Contract Law Essay Sample: Does Consideration Still Serve a Purpose?

Model Answer

Consideration has long been described as one of the essential elements of a valid contract in English law, requiring that each party to a bargain give something of value — whether an act, forbearance or promise — in exchange for the other’s promise, such that gratuitous promises, however seriously intended, remain generally unenforceable absent a deed (Treitel, 2015). The doctrine has attracted sustained academic criticism, with commentators from Atiyah (1986) to more recent commentary questioning whether it performs any function that could not be achieved more coherently through a straightforward test of intention to create legal relations.

This essay critically discusses the claim that consideration serves no useful purpose in modern English contract law, arguing that while the doctrine’s traditional formulation — particularly its treatment of past consideration, its rule against part-payment of debts, and its uneasy coexistence with promissory estoppel and the “practical benefit” doctrine established in Williams v Roffey Bros — has become doctrinally strained and arguably incoherent in places, the doctrine continues to perform an evidentiary and cautionary function that a pure intention-based test would not automatically replicate. The essay outlines the doctrine’s rationale, examines its principal criticisms, considers its erosion through equitable development, and assesses the case for retention.

The Doctrine of Consideration: Definition and Rationale

Consideration was classically defined in Currie v Misa (1875) as “some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other”, and subsequently reflected in Pollock’s oft-cited formulation, adopted in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915], of an act or forbearance of one party, or the promise thereof, as “the price for which the promise of the other is bought”. The doctrine performs several functions traditionally attributed to it. First, it operates as an evidentiary device, providing objective evidence that parties intended to enter a legally binding bargain rather than a merely social or gratuitous arrangement (Atiyah, 1986).

Second, it serves a cautionary function, ensuring that parties are not bound by promises made carelessly or without genuine deliberation, since the exchange of consideration typically involves some process of negotiation. Third, some scholars identify a channelling function, distinguishing enforceable bargains from unenforceable gifts and thereby preserving a coherent boundary within the law of obligations (Fuller, 1941, discussing analogous functions of contractual formalities more broadly). McKendrick (2020) notes that despite periodic proposals for reform, the doctrine has proven remarkably durable within English legal education and practice, in part because of its close integration with the broader architecture of offer and acceptance.

The doctrine’s core rules — that consideration must be sufficient but need not be adequate (Chappell & Co Ltd v Nestlé Co Ltd [1960]), that past consideration is generally not good consideration (Re McArdle [1951]), and that consideration must move from the promisee — have been applied with reasonable consistency by English courts for over a century. Nonetheless, even at this foundational level, tensions are apparent: the rule that consideration need not be adequate permits nominal consideration — famously a peppercorn — to satisfy the doctrine, raising the question of what substantive protective function the requirement performs if courts do not inquire into the fairness of the exchange, a point criticised extensively by Atiyah (1986).

Criticisms: Doctrinal Incoherence and Practical Redundancy

The strongest criticisms of consideration target its treatment of variations to existing contracts and part-payment of debts. The rule in Pinnel’s Case (1602), affirmed by the House of Lords in Foakes v Beer (1884), holds that part-payment of a debt cannot, without more, constitute good consideration for a promise to forgo the balance, because the debtor is merely doing what they were already legally obliged to do. This rule has been widely criticised as commercially unrealistic: creditors frequently have genuine practical reasons — securing partial payment rather than risking insolvency and receiving nothing — for accepting reduced sums, yet the strict doctrine renders such agreements technically unenforceable absent fresh consideration or a deed.

This is a position the Court of Appeal in Re Selectmove Ltd [1995] felt bound to preserve despite acknowledging its apparent tension with more flexible reasoning developing elsewhere in contract law. That tension arose directly from Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991], in which the Court of Appeal held that a promise to pay more for the same contractual performance could be supported by consideration where the promisor obtained a “practical benefit” — in that case, avoiding the cost and disruption of finding a replacement subcontractor — even though the promisee provided nothing beyond what was already contractually owed.

Poole (2016) argues that the Court of Appeal’s reasoning in Williams v Roffey effectively substitutes a benefit-based test for the traditional bargain-based conception of consideration, a shift she suggests better reflects commercial reality but sits awkwardly with the retained bargain-based rule in Foakes v Beer. Chen-Wishart (2019) similarly argues that Williams v Roffey effectively dissolves the pre-existing duty rule for cases of upward contract variation while leaving Foakes v Beer intact for downward variation, producing an asymmetry that is difficult to justify in principle: if practical benefit suffices to find consideration in one direction, there is no obvious doctrinal reason it should not suffice in the other.

This point was acknowledged obiter by Arden LJ in MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] before the Supreme Court, on appeal, expressly declined to resolve the question, leaving the law in a state of unresolved tension (Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018]). This inconsistency lends significant weight to the claim that consideration, at least in its application to contract variation, no longer performs a coherent gatekeeping function; rather than reliably distinguishing bargains worthy of enforcement from those unworthy of it, the doctrine’s application appears to turn on which line of authority a court elects to follow.

Consideration and the Rise of Promissory Estoppel and Practical Benefit

Equity has developed doctrines that operate, in substantial part, to mitigate the harshness of strict consideration doctrine, further weakening the claim that consideration performs indispensable work within the system. Promissory estoppel, established in Central London Property Trust Ltd v High Trees House Ltd [1947] and subsequently refined through cases including Combe v Combe [1951] and D & C Builders Ltd v Rees [1966], allows a promisor to be held to a promise not to enforce existing contractual rights, notwithstanding the absence of consideration for that promise, where the promisee has relied upon it and it would be inequitable for the promisor to resile.

Although English promissory estoppel remains formally limited — it operates only as a “shield” rather than a “sword” (Combe v Combe [1951]), and is generally regarded as suspensive rather than extinctive of rights — its practical effect in cases such as High Trees itself is to enforce, or at least give substantial legal effect to, a promise unsupported by consideration, precisely the outcome the doctrine of consideration is supposed to prevent. Halson (1990) observes that the coexistence of an increasingly flexible equitable doctrine alongside a strict common law rule produces a two-track system in which practical enforceability depends heavily on procedural characterisation rather than on any principled assessment of the promise’s merits.

The practical benefit doctrine from Williams v Roffey discussed above operates similarly: courts have shown a marked willingness to locate some benefit, however modest or already implicit in the original bargain, sufficient to satisfy the formal requirement of consideration, suggesting that in commercial variation cases the doctrine has become sufficiently malleable that findings of consideration are frequently outcome-driven rather than analytically prior to the court’s assessment of what a just result requires. Taken together, these developments support the view that consideration functions in modern practice less as a substantive filter and more as a formal hurdle that courts, when persuaded a promise ought to be enforced, generally find ways to clear.

Stevens (2018), commenting on the Supreme Court’s judgment in Rock Advertising, observes that the Court’s silence on the compatibility of Williams v Roffey and Foakes v Beer leaves lower courts without clear guidance on how the two lines of authority should be reconciled in future variation disputes. This unresolved tension calls into question how much independent normative work the doctrine of consideration continues to perform in the variation context specifically, even if its role in original contract formation remains comparatively secure and relatively uncontroversial across the great majority of commercial and consumer transactions.

The Case for Retaining Consideration

Despite these criticisms, wholesale abolition of consideration, as sometimes proposed by comparison with civil law systems that enforce gratuitous promises without an equivalent doctrine (Zimmermann, 1996), is not obviously preferable and has not been adopted despite decades of academic critique. First, consideration continues to perform a genuine evidentiary function in the large majority of routine commercial transactions, where its presence is uncontroversial and its absence would require courts to develop an alternative, and potentially less predictable, test for identifying genuinely intended bargains — most likely a revived or expanded doctrine of intention to create legal relations, which itself relies on presumptions and objective inference rather than any more determinate criterion.

Second, the doctrine’s cautionary function retains some continued relevance in protecting parties, particularly unsophisticated ones, from being bound by informally made gratuitous promises, a protective effect that would need to be reconstructed through alternative doctrines such as undue influence or unconscionability if consideration were abolished outright. Third, despite periodic academic pressure for reform, English law reform bodies have historically favoured targeted, incremental adjustments — such as clarifying the interaction between Williams v Roffey and Foakes v Beer — over wholesale doctrinal replacement, reflecting a broader common law preference for evolutionary rather than codified reform (Law Revision Committee, 1937).

Comparative experience is not straightforwardly favourable to abolition either: civil law systems that dispense with consideration typically rely on alternative formal requirements, such as notarisation for gratuitous promises, to perform an analogous cautionary and evidentiary function, suggesting that some functional equivalent of consideration is widely considered necessary even where the common law’s specific doctrinal form is not replicated (Zimmermann, 1996). The more persuasive position, therefore, is not that consideration serves no useful purpose, but that its application to certain categories of case, principally contract variation and part-payment of debts, has become doctrinally inconsistent and would benefit from targeted clarification.

Conclusion

This essay has critically discussed the claim that consideration serves no useful purpose in modern English contract law and concludes that the claim is overstated. Consideration continues to perform genuine evidentiary and cautionary functions across the great majority of contractual dealings, distinguishing enforceable bargains from gratuitous promises in a manner that reform proposals have not convincingly shown could be replicated more coherently through intention to create legal relations alone. At the same time, the doctrine’s application to contract variation and part-payment of debts has become doctrinally strained, producing the unresolved asymmetry between Williams v Roffey Bros and Foakes v Beer that the Supreme Court expressly declined to resolve in Rock Advertising.

Its practical displacement by promissory estoppel in reliance-based cases further demonstrates that strict consideration doctrine no longer operates as the sole gatekeeper of enforceability that its traditional rationale implies. The most defensible position is therefore a middle one: consideration retains a useful, if imperfect, function within English contract law, but its current doctrinal architecture, particularly regarding variation, requires judicial or legislative clarification rather than either uncritical preservation or wholesale abolition. Until the Supreme Court or Parliament resolves the tension identified in this essay, English contract law will continue to apply an internally inconsistent test to functionally similar categories of promise, undermining, without entirely destroying, the doctrine’s claim to serve a coherent purpose.

References

• Atiyah, P.S. (1986) Essays on Contract. Oxford: Clarendon Press.
• Chen-Wishart, M. (2019) Contract Law. 7th edn. Oxford: Oxford University Press.
• Fuller, L.L. (1941) ‘Consideration and form’, Columbia Law Review, 41(5), pp.799–824.
• Halson, R. (1990) ‘The offensive limits of promissory estoppel’, Lloyd’s Maritime and Commercial Law Quarterly, [1990] pp.256–277.
• Law Revision Committee (1937) Sixth Interim Report: Statute of Frauds and the Doctrine of Consideration, Cmd 5449. London: HMSO.
• McKendrick, E. (2020) Contract Law: Text, Cases and Materials. 9th edn. Oxford: Oxford University Press.
• Poole, J. (2016) ‘Consideration reconsidered’, Law Quarterly Review, 132, pp.1–20.
• Stevens, R. (2018) ‘Rock Advertising v MWB: contract variation’, Law Quarterly Review, 134, pp.362–367.
• Treitel, G.H. (2015) The Law of Contract. 14th edn. (ed. E. Peel). London: Sweet & Maxwell.
• Zimmermann, R. (1996) The Law of Obligations: Roman Foundations of the Civilian Tradition. Oxford: Oxford University Press.