Law of Contract: Consideration

PREPARED BY:
Zakiya Banu Bt Syed Naseer
Noramirah Shahirah Bt Adnan
Sakira Binti Shahjahan

Fauziah Binti Mohamed Saleem
Azeema Bt Abdul Halim

LAW 3235 SEM 2 2013/2014

MAIN PAGE
Consideration
-Is an
-What

agreement without consideration void?
is consideration?

Ty p e s o f C o n s i d e r a t i o n
-Executed consideration (present)
-Executory consideration (future)
-Past consideration

Can a consideration move from a person
who is not the promisee?
Must a consideration be adequate?
Can natural love and affection be a valid
consideration?
LAW OF CONTRACT: CONSIDERATION (LAW 3235 SEM 2 2013/2014

CONSIDERATION

•

Is an agreement without consideration void?


•

Section 26 of the Contracts Act 1950 states that an agreement without consideration is void.

What is consideration?


Section 2(d) of the Contracts Act 1950 lays down the definition of ‘consideration’.


TYPES OF CONSIDERATION
Executed Consideration (present)


What is executed consideration?
Consists of doing an act is said to be executed



In Indian case: SK Das Union of India v. Charman
Lal Loona


Executory Consideration (future)


What is executory consideration?
Consists of a promise is said to be executed



Case reference: K Murugesu v. Nadarajah [1980]


Past Consideration


What is past consideration?
Consists of something that performed before the promise
was made
It is made or given not in the response to the promise

The promise is subsequent to the act and independent of
it


Past Consideration


Example
Ahmad lose his samsung galaxy at café shop. Abu who is the waiter at the café shop saw
the Samsung galaxy and immediately call Ahmad and return his handphone.(
Ahmad promise to give rm 200 for return his handphone.(

) Later

). The act of of Abu is

wholly performed before the promise. The act was subsequent whereby the action came
first then only the promise.



Is past consideration a good consideration?


Section 2(d) of the Contracts Act 1950 states that if the act done were at the desire of the
promisor, then such act would constitute consideration



Has done or abstained from doing nothing as long as it was done at the desire of the
promisor.


CAN A CONSIDERATION MOVE FROM A
PERSON TO IS NOT THE PROMISEE
The consideration





can move from a person who is not the promisee

Refer to page 34
Case reference: Venkata Chinnaye v Verikata
Ma’ya (1881) cr.137
A sister agreed to pay an annuity of rs653 to her brothers who provided no
consideration for the promise. However, on the same day their mother had given

the sister some land, stipulating that she must pay the annuity to her brothers.
The sister failed to pay the annuity and was sued by her brothers.



Held
She was liable to pay the annuity. A party to an agreement can enforce the
promise, even if he himself has given no consideration as long as somebody has
done so. There was good consideration for the promise even though it moved
from her mother not her brothers.


MUST A CONSIDERATION BE ADEQUATE



Consideration must be sufficient but need not be
adequate



Explanation 2 to Section 26 of the Contacts Act 1950
states that an agreement is not void merely because
the consideration is not adequate.




Case reference: Phang Swee Kim v. Beh I Hock
(1964)
The respondent alleged that the appellant had trespassed on his land. He
instituted an action claiming for possession and for an account of all income
received by the appellant from the said land.






The appellant counter-claimed for a declaration that she was entitled to the said
land.
At the hearing, the appellant argued that there was an oral agreement made
between her and the respondent in which the respondent agreed to transfer the
land to her on payment of RM500.

Held
The agreement was void due to the inadequacy of consideration.





ON APPEAL
The federal court held that by virtue of Explanation 2 to section 26, the
inadequacy of the consideration was immaterial. There was good
consideration under section 2(d) of the contracts (Malay states)
Ordinance 1950 and judgment was made in favor of the appellant.




Illustration (f) Section 26





‘A’ agrees to sell a worth RM1000 for a RM10. the agreement is a
contract notwithstanding the inadequacy of the consideration.

Case reference: Bolton v. Madden (1873)
Held
“ the adequacy of the consideration is for the parties to consider at the time of
making the agreement, not for the court when it is sought to be enforced”.

Therefore, a contract to sell RM500,000 bungalow for RM5,000 is perfectly valid
and enforceable even though there is an imbalance of benefits to one party
(provided that there is free consent).


CAN NATURAL LOVE AND AFFECTION BE A
VALIDCONSIDERATION?




Case reference: Re Tan Soh Sim & Ors v Tan Saw
Keow (1951)
MLJ 21 is a Malaysian case which judicially
construed the meaning of 'natural love and
affection'.
In this case, a woman on her deathbed expressed her intention to leave all her
properties to her four adopted children. The court held that the claims of the
adopted children were not effective as it was contrary to Section 26(a) - that it
was not in writing, and there was no natural love and affection between parties
standing in near relation to each other, since the four children were adopted and
did not have natural relations (blood ties) to that woman.


QUICK TEST: EXECUTED, EXECUTORY
AND FUTURE CONSIDERATION
A teaches the son of B at B’s request in the month of January. B promises to
pay A a sum of RM200 for is service in February
The services of A will be past consideration because the action is done
BEFORE the date of the agreement, at the desire of the promisor.

X promises to sell and deliver 10 bags of wheat to Y for RM6,500 after a
week, upon Y’s promise to pay the agreed price at the time of delivery.
The promise of X is supported by the promise of Y. Thus, it is executory on
both ideas.
A sells and delivers a book to B, upon B’s promise to pay it at the future date
A has done his act of delivering the book simultaneously during the date of
the agreement, and thus it is considered as executed consideration.

QUICK TEST:PAST CONSIDERATION
IS A GOOD CONSIDERATION
A gives B a lift home in his car. Upon arrival, B promises to give A RM5 for
the petrol.
This is past consideration from A and A cannot enforce this promise in case
B does not pay.

B killed someone and then asked for L to forgive him. L forgave B. In return
for L’s kindness, B promised to pay L RM100.
L’s consideration to forgive B is past consideration. B’s promise to pay L
upon the B’s earlier request. This is considered as a good past
consideration.

NOTE: Past consideration is a good consideration ONLY IF it is the desire of
the promisor to give to the promisee.

Law of Contract: Consideration

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