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Tutorial 5 - Consideration

This document contains a tutorial on consideration in contract law with examples and questions to consider. [1] Consideration refers to something of value that is exchanged for a promise. [2] A gratuitous or unilateral promise without consideration is not enforceable as a valid contract. [3] Executory consideration consists of a future promise, while executed consideration is an act already performed in exchange for a promise.

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51 views2 pages

Tutorial 5 - Consideration

This document contains a tutorial on consideration in contract law with examples and questions to consider. [1] Consideration refers to something of value that is exchanged for a promise. [2] A gratuitous or unilateral promise without consideration is not enforceable as a valid contract. [3] Executory consideration consists of a future promise, while executed consideration is an act already performed in exchange for a promise.

Uploaded by

joanne wong
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Tutorial 5: Week 5

Voluntary= act must not response to other people suggestion

Consider these questions. Please attempt them and we will discuss them in class.

1. What is ‘consideration’?

Section 2(d) states that when, at the desire of the promisor, the promise or any other person has
done or abstained from doing, or does or obtains from doing, or promises to do or to abstain from
doing something, such act or abstinence or a promise is called a consideration for the promise.

2. “Lu, for your birthday I promise to buy you that laptop you asked me for.” Ru said one day.

Lu replied, “Thank you very much.” Is Ru obligated to buy the laptop for Lu?

RU did not receive anything in return for his promise, it is only a gratuitous promise. No
consideration.

2. Is an agreement without consideration valid? Which section is relevant here?

Section 26 of the Contracts Act 1950 provides that an agreement made without consideration is void
unless it comes under one of its exceptions. A void agreement is an agreement not enforceable by
law. An agreement enforceable by law is a contract.

4. Define:

(i) executory consideration,

Executory consideration consists of a promise to do or to abstain from doing something in the


future. This is borne out by the words of section 2 (e) of the Contracts Act 1950 which states: Every
promise and every set of promises, forming the consideration for each other, is an agreement.

(ii) executed consideration.

Executed consideration is a performed, or executed act in return for a promise.

5. What is past consideration? Is it good in law?

The consideration for a promise must be given in return for the promise. If the act alleged to
constitute consideration has already been done before the giving of the promise, it is said to amount
to ‘past consideration’. Such past acts or omissions do not ni law amount to consideration for the
promise. Generally, past consideration is not a good consideration.

6. Nureen woke up late on Monday and had to rush to the office to make it on time for a meeting.
Unknown to her, as she was running to the bus stop to board the bus, her purse fell onto the
side of the road. A colleague of hers, Liyana, found the purse as she was walking to the same
bus stop half an hour later and returned it to Nureen at the office. Overjoyed, Nureen
promised to pay Liyana RM100 after her meeting. Unfortunately, due to the fact that the
meeting did not go well, Nureen changed her mind and has refused give Liyana anything.
Advise Liyana if she has a cause of action against Nureen.
The issue is whether Nureen must keep her promise. It is only a good consideration in a
contract if the past act or omission done was at the desire of the promisor.
However, the exception is Section 26(b) applies in this case. Section 26(b) states that an agreement
made without consideration is void unless it is a promise to compensate, wholly or in part, a person
who has already voluntarily done something for the promisor, or something which the promisor was
legally compellable to do. In the case of JM Wotherspoon Co Ltd v Henry Agency House, the court
held that the plantiff’s act was not voluntarily done and that section 26(b) in the Contract Act 1950
could not applied because the plantiff paid the price for the said confectionery to Ductch Company
and admitted doing it at the suggestion of the defendant firm. However, between Nureen and Lyana,
Nureen found the purse without doing it at anyone’s suggestion. Her act is voluntarily done by
herself. Therefore, section 26(b) of the Contract Act 1950 could be applied here.
In conclusion, there is a good consideration between Nureen and Lyana. Lyana was obligated
to fulfill her promise and give Nureen the said RM100.
7. Explain the phrase: ‘consideration need not be adequate’.

It means that if the consideration is some economic worth, it may need to be matched with the
value of an item. If the promisor gets what he asks for in return for his promise, he has received
sufficient consideration and is bound. It is immaterial that his promise is far more valuable than the
price he asked for. The courts are generally concerned only with the question of whether the
promisor has made a bargain, not with whether he has made a good bargain. Therefore, a
consideration that has economic value is sufficient, but it may need not be adequate.

8. When, if at all, will the inadequacy of consideration be relevant, according to s 26 CA1950?

The illustration section in section26 of the Contract Act 1950 states that the inadequacy of the
consideration is a fact that the court should take into account in considering whether or not A’s
consent was freely given.

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