Principle of Past Consideration

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Task: Explain the concept of past consideration.


Consideration is the sum of money provided in accordance with the promiser's demands in exchange for the commitment. If the parties had managed to reach a legally binding agreement, it would be more than adequate because in some jurisdictions, the sum paid for the promise wasn't an essential part of a contract. It is believed that the prior consideration was not reasonable. It should materialise either prior to or subsequent to the project. It wouldn't be regarded as good if the value that was agreed upon came before the pledge [1].

Since the only consideration for a promise was the performance of a stallion, the agreement in the 1842 case of Roscorla v. Thomas was not binding on the members. The special arrangement that was made prior to the guarantee was treated the same way. [2].

There have been many provisions that provide a respectable historical consideration. Which are:

The person making a commitment had asked for the fee to be provided.

The organisations value the payment for their work;

The act that would have been binding has been committed to, and is still being developed.

All of the aforementioned circumstances are present in the case [3]. In fact, the defendant insisted that the claimant own 60% of the stock, and the participants concurred that the action would be reimbursed by a guarantee at that time [4]. The prevalent premise was that it is not a reasonable consideration to address an existing contractual responsibility unless some additional advantage was supplied in cases where the requirement was already required by the promiser's arrangement. Even so, if a third party had been given the guarantee to fulfil the contract's obligation, the result would have been different. The fulfilment of that commitment was viewed as a reasonable previous consideration of the promiser's pledge in a case where a third party was due the binding commitment of the promise.

Additionally, it was stated in this instance [5] that just carrying out the task was not a reasonable consideration where a promise was legally required to do so. This aids in preventing corruption, such as the officer demanding ransom in exchange for doing duties that were already expected of them. However, the entity would be regarded as a positive factor [6] if it goes above and above the call of duty.

There are currently, however, two distinct exceptions to the price commitment paid, namely:

Statements of Prior Consideration for Screening

Where the principle of collateral estoppel is in effect. Since this principle is intended to enforce duties in specific circumstances where it would be unacceptable to do otherwise, it wasn't actually an option for the amount paid.

The idea had a fair definition and applies when it would be unjust to keep the promise for the promiser. This was first established in the dispute of [7], although it had been withdrawn for a while before it was revived by the court in [8]. In this regard, the court ruled that the law established what it meant by "pseudo estoppels" and maybe more clearly by "contractual estoppels," which are when one party to a contract agrees not to exercise its rights in the absence of a new sum paid for the promise. Instead, fairness would be eliminated in favour of the opposing side. But this equity was subject to the essential requirement:

The promiser may withdraw from his commitment upon the issuance of a reasonable notification, which need not be an official statement, giving the promisee a realistic opportunity to redo his obligations. The certainty only becomes definitive and irrevocable if the promisee resumes his posture [9].

It was also asserted that the promisee must uphold the agreement if the following conditions are met: • It was made with the intention of establishing a legal relationship; • The promisor understood that the promisee will enforce it; and • It was enforced by the agreement to the detriment of the promisee.

The court came to the conclusion that the claimant would not be allowed to exercise his legal freedoms in this situation because it would be unfair to impose these rights. It also defined equitable estoppels as a situation in which a promiser would be precluded from enforcing all of his legal rights and benefits if he had previously given something in exchange for limiting this freedom [10].

Estoppels could therefore work as defence in certain circumstances to support the promiser who used the pledge inconsistently, but they might not be sufficient cause to take action. As a result, it can be used as a guard rather than a weapon.

The case is significant because the court "stated in passing" in its conclusion that an assurance that is meant to be binding, intended to be followed, or really followed is binding to the extent that its conditions are properly met. In carrying out this ruling, it was further argued that the homeowner was required to have the assurance of accepting a lower rent during the war, even though the renter did not provide an amount for it. Other conditions that must be adhered to in order to apply this principle have been developed in this circumstance. There are some restrictions, including:

Possession of a Promise

It is necessary to make a specific commitment in order to alter the contractual obligation.

However, there were several disadvantages to the estoppels principle as well, including:

This only applied in cases where the parties were already engaged in a legally binding partnership; this merely provided a safeguard against a promisee's claim that went against the pledge so that an accusation could not be brought.

In this [11] trial, a judge also stated that he agreed with the conclusion that High Trees will occasionally be used to cast doubt on a creditor's ability to repay a loan in full [4].

Australia's contract law has been stretched beyond what was apparent in the High Trees case to circumstances in which there was no prior legal connection between the parties, and the rule can be seen as a tool rather than just a shield. The decision rendered in the Waltan Stores case expanded the promissory estoppel theory established in the High Trees case, paving the way for the subsequent case laws to recognise and apply fair estoppel [12]. The principle known as "equitable estoppels" recognises that it would be impermissible for one party to acquire any sort of advantage over the other party as a result of forgeries leading to actions done by the other entity that have a detrimental effect on themselves. Therefore, this principle did not depend upon an earlier legal agreement.

The emergence of the exclusion of Promissory estoppels from this theory of past consideration in the scenario of the High Trees led to the discovery that possibly the idea of previous cost payment not being good consideration is no longer acceptable. Furthermore, in the Waltan Stores case, the High Trees case was not invalidated by any justification; rather, the theory of estoppels was merely more clearly established. As a result, this rule is still valid today.

[1] L. Siliquini-Cinelli, " Taking (legal) traditions seriously, or why Australian contract law should not be codified: An unconventional inquiry," U. Queensland LJ, vol. 34, p. 99, 2015.

[2] H. Prince, "Forward, Contract Law Present and Future: A Symposium to Honor Professor Charles L. Knapp on Fifty Years of Teaching Law," Hastings Law Journal, vol. 66, p. 871, 2015.

[3] Pao On vLlau Yiu Long, AC 614, 1980 .

[4] E. a. L. Q. McKendrick, "Contract Law: Australian Edition," Macmillan International Higher Education, 2015.

[5] Glasbrook Brothers Ltd. v Glamorgan County Council [1924] UKHL 3, 1924.


[7] Hughes v Metropolitan Railway Co., 2 App. Cas. 439, 1877.

[8] Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130, 1947.

[9] K. Maharaj, "An Action on the Equities: Re-Characterizing Bhasin as Equitable Estoppel," Alta. L. Rev., vol. 55, p. 199, 2017.

[10] A. Savelyev, "Contract law 2.0:‘Smart’contracts as the beginning of the end of classic contract law," Information & Communications Technology Law, vol. 26, no. 2, pp. 116-134, 2017.

[11] Collier v P & MJ Wright (Holdings) Ltd [2007] EWCA Civ 1329, 2007.

[12] P. Martin, "Estoppel: Binding promise without a contract: Court of appeal considers proprietary estoppel," LSJ: Law Society of NSW Journal, vol. 23, p. 93, 2016

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