'Offer' and 'acceptance' are required for an agreement which can lead to a binding contract. Having an agreement is necessary, but, it is not sufficient to create a legally binding and enforceable contract. English courts have developed other tests to assess the enforceability of agreements. The main test is the requirement for 'consideration'. The idea of exchange or bargain is the essence of a contract. Each party pays a 'price' for whatever is obtained from the other party. That price (the exchange element) is consideration. I promise to give you my book- this is not a contract because there is no bargain. I promise to give you my book and you promise to give me £10 for it- there is a bargain and this can be a contract. There is consideration on both sides of the agreement. 'A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to one party or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other.' Currie v Misa (1875) 'An act or forbearance of the one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.' Dunlop Pneumatic Tyre Co v Selfridge (1915) Where the promise has been performed, the contract (or the consideration) is said to be ‘executed'. Where the promise is yet to be performed, the contract (or the consideration) is said to be 'executory'. Consideration must be 'Sufficient' though it need not be 'Adequate' Past consideration is no consideration Consideration must move from the promisee 1) Consideration must be 'Sufficient' though it need not be 'Adequate' >Chappell v Nestle (1960) White v Bluett (1853) >Ward v Byham (1956) Hamer v Sidway (1881) Bainbridge v Firmstone (1838) 2) Past consideration is no consideration
If A renders a service to B, with no promise of payment given by B, the service is gratuitous. B's subsequent promise of payment is gratuitous and is not enforceable because the consideration for it is past. Re McArdle (1951) The common law exceptions- restated as three requirements by Lord Scarman in Pao On v Lau Yiu Long (1980) Act must have been performed at the request of promisor - Lampleigh v Braithwait (1615) Expectation of payment or conferment of some other benefit - Re Casey's Patents (1892) >The promise or payment must have been legally enforceable had it been given in advance.