Contract Law / Australia the Essay

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  • Subject: Business - Law
  • Type: Essay
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Excerpt from Essay :

However, it must be noted that the doctrine of consideration has changed and therefore seems to have fixed many of its most impractical elements, or at least that is what has been argued. One example of a change is the fact that in regards to consideration, the requirement for a benefit has moved from the requirement to show a legal benefit to simply a practical benefit.

Another aspect to the controversy of consideration is the fact that it originated in the 12th century. This shows that consideration was needed in those days because there wasn't the legal system in place that we have today. People had their "things" or their "services" that could be offered as fair terms in a promise. The consideration aspect was about giving something additional to a person's word in a contract arrangement. Those were simpler times and people didn't have as much as they have today. Without "consideration" -- anything at all to give -- one could not take part in a legal contract because it seems to have worked almost like collateral. Today we don't need someone to have collateral to get into a contract.

The problem with consideration from a more modern point-of-view, as well as a somewhat philosophical one, is that determining the value of something is highly subjective -- unless it is money or gold or something like that (but even then it is bound to be subjective because some people do not value those things; in fact, some people see money and gold and other material items as burdens). So, then there begs the questions: What is valuable and what is not? And we have to think about this universally or else it doesn't make any difference. If we want to use a simple example, we can consider that a daughter offers to do the laundry for her mother for a price of $2. The daughter gets $2 to spend on whatever she wants and the mother gets a little bit of help with the chores. We can clearly see what is valuable on both sides. So what would not be valuable? The mother obviously loves the daughter and vice versa, yet the love between these two individuals is not enforceable in a contract, but money and service is enforceable -- not that the two would ever go to court over it.

The eyes of the law must see the value; this is the bottom line. It doesn't matter how it appears to the people who are engaging in the contract. All that matters is how the law sees it -- of value or not. But, what happens when the parties believe that consideration on both sides is sufficient and the law does not? This is where the consideration law gets very tricky and where it has been criticized. The law is very clear when it comes to not considering as consideration something that has already been promised or is owed to another party and has been imposed by law of contract. This would not make a valid consideration in the eyes of the law. Yet, one can promise as consideration to do something or give something to a third party. This is seen as valid because a person is still getting something that is worthy or of value even though he is not the person who is ultimately receiving the thing promised. All of these rules add up to the confusion and the reason why so many people get tired of trying to understand consideration in common law.

In the case of White v. Bluett, the court found that a son's promise to stop complaining to his father about his father's distribution of his inheritance was not good consideration when compared with his father's promise not to sue the son over a debt his son owed him. The judge basically stated that the son wasn't giving any good or sufficient consideration because the son really did not have a legal right to complain to his father. So that means that in his promise to not complain to his father, the son did not give up anything of value in exchange for his father's rather valuable consideration (not to sue his son).

Albeit, there is a practical benefit that comes from the son's consideration, but still, there is nothing that says the son cannot complain to his father or that he doesn't have a right to complain to this father (after all, this is sort of what children do - no matter what age they are). The father may have viewed the consideration as being totally valuable.

In Ward v. Byham, a father of an illegitimate child promised to pay the mother of the child a pound each week under the promise that she would take care of the child and make sure it was healthy and happy. The father eventually stopped making the payments and the mother sued him. The father believed that the contract could not be enforced because the mother hadn't offered any sufficient consideration because it was her legal duty as a mother to make sure that the child was both healthy and happy; it was her legal duty as a mother. However, the court held that the father did not gain anything from the mother's promise to care for the child and saw the father's contract as one that was unilateral -- a promise that was made in exchange for an act and thus the mother did not owe him anything.

What makes the doctrine of consideration so confusing is that the consideration doesn't really need to be quantified or quantifiable. In the case of Hubbs v. Black (1918), the agreement of one party to not take a certain plot in the cemetery was deemed to be sufficient consideration (Dowling 1997). How can this be considered more valuable than a son's complaining? The son was saying he wouldn't complain like the man said he wouldn't take the cemetery plot (perhaps the distinction is because land is more valuable to most than peace and quiet).

It is the law that has the final say when it comes to contract interpretation and enforcement, yet there is a difference between legal obligations and moral obligations. (This doesn't meant that the law hasn't been asked to interpret and enforce certain situations that have been strange, to say the least.) Contract law has everything to do with what is seen as fair or equitable. It's much different than any other law because it does not aim to be right or just -- only equitable (Epstein 2008).

Law cannot -- obviously -- enforce every single promise than a person makes. Any promise, whether word-of-mouth or written, cannot be legally binding unless each party offers consideration. Should the doctrine of consideration be removed from the Common Law? Is it relevant in this day and age? The consideration law seems to be protected because of the simple fact that it is old. While there are obviously some good merits of the law, there is to much that is arbitrary. It seems that there isn't much discussion of abolishing the doctrine since the Law Revision Committee's Report in 1937 (Harland & Carter 2004). Many seem to approach the consideration law today as if it were some kind of fragile fossil from years ago.

The idea of this type of law may seem not only complex to people in other areas of the world, but it probably also appears very strange that we live in a world where everything has to be completely equitable. The fact that the law deems when something is equitable and not the people who are engaged in the contract is quite perplexing. Other people in other parts of the world probably rely more on the word of the people whom they are engaging in business with -- in whatever sense. Perhaps it is what westerners have lost with all of their progress (progress in every sense). We have lost the ability to trust people and to believe that what a person says his intention is, is indeed his true intention. The law of consideration seems to emphasize this fact and thus tries hard to make everything fair and square; but not everything in the world is fair and square, which is why having a law like the law of considerations seems -- not hopeful -- but rather hopeless.

Again, from a completely theoretical viewpoint, it makes sense. But law cannot be purely theoretical; it has to be put into practice and it has to be put into a practice that makes sense to those who are governed by that law.


Dowling, A 1997. Exclusive rights of burial and the law of real property. The Queen's

Epstein, A 2008. Contract Law Fundamentals. Prentice Hall.

Harland DJ. & Carter JW 2004. Contract Law in Australia. 4th ed. Lexis Nexis


Lisa, B 2010. How English law identifies valid contracts. Common Law Review.

Retrieved on September 14,…

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