanced area of contract law for students of the University of London (UOL) law curriculum.
The Concept of Consideration and Existing Duty
Consideration, often defined as something of value given in exchange for a promise, is a cornerstone of contract formation in English law. As articulated in Currie v Misa (1875), consideration can be a right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, or loss undertaken by the other (Lush J in Currie v Misa, 1875). For consideration to be valid, it must be sufficient (though not necessarily adequate) and must move from the promisee. However, when a party offers to perform a duty they are already obliged to fulfil—termed an existing duty—this raises questions about whether such an act can constitute fresh consideration.
An existing duty may arise from a pre-existing contract with the same party, a contract with a third party, or a public duty. The primary issue is that performing an existing duty arguably does not involve any additional detriment to the promisor or benefit to the promisee beyond what was already owed. This principle challenges the mutuality inherent in contract law, leading courts to scrutinise such scenarios closely. The following sections delve into specific categories of existing duty and their treatment under English law.
Existing Contractual Duty to the Same Party
One of the most well-established rules in English contract law is that performing an existing contractual duty owed to the same party does not constitute valid consideration for a new promise. This was crystallised in the landmark case of Stilk v Myrick (1809), where sailors who were already contracted to work on a ship demanded additional pay during a voyage after some crew members deserted. The court held that the promise of extra wages was unenforceable because the sailors provided no additional consideration beyond their pre-existing contractual obligations (Campbell, 1809). The rationale is straightforward: allowing such promises to be binding would undermine the integrity of original contracts and potentially encourage coercion or opportunism.
However, this rule is not without critique. Some scholars argue that it fails to account for the practical realities of commercial relationships, where parties may need to renegotiate terms due to unforeseen circumstances. Despite these concerns, the principle remains a bedrock of English law, ensuring that contractual modifications require fresh consideration to be enforceable. Indeed, the strictness of this rule reflects a policy preference for certainty over flexibility in contractual dealings.
Existing Duty Owed to a Third Party
In contrast to duties owed to the same party, performing an existing duty owed to a third party can, in certain circumstances, constitute valid consideration. This was established in Shadwell v Shadwell (1860), where a nephew’s promise to marry (a duty he arguably owed to his fiancée) was deemed sufficient consideration for his uncle’s promise of financial support. The court reasoned that the uncle derived a benefit from the nephew’s act of marrying, thus satisfying the requirement of consideration (Byles J in Shadwell v Shadwell, 1860). This decision highlights a nuanced exception to the general rule, suggesting that the context and the nature of the benefit to the promisor are critical factors.
Furthermore, in New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd (The Eurymedon) (1975), the Privy Council affirmed that a promise to perform a duty owed to a third party could constitute consideration if it conferred a practical benefit on the promisor. These cases illustrate that the law is not entirely rigid; rather, it allows for pragmatic outcomes where a tangible benefit or detriment can be identified. Nevertheless, such exceptions are applied narrowly, and the underlying principle remains cautious about validating existing duties as consideration.
Public Duty and Consideration
Another category where existing duty is typically deemed insufficient consideration involves public duties. Individuals or entities performing duties imposed by law, such as police officers or public officials carrying out their roles, cannot rely on these actions as consideration for a private promise. This was evident in Collins v Godefroy (1831), where a witness subpoenaed to give evidence in court could not claim additional payment as consideration for attending, since they were legally obliged to do so (Gurney B in Collins v Godefroy, 1831). The rationale here is rooted in public policy: allowing public duties to serve as consideration risks incentivising officials to demand payment for fulfilling their legal obligations, potentially leading to corruption or abuse of power.
However, an exception arises when the performance of a public duty exceeds the scope of the legal obligation. For instance, in Glasbrook Bros Ltd v Glamorgan County Council (1925), a mining company’s request for special police protection during a strike was deemed to provide valid consideration for payment, as the police provided services beyond their general public duty. This demonstrates that the law can adapt to specific circumstances, though such exceptions are rare and strictly construed.
Policy Reasons and Practical Implications
The reluctance to accept existing duty as valid consideration is underpinned by several policy considerations. Primarily, it protects parties from economic duress or exploitation, where one party might use an existing obligation to extract additional benefits without offering anything new in return. Additionally, it upholds the sanctity of contracts by ensuring that modifications or new agreements are supported by mutual exchange, as opposed to unilateral demands. Critics, however, argue that this strict approach can be overly formalistic, ignoring the realities of commercial necessity where renegotiations are often inevitable (Beatson, 1998).
Moreover, the rule reflects the broader aim of contract law to balance certainty with fairness. While exceptions exist—such as in cases involving third-party duties or extra public services—these are narrowly defined to prevent undermining the foundational requirement of consideration. For students of law, understanding these nuances is crucial, as they highlight the tension between legal doctrine and practical application in contractual disputes.
Conclusion
In conclusion, existing duty is not always considered a valid form of consideration in English contract law due to its failure to meet the essential requirement of providing fresh value or detriment beyond pre-existing obligations. Whether arising from a prior contract with the same party, a duty to a third party, or a public obligation, the general rule seeks to preserve the mutuality and integrity of contractual agreements. While exceptions exist, as seen in cases like Shadwell v Shadwell and Glasbrook Bros Ltd, they are limited and context-specific, driven by the presence of tangible benefits or additional efforts. The underlying policy reasons—protection against coercion, maintenance of contractual certainty, and prevention of abuse in public duties—further justify the cautious approach. For law students, this area underscores the importance of critically evaluating legal principles against their practical implications, recognising that while the law strives for consistency, it must also accommodate the complexities of real-world interactions. Ultimately, the doctrine of consideration remains a dynamic field, inviting ongoing debate and refinement in response to evolving commercial and societal needs.
References
- Beatson, J. (1998) Anson’s Law of Contract. 27th ed. Oxford University Press.
- Campbell, J. (1809) Stilk v Myrick. 2 Camp 317.
- Gurney, B. (1831) Collins v Godefroy. 1 B & Ad 950.
- Lush, J. (1875) Currie v Misa. LR 10 Ex 153.
- Byles, J. (1860) Shadwell v Shadwell. 9 CB (NS) 159.
- House of Lords (1925) Glasbrook Bros Ltd v Glamorgan County Council. [1925] AC 270.
- Privy Council (1975) New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd (The Eurymedon). [1975] AC 154.
