Past consideration

Definition

Past consideration refers to a situation where something of value has already been given or performed before a promise is made, which does not qualify as valid consideration for a new contract. This concept is important because it underscores the requirement that consideration must be contemporaneous with the promise in order to support enforceability. Understanding past consideration helps clarify why certain promises may not be legally binding, even if they appear generous or well-intentioned.

5 Must Know Facts For Your Next Test

1. Past consideration cannot be used as a basis for a new contractual obligation since the value was not exchanged at the time of the promise.
2. The rule against past consideration helps prevent situations where parties could be held liable for promises made without mutual exchange of benefits.
3. In some jurisdictions, there are exceptions where past consideration can have relevance in establishing implied contracts or equitable claims.
4. Legal cases often illustrate the limitations of past consideration, emphasizing that it fails to create enforceable obligations in most circumstances.
5. Understanding past consideration is crucial when evaluating the enforceability of contracts, particularly in negotiations and informal agreements.

Review Questions

• How does past consideration differ from valid consideration, and why is it significant in contract law?
  • Past consideration differs from valid consideration in that valid consideration requires an exchange of value occurring simultaneously with the promise, while past consideration refers to something already given before the promise was made. This distinction is significant because it affects whether a contract can be enforced in court. Without valid consideration, even a seemingly generous promise may not create any legal obligation, which highlights the importance of timing and mutual exchange in forming enforceable contracts.
• What are some legal cases that illustrate the concept of past consideration and its implications on enforceability?
  • Legal cases such as *Re McArdle* and *Lampleigh v Braithwaite* are commonly cited when discussing past consideration. In *Re McArdle*, the court ruled that work done prior to a promise did not constitute valid consideration, as it occurred before the agreement was made. On the other hand, *Lampleigh v Braithwaite* showcased how prior actions could influence enforceability when they were performed at the request of the other party, highlighting potential exceptions to the strict rule against past consideration.
• Evaluate how understanding past consideration can influence contract negotiations and future agreements.
  • Understanding past consideration is critical in contract negotiations because it shapes how parties structure their agreements to ensure enforceability. Knowing that past acts do not constitute valid consideration can lead parties to clarify their intentions and stipulate future exchanges explicitly. This awareness prevents misunderstandings and ensures that all parties recognize their obligations from the outset, thereby minimizing potential disputes over contractual validity. Ultimately, recognizing the limitations of past consideration can foster more effective communication and stronger contractual relationships.

Related terms

consideration: Consideration is something of value that is exchanged between parties in a contract, forming the basis for its enforceability.

executed contract: An executed contract is one where both parties have fulfilled their obligations, and thus no further consideration is needed for enforcement.

promissory estoppel: Promissory estoppel is a legal principle that allows for a promise to be enforced even without consideration if one party relied on that promise to their detriment.