BetterLawNotes-5 (2)

CONTRACT LAW

Consideration must be distinguished from a condition, a distinction which is not always easy to draw. A promise by D to pay C £100 ‘if it rains tomorrow’ is not enforceable by C. C provides no consideration: D’s promise is better analysed as a conditional promise of a gift. However, a promise by D to pay C £100 a month for so long as C remains tee-total is probably enforceable by C: abstention from alcohol constitutes consideration rather than the mere occurrence of a condition. And what if A promises to give B their new Rolls Royce car if B will fetch it from the garage? Assuming that B fetches the car, can they claim it? Has B provided consideration? According to Furmston, ‘[t]he requirement that B is to fetch the car is not the price of the promise, but the condition precedent to the operation of A’s generosity.’

Furmston, Cheshire, Fifoot and Furmston’s Law of Contract 17th edn (2017) at 121.

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

The Court of Appeal held that the claimant provided consideration by purchasing and using the smoke ball as directed. (Note that the catching of influenza was a condition of C’s entitlement to enforce the promise and not any part of the consideration).

Shadwell v Shadwell (1860) 9 CB (NS) 159

On the engagement of his nephew Lancy to Ellen Nicholl, Uncle Charles wrote to the nephew saying that as he had promised to assist his nephew ‘at starting’ he would pay his nephew £150 a year during the uncle’s life until Lancy’s annual income from the Bar amounted to 600 guineas. The nephew averred that the uncle paid 12 out of the 18 annual sums but that part of the 13th and the five subsequent instalments remained due and unpaid. For the uncle’s estate, it was pleaded that the nephew had become engaged to Ellen Nicholl before the alleged agreement with the uncle without any request from the uncle and that there was no consideration for the agreement. The nephew averred that he married Ellen Nicholl relying on the uncle’s promise.


Erle CJ, with whom Keating J agreed, thought that the promise to pay was in legal effect a request to marry as marriage may be a detriment and might entail a material change in the nephew’s position and the taking on of pecuniary liabilities. Also, Erle CJ thought that the marriage might be a benefit to uncle. Byles J (dissenting) thought that the uncle’s promise was a conditional promise of a gift: the uncle had not requested his nephew to marry, and the nephew was already bound to marry EN when the uncle made the promise. As such, the consideration would be doing something the nephew was already bound to do. Byles J concluded that the uncle derived no personal benefit from the marriage and there was no request, express or implied.

Wyatt v Kreglinger [1933] 1 KB 793

A month before his retirement the defendant firm wrote to their employee, Wyatt, saying that they had decided to grant him an annual pension. The letter stated that Wyatt was free to enter into any employment “except in the wool trade”. The firm paid the pension for nine years but then gave notice that it would cease. Wyatt sought a declaration that he was entitled to continued payment of the pension. Macnaghten J held that the firm had merely made a gratuitous promise and that Wyatt had no entitlement to be paid. On appeal, Greer LJ inclined to the view, without expressing a final conclusion, that there was a binding contract. Slesser LJ assumed that there was a contract. But both Slesser and Greer LJJ held that it was void as an illegal restraint of trade. Scrutton LJ agreed with Macnaghten J that the pension represented a gratuitous payment.

Dickinson v Abel [1969] 1 WLR 295

Abel’s wife was the granddaughter of one Joseph Wint, deceased. Part of Wint’s estate, which was vested in trustees, comprised a farm a few miles from Abel’s own farm. Abel was approached by a Mr Wallace, a director of Inns & Co Ltd who were prepared to pay £100,000 for the farm. Abel, who did not hold himself out as a trustee, said that he was not in a position to say yes or no to the offer and said that any contract would have to be sent to the trustees. At the end of his conversation with Wallace, Abel asked “What’s in it for me?” Wallace said that the company would pay A £10,000 if it bought the farm for £100,000 or less. Wallace did not specify any services to be rendered by Abel in return and Abel did not offer to speak to the trustees. The trustees subsequently sold the farm to the company for £100,000 and the company then paid Abel the £10,000. Abel was later assessed to income tax on the £10,000 on the basis that it was a payment to which he had been contractually entitled. Pennycuick J held that the company’s undertaking to make the payment was a conditional promise made without valuable consideration, which would have been unenforceable by A.

Chappell & Co Ltd v Nestlé & Co Ltd [1960] AC 87

Nestlé ran a promotion whereby the public could send in 1s 6d together with three chocolate bar wrappers in order to receive a record. The wrappers, when received, were valueless and thrown away by Nestlé. One issue was whether the wrappers formed part of the consideration for the supply of the record. In the Court of Appeal, Jenkins LJ held that the sending in of the wrappers was merely a condition of making the purchase By a bare majority, the HL held that the sending of the wrappers was part of the consideration for the promise to supply the record.

‘. . .[t]he respondents [submit] that acquiring and delivering the wrappers was merely a condition which gave a qualification to buy and was not part of the consideration for the sale. Of course, a person may limit his offer to persons qualified in a particular way, eg, members of a club. But where the qualification is the doing of something of value to the seller, and where the qualification only suffices for one sale and must be re-acquired before another sale, I find it hard to regard the repeated acquisitions of the qualification as anything other than parts of the consideration for the sales. The purchaser of records had to send three wrappers for each record, so he had first to acquire them. The acquisition of wrappers by him was, at least in many cases, of direct benefit to the respondents Nestle, and required expenditure by the acquirer which he might not otherwise have incurred. To my mind, the acquiring and delivering of the wrappers was certainly part of the consideration in these cases . . .’ (Lord Reid at 109).

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