CIMA BA4 Syllabus C. CONTRACT AND EMPLOYMENT LAW - Explain The Need For Consideration - Notes ^{6 / 13}

It can be goods, service money or a promise of any of these.

Both parties must give some form of consideration for a contract to be legal.

Therefore you often see people pay £1 for something - just so there is some consideration.

It must move from the promisee to the promisor.

Normally, both parties must give consideration in an agreement but if a contract is under deed then a promise by one party for consideration will be sufficient to create a legally binding agreement.

There are 3 types of Consideration

Executory and Executed are generally valid

Past is generally not valid

1. Past Consideration NOT VALID because the law states that the order should be agreement first then consideration, not a past consideration then an agreement

   McArdle

   However if there was an implied agreement or promise before then that's ok

   Lampleigh v Braithwaite

2. Executed Consideration VALID. This is an action(normally done in return for a promise of money)

3. Executory Consideration VALID. This is a promise - either to pay or provide goods / services

Types of consideration that are NOT VALID

1. Past consideration (generally not valid)

2. Performance of an existing statutory/public duty - this is an agreement to carry out an act which the law requires anyway, and is therefore insufficient consideration.

3. Performance of a contractual duty