Chen Wishart Reforming Consideration - No Greener Pastures

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Reforming Consideration - No Greener

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Chapter · December 2016
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REFORMING CONSIDERATION: NO GREENER PASTURES
MINDY CHEN-WISHART
INTRODUCTION
The most basic proposition of the common law of contract is that contractual liability is only
incurred when a promise forms part of an interlocking exchange in which each party’s
promise or performance is the agreed equivalent and inducing cause of the other’s. This is the
doctrine of consideration and its pedigree is impeccable. 1 And yet, the literature on the
consideration doctrine is conspicuous in the depth and intensity of the hostility towards it. 2
Professor Cartwright observes that: “[w]ithin the law of contract, consideration is probably
the most criticised doctrine”.3
Lawyers are critical by nurture (and perhaps by nature); it is more difficult to respond
constructively to an identified problem. The report of the 1937 Law Revision Committee4
(henceforth “LRC”) on consideration is the obvious place to start since consideration
1
Peter Benson, "The Idea of Consideration"’ (2011) 61 U Tor LJ 241; see also Arthur T von Mehren,
“Civil-Law Analogues to Consideration: An Exercise in Comparative Analysis” (1959) 72 Harv LR 1009,
1009; JH Baker, The Reports of Sir John Spelman, vol 2 (Selden Society 1978) 94 SS ch 9; JH Baker,
“Origins of the ‘Doctrine’ of Consideration, 1535–1585” in Morris S Arnold et al (eds), On the Laws and
Customs of England (University of North Carolina Press 1981) 336–58; AW Brian Simpson, A History of
the Common Law of Contract: The Rise in the Action of Assumpsit (Clarendon 1987) 319; David J
Ibbetson, “Consideration and the Theory of Contract in the Sixteenth Century Common Law” in John
Barton (ed), Towards a General Law of Contract (Duncker & Humblot 1990) 67–124; David J Ibbetson, A
Historical Introduction to the Law of Obligations (Oxford University Press 1999) chs 2, 7, 11–12; Daniel
Markovits, “Contract and Collaboration” (2004) 113 Yale LJ 1417.
2
See eg White v Jones [1995] 2 AC 207 (HL) 262–263; PS Atiyah, Essays on Contract (Clarendon Press,
1986) ch 8; see also Gay Choon Ing v Loh Sze Ti Terence Peter [2009] SGCA 3; [2009] 2 SLR(R) 332
(Singapore Court of Appeal (SCA)) [92]–[118] whereof Phang JA, obiter, appended a “coda on the
doctrine of consideration” in the nature of an essay on the need for reform and the potential use of
doctrines such as promissory estoppel, economic duress, undue influence and unconscionability in filling
the gap that would be left by abolishing the doctrine of consideration; see commentary in Mindy Chen-
Wishart, “Consideration and Serious Intention” (2009) Sing J Legal Stud 434; Phang JA had also been a
critic of the consideration doctrine sitting in the High Court in Sunny Metal & Engineering Pte Ltd v Ng
Khim Ming Eric [2006] SGHC 222; [2007] 1 SLR (R) 853 (Singapore High Court (SHC)) [28]–[30] (again
obiter).
3
John Cartwright, Formation and Variation of Contract (Sweet and Maxwell, 2014) [8-40]; see eg Lord
Wright, “Ought the Doctrine of Consideration to be Abolished from the Common Law?” (1936) 49 Harv
LR 1225.
4
Law Revision Committee, Sixth Interim Report (Statute of Frauds and the Doctrine of Consideration)
(1937, Cmd 5449) [26]–[40], [50] (Sixth Interim Report); see also Ontario Law Reform Committee, Report
on Amendment of the Law of Contract (Ministry of the Attorney General 1987) ch 2.
1
reformers standardly refer to it as some sort of panacea. The LRC regards the abolition of
consideration as unrealistic because it is “too entrenched”, but recommends that we “prune
away from the doctrine those aspects of it which can create hardship or cause unnecessary
inconvenience”.5 In particular, the LRC recommends that the following six types of promises
should be binding without consideration:6
(i) promises in writing,
(ii) promises that induce foreseeable reliance,
(iii) promising to do what one is already bound to do,
(iv) promises to accept part payments in discharge of the whole debt,
(v) promises for past consideration, and
(vi) promise to keep offers open for a definite period (“firm offers”).
The laudable aim is “to remove certain obstacles which have accumulated in the
course of our history and are impeding our Courts in the task of developing a rule of
practice in the manner most likely to serve the needs of our modern community”.7 But,
do they move the doctrine of consideration from troubled waters to greener pastures (to mix
metaphors)?
My conclusion is in the negative. The rationales for these reforms are variously based
on: (a) the belief that all seriously intended promises should be enforced, (b) the belief that
induced reliance should be protected, or (c) the flawed implementations of (rather than any
flaw in the basis for) the consideration doctrine. In response, I make three main arguments.
In section 1 of this chapter, I argue that while a seriously intended promise is necessary,
it has (for very good reasons) never been the sufficient condition of contractual liability at
common law; the LRC’s recommendation that a writing requirement be added does not
adequately protect the parties’ freedom from contract. Hence recommendation (i) above
should be rejected and the higher thresholds of the deed retained.
In section 2, I argue that one party’s foreseeable reliance on another’s promise cannot
justify imposing contractual liability on the promisor; moreover, recommendation (ii) above
5
Sixth Interim Report (n 4) [27].
6
7
2
fails to give sufficient weight to the promisor’s interests as the existing promissory estoppel
doctrine currently does; it should also be rejected.
In section 3, I argue that the enforceability of seriously intended exchanges has (for
very good reasons) not been questioned, and was not questioned by the LRC. Rather, it is the
implementation of the consideration doctrine that is rightly criticised for being too rigid and
for failing to track common sense or business expediency. This logically points to the
adjustment of the scope of valuable consideration and not its dispensation as
recommendations (iii)–(vi) suggest. They should, therefore, also be rejected.
1. THE ENFORCEMENT OF SERIOUSLY INTENDED PROMISES
The LRC’s recommendation (i) is that promises made in writing should be enforceable.8 It is
based on two assumptions. First, that promises intended to be binding should be legally
enforced; hence, the LRC criticises the consideration doctrine because it “frequently affords
a man a loophole for escape from a promise which he has deliberately given with intent
to create a binding obligation”.9 The second assumption is that it follows that all we need is
evidence of an intention to be legally bound, which “can be satisfied equally well either by
consideration regarded as evidence of that intention or by some other evidence of that
intention.”10
It is true that courts have sometimes sought to find consideration where it will give
effect to the intention of the promisor,11 and consideration may provide evidence of serious
intention to be bound. Nevertheless, the two assumptions are erroneous and provide an
unstable basis for the recommendation to enforce written promises. These and other problems
are elaborated below.
8
Sixth Interim Report (n 4) [50(2)].
9
10
Sixth Interim Report (n 4) [28]–[29].
11
See eg Vantage Navigation Corp v Suhail and Saud Bahwan Building Materials (The Alev) [1989] 1
Lloyd’s Rep 138 (QB) 147; Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1 (CA) 18,
21.
3
1.1 Consideration is not just evidence of serious intention
Fuller’s widely accepted 12 primary explanation for the consideration requirement is that a
promise is a more secure candidate for enforcement if it is validated by the “evidentiary”,
“cautionary”, and “channelling” functions of a formality such as a deed. This would ensure
that: a promise was actually made (evidentiary), the promisor took care in making it
(cautionary) and the parties and third parties understood its legal status (channelling). Fuller
reasons that consideration functions as an efficient indicator of the promises that satisfy these
concerns, while promises unsupported by consideration are likely to fall foul of them.
Consistently, in Antons Trawling Co Ltd v Smith, Baragwanath J said that: 13 “[t]he
importance of consideration is as a valuable signal that the parties intend to be bound by their
agreement, rather than an end in itself.” Likewise, the LRC states:
“The only justification for the doctrine of consideration … is that it furnishes
persuasive evidence of the intention of the parties concerned to create a binding
obligation, but it does not follow from this that consideration should be accepted
as the sole test of such intention. This intention ought to be provable by other and
equally persuasive evidence such as, eg the fact that the promisor has put his
promise in writing. We agree with this view, and we therefore recommend that
consideration should not be required in those cases in which the promise is in
writing.” 14
The idea that consideration merely functions as evidence of serious intention is clearly
wrong as a matter of law and of fact. While the presence of consideration may coincidentally
perform evidentiary, cautionary and channelling functions, it may also contradict them in
spectacular fashion. Absent consideration, the law will not enforce a promise even if the
promisor solemnly declares in front of witnesses and in writing that she intends to be bound.
Gratuitous promises are not necessarily more difficult to prove or more likely to be fabricated
than bargains. Conversely, bargains made orally may be very difficult to prove and nominal
consideration is easily denied. Further, the limitations on human rationality apply to both
gratuitous and bargain promises; bargains may be rashly made, or made on standard forms,
12
Lon L Fuller, “Consideration and Form” (1941) 41 Col LR 799; see also Richard A Posner, “Gratuitous
Promises in Economics and Law” (1977) 6 J Legal Stud 411; Melvin Aron Eisenberg “Donative Promises”
(1979) 47 U Chi L Rev 1; Charles J Goetz and Robert E Scott, “Enforcing Promises: An Examination of
the Basis of Contract” (1980) 89 Yale LJ 1261; Sir Jack Beatson, Andrew Burrows and John Cartwright,
Anson’s Law of Contract (29th ed, OUP 2010) 91.
13
[2003] 2 NZLR 23 (CA) [93].
14
4
without negotiation and with only the most cursory understanding of their content, while gifts
may be calculated and heavily negotiated.
Further, Fuller’s thesis is based on a flawed understanding of the historical evolution of

the consideration doctrine. The enforcement of sealed promises in a debt action long
predates and rests on different theoretical foundations from the writ of assumpsit (from which
the modern contract action evolved):
“Before the law attained the sophistication of enforcing executory contracts, it enforced
promises by interpreting them as symbolic transfers when accompanied by formalities
signifying the crossing of a boundary between promise and ‘deed’”.15
In short, promises plus formalities are enforced as executed transfers of things, and can tell
us nothing about the function of consideration, which enforces promises as promise.
1.2 Vitiation factors are not just evidence of serious intention
Just as flawed as the idea that consideration merely evinces serious intention (and so can be
replaced by writing) is the recent suggestion that vitiating factors such as economic duress,
undue influence, and even unconscionability can also substitute for the consideration
requirement because they all simply interrogate serious intention to be bound.16 I have argued
elsewhere,17 that vitiating factors are not generally aimed at negating the consent basis of
contractual liability. Rather, they express the force of other important values that trump the
presence of consent (such as responsibility in contract formation, non-exploitation and
protection of vulnerable parties against harsh outcomes). It is not a case of “no consent” but
rather “consent but”. For example, it is impossible to generate a coherent theory of duress by
sole reference to the complainant’s internal will (objectively ascertained); 18 the law must
appeal to external factors such as the legitimacy of the defendant’s threat and the fairness of
15
See Alan Brudner, "Reconstructing Contracts" (1993) 43 U Tor LJ 1, 35; see also Peter Benson, “The Idea
of Consideration” (2011) 61 U Tor LJ 241, 245–46.
16
See Gay Choon Ing v Loh Sze Ti Terence Peter [2009] SGCA 3; [2009] 2 SLR(R) 332 (CA).
17
Mindy Chen-Wishart, “Consideration and Serious Intention” (2009) Sing J Legal Stud 434, 446–49;
Mindy Chen-Wishart, “The Nature of Vitiating Factors in Contract Law” in Gregory Klass, George Letsas
and Prince Saprai (eds), Philosophical Foundations of Contract Law (OUP 2014) 294.
18
PS Atiyah, “Economic Duress and the Overborne Will” (1982) 98 LQR 197.
5
the demand. In undue influence cases, typically, the more severe the case, the more willing
(objectively determined) the claimant is to enter the contract. Yet, this is outweighed by the
other party’s advantage-taking that seriously jeopardises the claimant’s future autonomy.19
Again, unconscionable bargain cases have less to do with the claimant’s lack of intention to
be bound than with the improvidence of the transaction that “shocks the conscience of the
court”20 and threatens the claimant’s future freedom.
1.3 Common law does not enforce all seriously intended promises
The common law of contract has never sought to enforce all serious promises. As Professor
Cartwright states:21
“it is unreasonable to criticise the doctrine of consideration for failing to give
effect simply to the parties’ intentions even where the promisee has not been
asked to do anything in return for the promise he seeks to enforce, since that
would be to change fundamentally the legal basis of the promissory obligation.”
Rather, the claimant’s entitlement to enforce the defendant’s promise depends on her
having done something, in return for the promise, to earn the right to sue. Without
consideration, promises are only binding in honour. Laypersons who expect promises to be
binding may find the law surprising but morality and law, while overlapping, have never been
coterminous, for good reasons.
1.4 The civil law does not enforce all seriously intended promises
The oft-made claim is that abolishing consideration would bring English law into line with
continental European civilian legal systems.22 In truth, civil law draws essentially the same
19
Mindy Chen-Wishart, “Undue Influence: Beyond Impaired Consent and Wrong-Doing, Towards a
Relational Analysis” in A Burrows and A Rodger (eds), Mapping the Law: Essays in Honour of Peter
Birks (Oxford 2006) 201; Mindy Chen-Wishart, “Undue Influence: Vindicating Relationships of
Influence” (2006) 59 CLP 231.
20
Alec Lobb (Garages) Ltd v Total Oil (Great Britain) Ltd [1983] 1 WLR 87 (CA) 94–95.
21
Cartwright (n 3) [8-42].
22
Lord Wright (n 3) 1226; AG Chloros, “The Doctrine of Consideration and the Reform of the Law of
Contract” (1968) 17 ICLQ 137, 164ff; Andrew Burrows, Understanding the Law of Obligations (OUP
1998) 196–98; Beatson, Burrows, Cartwright (n 12) 129.
6
line between gratuitous and reciprocal undertakings.23 Civil law imposes a stringent formality
requirement, unless the transaction is “synallagmatic” (ie consists of bilateral reciprocal
undertakings). 24 This is simply the mirror image of the common law position that
consideration is necessary unless it is accompanied by the requisite formality.25
Indeed, if anything, civilian law is even more hostile to gratuitous transactions in some
respects. First, its requirement of notarisation is stricter than the common law requirement of
deed. For example, under French law a donative promise relating to wealth that is
“giveable”,26 is normally enforceable to its full extent only if both parties execute the promise
in writing before a notary,27 who must warn and advise the parties of their rights and duties
under the instrument.28 Second, civil law recognises special excuses for the non-performance
of gratuitous promises and even completed transfers, including: the donee's “gross
ingratitude”,29 the donor’s deterioration of circumstances such that he would not be able to
fulfil the promise without endangering his own reasonable maintenance or the fulfilment of
his legal obligations to maintain others, 30 and the “subsequent acquisition of a child by a
previously childless donor”.31 Lastly, with mixed (gift and exchange) transactions, German
courts have undertaken the extraordinarily difficult task of dissecting the fused transaction so
that the gift part does not escape control.32
French and German law do enforce certain informal gratuitous non-gifts that would be
unenforceable at Common Law; namely, gratuitous promises to: (a) modify existing
23
See von Mehren (n 1); John P Dawson, Gifts and Promises: Continental and American Law Compared
(Yale University Press 1980); Hein Kötz, European Contract Law: Volume One (Tony Wier (tr), OUP
1997) ch 4.
24
§§ 320–326 German Civil Code (BGB); Art 1102 French Civil Code (Code civil).
25
Reinhard Zimmermann, The Law of Obligations: Roman Foundations of the Civilian Tradition (OUP
1996) 504–05.
26
Meaning some interest (tangible or intangible) that has already been reduced to an ownership that the gift
can divest and transfer; gratuitous services are excluded: see Dawson (n 22) 54–68. This is due to the need
to prevent frustration of relatives’ inalienable right to succeed by depletion of the estate by lifetime gifts.
27
See Dawson (n 223) 69.
28
Art 931 French Civil Code (Code civil); § 518 German Civil Code (BGB).
29
§ 530(1) German Civil Code (BGB); Arts 953, 955 French Civil Code (Code civil).
30
§ 519 German Civil Code (BGB).
31
See further Dawson (n 23) 53.
32
Dawson (n 23) 196.
7
contracts, (b) keep an offer open for a specific period (options), and (c) lend goods or provide
a service. However, the end result is not so different. English law can enforce (a) via the
concept of “practical benefit” as consideration and via promissory estoppel. With (b)
consideration may sometimes be found.33 With (c), French and German courts will often
conclude that the parties did not intend to be legally bound and so deny enforcement. 34 Even
where such promises are enforced, a lender is only liable for malice or gross negligence, or
deceitful concealment of the loss-causing defect.35 English law can reach the same result
through the tort of negligence. Dawson concludes that the civil law’s enforcement of
gratuitous promises is “fragile”:
“[I]t is seldom that much is invested in such arrangements … ordinarily such
arrangements are readily dissolved at the will of either party and the care and
diligence required of the promisor in his own performance are much reduced. In
most of the situations that have led to litigation (promises to supply free
transportation or medical care), a promise would usually add little to the duties
that the enterprise itself would generate. So I conclude that our law has suffered
no real loss by withholding from ties that bind so lightly the descriptive title
contract...”36
1.5 Serious promises should not be enforceable per se
The idea that contract law should enforce all seriously intended promises is not only
descriptively inaccurate, it is also normatively flawed. Promises do not enforce themselves;
parties need the support of the law.37 Why should the state subsidise private arrangements in
this way? When is the state justified in empowering individuals to coerce others to perform
for their benefit?
The starting point in answering these questions is the moral, political and economic
importance of personal autonomy in modern liberal societies. 38 Its core idea is that of self-
33
See below 4.2.5.
34
Kötz (n 22) 58, 71–73, 77.
35
Kötz (n 22) 66.
36
Dawson (n 223) 55, 222–23.
37
HLA Hart, The Concept of Law (Clarendon Press 1961) 27–38; BC Zipursky, “Philosophy of Private Law”
in Jules L Coleman and Scott Shapiro (eds), The Oxford Handbook of Jurisprudence and Philosophy of
Law (OUP 2002) 623, 655.
38
See JS Mill, On Liberty (JW Parker and Son 1859); FA von Hayek, The Road to Serfdom (Routledge
1944); FA von Hayek, Individualism and Economic Order (Routledge 1949); FA von Hayek, The
8
authorship; that there is something intrinsically valuable in pursuing freely chosen goals and
relationships. Its preservation is a ready justification for state action. But, personal autonomy
goes beyond the simplistic immature idea of being free to do “whatever I want”—of being
free from interference, of negative liberty. Professor Raz’s 39 influential work outlines a
liberalism that does not require or justify upholding all promises. He posits a positive
conception of autonomy that emphasises the freedom to pursue “acceptable and valuable
projects and relationships”.40 Since people derive well-being only from ways of life which are
valuable, the state need not facilitate worthless options that one is better off without;41 it has
no duty of neutrality as between all options. Hence, “the autonomy principle is a perfectionist
principle … [it] permits and even requires governments [read law] to create [and support]
morally valuable opportunities, and to eliminate [or discourage] repugnant ones”.42
1.5.1 Making space for change of mind
One valuable option is the freedom to change one’s mind. Breach of contract occurs because
the defendant either can no longer perform or no longer wants to perform. If contract law
values freedom of choice in support of individual autonomy, the question is why it should
prioritise an individual’s past choice over her present change of mind, when both are equally
valid expressions of her freedom.43 It is not obvious that we enhance an individual’s freedom
by forcing her to do what she no longer wants to do. Indeed, the individualistic premise
points in the opposite direction.
Fried’s answer is that restricting one’s ability to change one’s mind “increase[s] one’s
options in the long run” 44 and is thus autonomy-respecting. This is premised on “the
continuity of the self and the possibility of maintaining complex projects over time”, without
Constitution of Liberty (Routledge 1960); Milton Friedman, Capitalism and Freedom (University of
Chicago Press 1962); Robert Nozick, Anarchy, State and Utopia (Basic Books 1974); Charles Fried,
Contract as Promise: A Theory of Contractual Obligation (Harvard University Press 1981).
39
Joseph Raz, The Morality of Freedom (OUP 1987).
40
Raz (n 39) 417.
41
Raz (n 39) 338ff.
42
Raz (n 39) 417.
43
Brudner (n 15) 22: “the decision of the autonomous will to commit itself to a course of action can enjoy no
moral privilege over its subsequent decision to change its mind, for both decisions are particular and
equally valid expressions of the will”.
44
Fried (n 38) 14.
9
which, “not only the morality of promising but also any coherent picture of the person
becomes impossible”.45 But, this claim cannot be ascertained by abstract deduction from the
basic autonomy principle, but only by examining particular circumstances in their historical
context. 46 It is always vulnerable to the challenge that in particular circumstances the
claimed increase in autonomy does not, or will not, occur.
Moreover, while the self may be continuous, it also evolves over time. An integral part
of our autonomous life is our ability to learn, mature and recreate ourselves. Over time, our
assumptions, knowledge, attitudes, values, priorities, or passions change. This may entail the
alteration or rejection of previous beliefs, commitments or goals that are now, no longer
authentically ours: “a person who remains unwaveringly true to past commitments which no
longer meaningfully relate to her present vision of how she ought to live [i]s anything but a
model of personal autonomy in action”. 47 Professor Cohen recognised something amiss in a
concept of autonomy that renders individuals “bound by every promise, no matter how
foolish, without any chance of letting increased wisdom undo past foolishness. Certainly,
some freedom to change one's mind is necessary for free intercourse between those who lack
omniscience”.48 This is the crucial point: the common law of contract allows a promisor to
change her mind unless she has received consideration from the promisee, triggering the
promisee’s legitimate interest.
1.5.2 Keeping out of private domain
One option that the law discourages is bringing the force of the state into the private domain
of family and friends. Human beings are social creatures and trust has intrinsic value in
facilitating valuable relationships. Trust allows us to depend on others (for love, advice, help,
information and so on) especially when we know that they are not compelled to give us these
things and when it is difficult or impossible to verify the authenticity of what is given. Trust
enhances co-operation and reduces the incentive or need to check up on other people. 49 The
45
Fried (n 38) 14.
46
Ian R Macneil, "Values in Contract: Internal and External" (1983) 78 Nw UL Rev 340, 356–58, 395.
47
Dori Kimel, “Personal Autonomy and Change of Mind in Promise and in Contract” in Gregory Klass,
George Letsas and Prince Saprai (eds), Philosophical Foundations of Contract Law (OUP 2014) 96, 100.
48
Morris R Cohen, “The Basis of Contract” (1933) 46 Harv LR 553, 573.
49
Niklas Luhmann, Trust and Power: Two Works (Wiley 1979).
10
private domain is the natural home of gratuitous promises and transfers; they are particularly
good at building valuable trusting relationships by engendering feelings of personal
obligation and gratitude. 50 Their value is primarily as tangible expressions of the parties’
relationship (friendship, love, comradeship, gratitude, respect, benevolence or generosity),
and only secondarily in the commodity promised. They create and consolidate ties between
individuals, and among members of society more broadly and create the sort of society in
which human beings thrive and sensibly want to live.
In this context, the enforceability of gratuitous promises by an outside force could

undermine their valuable trust building function. The risk that trust will be betrayed is
constitutive of the attitude of trust. The elimination of risk (by resorting to law) can
undermine trust or prevent it from occurring at all. Unenforceability allows promisors to
demonstrate their trustworthiness and promisees to demonstrate their trust. Conversely,
enforceability introduces a new motive, which masks the signalling function of performance,
and changes its personal, social, and cultural significance.51 It could become unclear to both
parties whether an undertaking made in a spirit of love, friendship, affection, or the like, is
also performed for those reasons, or only to discharge a legal obligation under the threat of
legal sanction.
We need to preserve a private sphere where the law does not intrude—where we do not
have to be on guard, can experiment, act aspirationally and spontaneously, and make or break
gratuitous promises as expressions of our commitments.52 The unenforceability of gratuitous
promises “helps to define and construct the legal understanding of intimacy, and to mark the
dignity and specialness of intimate relations”53 that distinguishes them from the economic
transactions between strangers. Preserving the expressive functions of gratuitous
undertakings and maintaining a private sphere free from legal involvement also helps to
50
H Lorne Carmichael and W Bentley MacLeod, “Gift Giving and the Evolution of Cooperation” (1997) 38
IER 485.
51
Dori Kimel, “Remedial Rights and Substantive Rights in Contract Law” (2002) 8 Leg Th 313, 327.
52
See eg Robert E Scott, “A Relational Theory of Default Rules for Commercial Contracts” (1990) 19 J
Legal Stud 597, 615, warning that “any effort to judiciali[s]e these social rules will destroy the very
informality that makes them so effective in the first instance”; Frank B Cross, “Law and Trust” (2005) 93
Geo LJ 1457.
53
Jill Elaine Hasday, “Intimacy and Economic Exchange” (2005) 119 Harv LR 491, 493; see also Jeanne L
Schroeder, “Pandora's Amphora: the Ambiguity of Gifts” (1998) 46 UCLA LR 815, 837.
11
explain why gratuitous promises, which are typically made in the private domain, are
ordinarily unenforceable.
Moreover, enforcement against an unwilling gratuitous promisor will normally

contradict the constitutive nature of the parties’ relationship. That is, even if the promisor is
morally obliged to perform, the promisee is morally obliged (eg as a friend, family member,
romantic partner, work colleague) to release, forgive or otherwise accommodate the repenting
promisor.54 To take account of this, we would need to recalibrate the excuses for breach if
gratuitous promises were to be enforceable. We saw that continental European contract
laws55 recognises additional excuses in respect of informal gratuitous promises. Ingratitude of
the promisee and material reverses in the promisor’s economic circumstances rendering
performance improvident are extremely fluid concepts that will be difficult and costly to
adjudicate.
In addition, if gratuitous promises are to be enforced, to what extent should they be

enforced? Since the promisee has not “purchased” the promise (via consideration) there
seems no reason to award more than the promisee’s reasonable reliance. Consistently, the US
Restatement on Contract 2d, § 90(1) provides that a promise unsupported by consideration
“is binding if injustice can be avoided only by enforcement of the promise. The remedy
granted for breach may be limited as justice requires”. This is not the contractual
enforcement of a gratuitous promise. Atiyah,56 a critic of the consideration doctrine, concedes
that the issues arising from the enforcement of gratuitous promises are too complex and
difficult “to generali[s]e about in advance, because so much depends on the context”.57 He
concludes that they should not be enforceable to the same extent as ordinary commercial
promises; that they should attract a much wider defence of frustration and a shorter limitation
period, that the promisee’s conduct may bar her enforcement, and “perhaps after all some
gratuitous promises may be better treated as merely giving rise to a defence [presumably via
promissory estoppel] rather than a cause of action”.58
54
Melvin Aron Eisenberg, “The World of Contract and the World of Gift” (1997) 85 Calif L Rev 821, 849–
850.
55
See above at 1.4.
56
Atiyah (n 2) 178, 241–42.
57
Atiyah (n 2) 242.
58
Atiyah (n 2) 242.
12
Further, legal enforcement of gratuitous promises would generally convert it into its
cash equivalent as damages awarded by the courts. The social domain would be impoverished
if gratuitous promises out of love, friendship, affection, camaraderie and gratitude were
translatable into money’s worth. It would demean the relationship by valuing it on a metric
that applies to the market domain, driven by relatively impersonal considerations, focused on
commodities, prices, and legal duties. Gratuitous promises are and should be unenforceable,
not because they are less important than bargain promises, but because the values they
promote (such as trust) would be undermined by enforcement. It is just because these values
are usually absent from the market domain that the law is required to (and can safely) play a
central role there.
It could be countered that the consideration requirement is unnecessary since the

private realm is already ring-fenced by the presumption that promises within that realm lack
the necessary intention to create legal relations. One answer is that the consideration
requirement reinforces that boundary. Another is that the consideration requirement would
also insulate gratuitous transactions outside the private domain from legal coercion. It is true
that gratuitous undertakings in the market domain will be primarily aimed at creating an
environment conducive to future exchange (eg hospitality from prospective employers,59 or
gifts from pharmaceutical companies to prescribing doctors).60 Even so, the law should treat
as gratuitous (and so unenforceable) that which purports to be a gratuitous promise. It is
autonomy enhancing to allow individuals to mimic the valuable social form of gratuitous
promise in the private domain. This creates or reinforces relationships that bring out the best
in human interactions, such as good will, concern, flexibility, accommodation, and common
purpose. Moreover, legal enforcement in this area may be too heavy-handed an approach for
micromanaging the fine lines between geniality and commercial inducement, and may
compromise the valuable social relations yielded by gratuitous undertakings.
59
Rachel E Kranton, “The Formation of Cooperative Relationships” (1996) 12 J L Econ & Org 214; noting
that co-operation among self-interested individuals is often achieved by giving a bond at the beginning of a
relationship.
60
Dana Katz, Arthur L Caplan, Jon F Merz, “All Gifts Large and Small: Toward an Understanding of the
Ethics of Pharmaceutical Industry Gift-Giving” (2003) 3 Am J Bioeth 39.
13
1.6 Problems with enforcing written promises
In addition to the above reasons against the LRC’s first recommendation to enforce written
gratuitous promises without requiring consideration, the following reasons weigh against this
recommendation.
1.6.1 The function of the stipulated writing is unclear
The LRC said:

“If the view is accepted that all that is necessary in order to render an agreement
enforceable is that there should be evidence that the parties intend to create a
relationship binding in law, then it seems to follow that this requirement can be
satisfied equally well either by consideration regarded as evidence of that
intention or by some other evidence of that intention.”61
The problem is twofold. First, the LRC seems to regard writing as more than just
evidence of serious intention because it later adds that “the entire promise should be in
writing to bring it within the rule, and that no other evidence of the promise, whether in
writing or partly in writing and partly oral, should be considered sufficient”.62 Not only is this
badly expressed, it is also curious. Given that the written promise need not be signed, how
should a court determine which evidence of “the whole promise” is acceptable? Moreover, if
writing is merely evidentiary, why should other evidence not be admitted? The LRC seems to
be saying that writing is necessary to the validity of a contract without consideration, by
analogy to a deed; it is not just evidence of a contract.
Second, while writing seems necessary to the validity of a contract without consideration, it is
not sufficient to render the contract enforceable since the LRC adds that: “[i]t will still be
necessary for the Court to find that the parties intended to create a binding obligation”.63 This
is also curious. If writing and consideration were really evidence of animus contrahendi
further evidence would be superfluous. In practice, this recommendation would make the
inquiry into intention to create legal relations more frequent and more important, particularly
where consideration is absent. In its substantive sense (as opposed to its sense of keeping
contract law out of the private domain) it will be no easier to determine than consideration.
61
62
63
Sixth Interim Report (n 4).
14
Parties will often have given the matter no thought and there will be neither discernible (ie
objective) nor concordant intentions on whether the arrangement entered is legally binding.
That leaves courts to imply or deem such an intention. On the other hand, a clear finding of
intention to be legally bound will be insufficient in the absence of both writing and
consideration; the intention of the parties will still be frustrated.
1.6.2 Writing is insufficient to perform the cautionary function
The greater concern is that even if writing satisfies the evidentiary function, it may be
insufficient to satisfy the cautionary or channelling functions. Writing is such a common
means of communication that it may not make the parties stop and think much more than any
other communication, nor mark it out as inviting legal liability. The charge seems conclusive
when we include electronic communications such as text messages, email and internet-based
messaging from everyday electronic devices such as mobile telephones.
Compare this with the deed, which is enforceable without consideration, but which
must be: written (on any substance, but not in electronic form);64 signed by the individual; in
the presence of one attesting witness (or two witnesses if signed by the promisor’s agent);
“delivered”;65 and, in a form which makes clear on its face that it is intended to be a deed and
legally binding on the promisor. Hence, it must always be a conscious choice to make a deed;
it will not generally be possible to find oneself accidentally bound by a deed; one’s freedom
from contract is preserved. The same cannot be said of the LRC recommendation that mere
writing is enough; the risk that a promisor may enter a binding transaction without intending
or realising it is significant. This recommendation should therefore be rejected. In the
commercial domain, parties are generally well-advised and can always use nominal
consideration or execute a deed.
64
Although the Land Registration Act 2002 (UK) s 91 provides that a document in electronic form which
purports to effect certain dispositions relating to registered land for which a deed would otherwise be
required is to be regarded as a deed if it fulfils certain requirements.
65
This happens “as soon as there are acts or words sufficient to shew that it is intended by the party to be
executed as his deed”: Xenos v Wickham (1867) LR 2 HL 296, 312 (Blackburn J); reaffirmed in Alan
Estates Ltd v WG Stores Ltd [1982] Ch 511 (CA) 526.
15
2. THE PROTECTION OF INDUCED RELIANCE
The LRC also recommends that “a promise which the promisor knows, or reasonably should
know, will be relied on by the promisee, shall be enforceable if the promisee has altered his
position to his detriment in reliance on the promise”.66 Consideration would be unnecessary.
The assumption is that we should not let people down whom we have induced to rely on us,
even when we have not asked them to do so. Rather, we should be liable to such people in
contract. This raises three problems.
2.1 Incoherence of contractual liability for induced reliance
The logical response to a reliance-based obligation is to reimburse the claimant for the losses
she has suffered; this is backward-looking. It is inconsistent with the forward-looking
contract duty to perform the contract and the correlative remedy for breach – either to
perform the contract or, more commonly, to pay expectation damages.
Fuller and Perdue try to square the circle. They argue that expectation damages are
merely a proxy for the real concern to negate detrimental reliance.67 First, they explain that
commercial parties rely on contracts both positively (by expenditure which would be wasted
if the defendant’s promise is not performed), and negatively (by not entering alternative
contract with other parties which could generate similar profits labelled “lost
opportunities”). 68 Hence, reliance loss in the negative form of foregone opportunities is
practically indistinguishable from expectation loss. 69 However, this explanation cannot
account for the remedy of specific performance which is typically awarded in contracts for
unique goods where, by definition, equivalent alternatives are not available (ie there are no
readily available opportunities foregone). Moreover, Fuller and Perdue’s account cannot
explain why the defendant should ever be ordered to do something that, on reliance
reasoning, she had no duty to do.
66
Sixth Interim Report (n 4) [40], [50(8)].
67
Lon L Fuller and William R Perdue, “The Reliance Interest in Contract Damages: 1” (1936) 46 Yale LJ 52,
60, 70
68
Fuller and Perdue (n 67) 55, 74.
69
Fuller and Perdue (n 67) 62, 74.
16
Second, Fuller and Perdue argue that awarding the expectation measure overcomes the
difficulties of proving and quantifying reliance. 70 The problem here is that, even where
reliance can be proved and quantified, the claimant is shut out from it if it would exceed her
expectation and she would thereby circumvent a bad bargain.71 Thus, reliance is not of the
essence of contractual liability, but rather, is subordinated to the expectation. In practice, it
only comes into play when the expectation is speculative and the promisor cannot prove that
the promisee has made a bad bargain. It is merely a backstop operating on the assumption
that the promisee is likely, at least, to have broken even (and not made a loss).
2.2 The essence of liability is promise and not reliance
The LRC recommendation is limited to reliance on a promise. This is curious. If an aim of

contract law is really to protect foreseeably induced reliance, why should reliance induced by
other statements (notably ones of intention) not count? The reasons why the reliance must be
on a promise shows that it is promise and not reliance that lies at the root of this
recommendation.
First, it is clear that something more than foreseeable reliance is necessary to support a
reliance-based duty. Otherwise, the weather forecaster’s potential liability would be
boundless. Even the tortious duty not to make negligent misrepresentations only arises in
limited circumstances variously circumscribed by reference to “reasonableness”, “proximity”,
“special relationship”, or “assumption of responsibility”. Such concepts indicate that a
claimant must have adequate reasons to treat another’s statements as credible, trustworthy
and stable on the one hand. And, there must be a justification for imposing liability on the
defendant on the other. Using non-promissory language to express an intention implies that
the speaker is not bound to do what she said she would do; it implicitly preserves her ability
to change her mind, and calls into question the reasonableness of the representee’s reliance
and its worthiness for protection (absent “special relationship” and so on between the parties).
Second, if a duty is to be imposed by the law, it cannot be a duty to avoid making the
statement (unless it is false at the time), or a duty to act consistently with the statement (since
one is entitled to change one’s intention). Rather, it must be a duty to reimburse another for
70
Fuller and Perdue (n 67) 62.
71
C & P Haulage v Middleton [1983] 1 WLR 1461 (CA).
17
her reliance. Where the defendant has not made a promise, it seems unfair to hold her liable
for the consequences of her change of mind when the claimant’s loss is at least partly due to
her own choice to rely. To impose liability on the defendant is inconsistent with the harm
principle;72 it is more like a charitable duty to benefit another. As Fried asks: “why should my
liberty be constrained by the harm you would suffer from the disappointment of the
expectations you choose to entertain about my choices?”73 Your choice to rely is not my
problem.
Only a promise really signifies the promisor’s undertaking not to change his mind and,
hence, the worthiness of the promisee’s reliance for protection. It is telling that reliance
theories assume the necessity of a promise for the imposition of contractual obligations. 74
But then, if the defendant has made a promise to the claimant, then that (and not the
claimant’s reliance) is the source of the claimant’s enforceable right and we must return to
the serious intention basis and its weaknesses already discussed in section 1.
2.3 Failure to take due account of the promisor’s interest
The position of the promisor must also be considered. The promisee’s reliance on the
promise is a weaker justification to bind the promisor to her promise than where the promisor
has requested the promisee to rely as the price for her own promise. The LRC’s
recommendation to enforce foreseeable reliance weighs the balance too heavily against the
promisor. It predates Central London Property Trust Ltd v High Trees House Ltd75 and the
subsequent development of the doctrine of promissory estoppel.76 By virtue of it, English law
gives force to a promise by reason of the claimant’s reliance on it. But it does so in a far more
limited way than that recommended by the LRC—one that achieves a better balance between
the equities of the parties.
72
Stephen A Smith, Contract Theory (Clarendon Press, 2004) 85–87.
73
Fried (n 38) 10.
74
Indeed, reliance theorists assume this; see Fuller and Perdue (n 67); Atiyah’s work refers throughout to
promisors and promisees; and see Neil MacCormick, “Voluntary Obligations and Normative Powers: Part
I” (1972) 46 Proceedings of the Aristotelian Society Supplementary Volumes 59. {AQ: “Aristotelian
Society Proceedings” – shall we just keep it in full?}
75
[1956] 1 All ER 256 (KB).
76
Hugh G Beale, Chitty on Contracts (32nd ed, Sweet and Maxwell 2015) [4-086]–[4-107].
18
Accordingly, even if the promisee’s reliance on the promisor’s promise is foreseeable,
the reneging promisor can still escape liability if it would not be inequitable to do so, or if she
can 77 give the promisee adequate notice of her intention to renege (since the effect of
promissory estoppel is suspensory and not extinctive). Moreover, the remedy is not
expectation but only “as justice requires” 78 —in practice, this means reliance but with an
expectation ceiling.79 In Collier v P&MJ Wright (Holdings) Ltd80 Arden LJ sought to realise
the LRC recommendation by effectively eliminating these three limitations. But, the
judgment has been subject to trenchant criticisms81 and has yet to be followed or applied.
The higher threshold of the orthodox promissory estoppel doctrine82 should be preferred over
the LRC recommendation.
3. THE ENFORCEMENT OF SERIOUSLY INTENDED EXCHANGES
The enforceability of seriously intended exchanges has not been questioned, and was not
questioned by the LRC. There are good reasons for this, which I will briefly discuss before
addressing the LRC’s criticisms of workings of the doctrine.
77
He may not be able to because the claimant cannot resume his original position.
78
Waltons Stores (Interstate) v Maher (1988) 164 CLR 387 (HCA) stresses that the aim is not to enforce the
promise, but, rather, to avoid the detriment occasioned by the promisee’s reliance on the promise, although
sometimes this will result in the full enforcement of the promise as in Walton Stores itself.
79
Andrew Robertson, “Reliance and Expectation in the Estoppel Remedies” (1998) 18 LS 360, argues that
the expectation was awarded in Walton Stores v Maher because that is the only way of fully protecting the
promisee’s reliance interest (which includes the loss of opportunity to make other contracts) where the
reliance comprises demolishing one’s own building and erecting another to the promisor’s specifications.
80
[2007] EWCA Civ 1329; [2008] 1 WLR 643 (CA), holding that a claimant’s “reliance” can be satisfied by
making part-payment, that reliance makes it inequitable for the defendant to resile from his promise, and
the effect is to extinguish the defendant’s original rights. See further below at 3.2.3.2.
81
See eg Alexander Trukhtanov, “Foakes v Beer: Reform at Common Law at the Expense of Equity” (2008)
124 LQR 364; Luke Pearce, “Foakes v Beer and Promissory Estoppel: A Step Too Far” (2008) 19 King’s
LJ 630; David Capper, “The Extinctive Effect of Promissory Estoppel” (2008) 37 CLWR 105. And see
below 3.2.3.2.
82
Although there is room to expand the operation of promissory estoppel from a shield to a sword (ie from
relieving promises to adding promises) so long as the remedy is distinguishable from that purchased by the
giving of consideration.
19
3.1 Justifications for the consideration of doctrine
I have written elsewhere in defence of consideration.83 I emphasised a neglected perspective

in the debate on consideration, namely, that of the state, of which law is an emanation. To
succeed in enforcing a promise, parties need the support of the law. 84 The question can be
asked again: why should the state subsidise such private arrangements by empowering
individuals to coerce others to act for their benefit?
3.1.1 Respectful dealing in the market domain
While it is relatively easy for people to transact (and so co-operate and co-ordinate) with
those they trust and against whom they can exercise non-legal sanctions in the private
domain, it is much more difficult to transact with strangers where trust and sanctions are
more doubtful or absent. The state’s interest in enhancing the autonomy and welfare of its
citizens is furthered by increasing their ability to co-operate, co-ordinate and otherwise create
their own arrangements with people beyond their private circle. The state fills the gap in trust
and sanctions by being prepared to enforce promises in this domain.85 This allows individuals
to project their intentions into the future and plan actions that require concrete pre-
commitments. It enables self-interested relations that stand apart from status, custom, habits,
and other thicker, more contextual forms of sharing.86 However, to justify state enforcement
of promises in the market domain is not to commit to it in an unlimited way. The state must
set out the acceptable terms of engagement between the parties.
Here, we can immediately refer to vitiating factors such as duress, misrepresentation,

and undue influence as impermissible ways of deriving enforceable expectations. But even
beyond these, the idea that comes to the fore is Kant’s insistence that persons are ends in
themselves with an absolute dignity that must always be respected. This has become a core
ideal of modern humanism and political liberalism and the foundation of all other moral
83
Mindy Chen-Wishart, “In Defence of Consideration” (2013) 13 OUCLJ 209.
84
See text corresponding to n 37-42.
85
Joseph Raz, “Promises in Morality and Law” (1982) 95 Harv LR 916, 934.
86
Contract therefore presents a much sparer and more formal conception of community than is common to
many promises in the private domain, prompting Dori Kimel, From Promise to Contract: Towards a
Liberal Theory of Contract (Hart Publishing Limited 2003) to draw the distinction between “promise” and
“contract”, and Daniel Markovits, “Contract and Collaboration” (2004) 113 Yale LJ 1417 to do so between
“co-operation” and mere “collaboration”.
20
duties and obligations. One formulation of the Categorical Imperative—the supreme
principle of morality—states: “Act in such a way that you treat humanity, whether in your
own person or the person of any other, never simply as a means but always at the same time
as an end”.87 It is not wrong to treat others as means to advance our ends; what we must not
do is to treat persons merely as if their only value is derived from their usefulness to us. We
must always treat them at the same time as ends; to consider their interests and help them to
promote, protect and pursue their ends. A concrete expression of this attitude of mutual
respect in contracting is the requirement of consideration. Each party treats the other, not
only as a means of enhancing her own self-interest, but also as an end whom she
simultaneously serves.
Moreover, reciprocity is a generalised moral norm, a deep intuition, the foundation of

human interactions, and one of the “principal components” of a universal moral code. 88
Evolutionary biologists, social biologists, evolutionary psychologists, and Darwinian
anthropologists agree that “humans have developed an innate sense of fairness” expressed by
the internalised norm of reciprocity, 89 both positive (people help those who have helped
them) and negative (people take revenge taken on those who have injured them). 90 Even
Fried concedes that contract law’s central concern “is the situation where we facilitate each
other’s projects, where the gain is reciprocal”.91 Conversely, lack of reciprocity (unless it is
explicable by altruism, generosity or beneficence) generates tensions that threaten social
stability, a core concern of state action. Given power disparities, natural egoistic motivations
will seek benefits without returning them. The reciprocity norm facilitates a pattern of
interaction that inhibits exploitative relations and resulting social instability. 92 Thus, explicit
reciprocity describes the basic structure of what counts as just and prescribes the basic rule of
engagement that justifies state support between parties in the market domain where trust and
social sanctions cannot be assumed.
87
Immanuel Kant, Ground Work of the Metaphysics of Morals, (H J Paton tr, Harper 1991) 427–430.
88
Alvin W Gouldner, “The Norm of Reciprocity: A Preliminary Statement” (1960) 25 Am Sociol Rev 161.
89
See eg Vincy Fon and Francesco Parisi, “Revenge and Retaliation” in Francesco Parisi and Vernon L
Smith (eds), The Law and Economics of Irrational Behavior (Stanford University Press 2005) 141, 143;
Robert A Prentice, “Law & Gratuitous Promises” (2007) U Ill L Rev 881.
90
Ernst Fehr and Simon Gächter, “Fairness and Retaliation: The Economics of Reciprocity” (2000) 14 J
Econ Perspect 159.
91
Fried (n 38) 13.
92
Gouldner (n 88) 174.
21
The justice of exchange is embedded in other private law rules. Less than full
expectation remedies are available via a deed or promissory estoppel where consideration
may be absent. A third party who acquires contested property is protected only if she is a
bone fide purchaser for value, rather than a donee.93 A causative mistake is enough to trigger
the restitution of a non-contractual enrichment, but much higher thresholds must be crossed
for the return of (or to set aside) reciprocated (contractual) transfers.94 The transactions of a
bankrupt can be set aside if it is not part of an exchange.95 Restitution for total failure of
consideration96 allows a transferor to escape a bad bargain because the transferee should not
get something for nothing. Lastly, where one party pays for or contributes to the purchase of
property in the name of another, the law presumes that the contributor did not intend a gift
and raises a resulting trust in her favour. 97 At the core of all these rules is the idea of
reciprocity, that one is presumed not to give away something for nothing. Dismantling the
requirement of consideration would grate against these rules and trigger potentially radical
but uncertain knock-on effects.
3.1.2 Justification of expectation damages
Loss of expectation is among the least serious in the scale of harms.98 Even if the promisor
should keep his promise as a matter of self-consistency, this does not explain why the
promisee should profit from it as a matter of justice and not, say, the state. English law
focuses on why a promisee should be entitled to enforce it, what she has done to earn it. It is
the reciprocity manifest in the consideration requirement that provides the best justification
for the claimant’s right to enforce the promise. Correlatively, the defendant should be liable
to perform her promise because she has received the consideration she asked of the claimant.
The doctrine of consideration looks at both sides and explains the expectation measure of
contractual remedies.
93
Miller v Race (1758) 1 Burr 452; 97 ER 398; Pilcher v Rawlins (1871–1872) LR 7 Ch App 259 (CA).
94
cf Kelly v Solari (1841) 9 M & W 54; 152 ER 24; Bell v Lever Brothers [1932] AC 161 (HL).
95
Insolvency Act 1986 (UK) s 238(4)(a).
96
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 (HL).
97
Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 (HL); Re Vandervell’s Trusts (No
2) [1974] Ch 269 (CA).
98
See Fuller and Perdue (n 67) 56–57; Eisenberg, “Donative Promises” (n 12) 3.
22
3.2 Criticisms of consideration
If exchanges should be enforced, then what is the LRC’s problem? Its criticisms99 boil down
to three strands. All can be met to a very significant degree without abandoning the
consideration doctrine.
3.2.1 Not requiring genuine bargains
The first charge is that the reciprocity entailed by consideration is fatally diluted since
consideration need not be adequate.100 The validity of even nominal consideration101 is said
to represent the triumph of form over substance and, indeed, effectively makes gratuitous
promises binding.
It is true that the reciprocity underlying the justifications of the consideration doctrine
advanced above is a juridical rather than an economic concept; its value is in “the eye of the
law”. As long as there is some possible value given or promised, the law is indifferent to any
apparent disparity in the values exchanged. Deference to freedom of contract and the
subjectivity of values demand such indifference, at least in the first instance. It is important
to recognise that the consideration doctrine does not shoulder the whole responsibility for
determining the enforceability of a promise. It operates at stage one to ensure compliance
with the basic rule of engagement (agreement and reciprocity). This yields a presumptively
enforceable agreement that is, nevertheless, defeasible at stage two by the recognised
vitiating factors (such as duress, undue influence and unconscionable bargain), the presence
of which depend, inter alia, directly or indirectly on the degree of imbalance in the proposed
exchange. 102 Contractual imbalance may also be “corrected” by contractual interpretation,
implied terms, and other common law doctrines103 or statutory instruments.104
99
100
See also Clare Dalton, “An Essay in the Deconstruction of Contract Doctrine” (1985) 94 Yale LJ 997,
1039–1065, 1066ff; Atiyah (n 2) 194.
101
Chappell & Co Ltd v Nestlé Co Ltd [1960] AC 87 (HL) 114.
102
See Chen-Wishart, “The Nature of Vitiating Factors in Contract Law” (n 17) 294.
103
Eg the penalty rule, restraint of trade, forfeitures, salvage, and rescission on terms.
104
Eg the Unfair Contract Terms Act 1977 (UK) or the Consumer Rights Act 2015 (UK).
23
A final observation should be offered on the usual case cited for this criticism. In
Chappell & Co Ltd v Nestlé Co Ltd, 105 the promisor stipulated three wrappers from its
chocolate bars in exchange for a gramophone record. Atiyah’s claim that the case instances
enforceability without consideration 106 takes a myopic view of the facts. The real and
substantive value of the wrappers emerges if we see it as residing in Nestlé’s overall
marketing strategy, rather in the wrappers themselves.
3.2.2 Inconsistent or backwards reasoning
The second criticism of the consideration doctrine is the looseness of the definitions of value
that qualify as valid consideration. This led Fried to dismiss the consideration doctrine as
“too internally inconsistent to offer an alternative at all” 107 to his promise principle.
Inconsistencies are generated by the different conceptions of “value” applied from time to
time by the courts, such as “benefit”, “detriment” and “request”; “legal” and “practical”
benefit; value in the eyes of the parties and in the “eye of the law”; tangible and intangible
consideration; nominal and illusory consideration. No definition seems immune from
incursions by an alternative definition, and those broad enough to encompass the
contradictions lack critical bite. This invites the further charge of backwards reasoning—that
courts manipulate these unstable conceptions of value to reach results considered desirable on
other grounds. 108 Thus, courts have extended the doctrine of consideration (sometimes
“inventing” it)109 to enforce a promise for policy reasons,110 or to protect a party’s reliance.111
Other times the reasoning is simply incoherent. The most notable example is that, while the
105
[1960] AC 87 (HL).
106
Atiyah (n 2) 179, 193.
107
Fried (n 38) 35.
108
Atiyah (n 2).
109
Treitel defines this as “treating some act or forbearance as consideration quite irrespective of the question
whether the parties have so regarded it”: G H Treitel, “Consideration: A Critical Analysis of Professor
Atiyah’s Fundamental Restatement” (1976) 50 ALJ 439, 440; see also New Zealand Shipping Co Ltd v AM
Satterthwaite Co Ltd (The Eurymedon) [1975] AC 154 (PC) 167 (Lord Wilberforce).
110
Eg Ward v Byham [1956] 2 All ER 318 (CA); Lancelot Shadwell v Cayley Shadwell [1860] 142 ER 62.
111
Eg Clarke v Earl of Dunraven (The Santanita) [1897] AC 59 (HL); Bainbridge v Firmstone (1838) 112 ER
1019; Blackpool and Fylde Aero Club v Blackpool BC [1990] 1 WLR 1195 (CA).
24
court has recognised “practical benefit” as good consideration for a promise to pay more,112 it
has refused to do the same for a promise to accept less than was previously due.113
One answer is that examples of the stretching of an existing rule to reach desirable
results are ubiquitous in law. Another is that some of the older “hard cases” can be explained
by the courts filling gaps in the law of tort 114 or unjust enrichment 115 that are now
unnecessary in the light of recent developments. These do not mean that the consideration
doctrine lacks substance or justification. For, there is an enormous difference between
exceptional deviations from the consideration requirement, and a free-for-all that would
ensue if consideration were abolished.
3.2.3 Failure to find consideration consistent with common sense and business expediency
The last problem arises from a too rigid conception of value in certain circumstances so that
judicial conclusions may fail to track common sense or business expediency. The LRC’s
solution is to abolish consideration in four such situations.116 But this is far too quick. The
rational response to a failure to recognise the quid pro quo (exchange) in line with common
sense and business expediency is to expand the scope of valuable consideration accordingly,
within the traditional framework. It is not to take a radical departure from hundreds of years
of legal development. This is to throw the baby out with the bathwater.
3.2.3.1 More for the same
The LRC’s third recommendation is that “an agreement in which one party makes a promise
in consideration of the other party doing or promising to do something which he is already
bound to do by law, or by a contract made either with the other party or with a third party,
shall be deemed to have been made for valuable consideration”.117 The controversy is located
112
Williams v Roffey Bros & Nicholls (Contractors) Ltd [1990] 2 WLR 1153 (CA).
113
Re Selectmove Ltd [1995] 1 WLR 474 (CA), affirming Foakes v Beer (1884) 9 App Cas 605 (HL).
114
Eg De la Bere v Pearson Ltd [1908] 1 KB 280 (CA).
115
Eg Upton-on-Severn RDC v Powell [1942] 1 All ER 220 (CA).
116
Sixth Interim Report (n 4) [29]–[35], [37].
117
Sixth Interim Report (n 4) [50(4)]; [36] adds “provided that in other respects such as legality and
compatibility with public policy it is free from objection”.
25
in one-sided contract variations where a party promises to pay more but the other merely
promises to perform her pre-existing contractual duty.
Williams v Roffey Bros & Nicholls (Contractors) Ltd 118 has gone some way in
implementing the LRC’s recommendation by recognising additional consideration in the
promisee’s repromise to perform where “the promisor obtains in practice a benefit, or
obviates a disbenefit”.119 The main problem is that the “practical benefit” of a repromise is
illusory.120 The promisor has the same right to performance and to sue for non-performance
as she had before promising to pay more. This has led detractors of consideration to conclude
that the Roffey case has abolished consideration for contract variations of the more for the
same variety. This need not be conceded. I have argued elsewhere that the solution is to
supplement the original bilateral contract with a collateral unilateral contract to pay more
only if the stipulated performance is rendered. 121 This is not inconsistent with the main
contract insofar as it merely adds to one party’s rights. 122 It accurately reflects the promisor’s
motivation (to get actual performance and not just the right to sue again, which she already
had). At the same time, it would protect the promisor if the promisee fails to complete the
stipulated performance, since the unilateral contract will then not eventuate and the original
contract retains full force. The extra sum promised will not be deducted from the promisor’s
damages as costs saved;123 the promisor will not end up worse off as a result of promising
more and still not getting performance. This is entirely consistent with the outcome of
Williams v Roffey (although not its reasoning). 124 It is also consistent with the LRC’s
reasoning that there is “no reason in general why A [the promisor], having got what he
118
[1991] 1 QB 1 (CA).
119
Williams v Roffey 16.
120
See Mindy Chen-Wishart, “Consideration, Practical Benefit and the Emperor’s New Clothes” in Jack
Beatson and Daniel Friedmann (eds), Good Faith and Fault in Contract Law (OUP 1995) 123.
121
See Mindy Chen-Wishart, “A Bird in the Hand: Consideration and One-Sided Contract Modifications” in
Andrew S Burrows and Edwin Peel (eds), Contract Formation and Parties (OUP 2010) 89.
122
Although a collateral contract can prevail over an inconsistent term in the main written contract; City and
Westminster Properties (1934) Ltd v Mudd [1959] Ch 129 (Ch); Brikom Investments Ltd v Carr [1979] QB
467 (CA); Harling v Eddy [1951] 2 KB 739 (CA); Mendelssohn v Normand [1970] 1 QB 177 (CA).
123
The cost saved deducted from the promisor’s expectation would then be the lower amount of the original
contract.
124
Chen-Wishart (n 120).
26
wanted, should be allowed to evade his promise”.125 The implication is that if the promisee
does not complete performance, the promisor should not have to pay the extra sum promised.
3.2.3.2 The same for less
The LRC’s fourth recommendation is that “an agreement to accept a lesser sum in discharge
of an enforceable obligation to pay a larger sum shall be deemed to have been made for
valuable consideration”.126
In the context of promises to accept less for the same performance, Re Selectmove127
has refused to recognise “practical benefit” as good consideration in deference to the House
of Lords decision in Foakes v Beer. 128 With this route closed, Arden LJ restated the
promissory estoppel doctrine in Collier v P&MJ Wright (Holdings) Ltd 129 to achieve “in
practical terms the recommendation of the Law Revision Committee”. Her Ladyship said
that where:
“(1) a debtor offers to pay part only of the amount he owes; (2) the creditor
voluntarily accepts that offer, and (3) in reliance on the creditor’s acceptance the
debtor pays that part of the amount he owes in full, the creditor will, by virtue of
the doctrine of promissory estoppel, be bound to accept that sum in full and final
satisfaction of the whole debt. For him to resile will of itself be inequitable. In
addition, in these circumstances, promissory estoppel has the effect of
extinguishing the creditor’s right to the balance of the debt.”130
This distorts the promissory estoppel doctrine beyond recognition. First, treating part
payment as “reliance” does violence to the concept of “reliance”. As the lower court found131
and Arden LJ concedes, the promisee’s position after part-payment was not “in any material
125
Sixth Interim Report (n 4) [36] (emphasis added).
126
Sixth Interim Report (n 4) [50(3)], [33]–[35].
127
[1995] 1 WLR 474 (CA).
128
(1884) 9 App Cas 605 (HL).
129
[2007] EWCA Civ 1329; [2008] 1 WLR 643 [42] (Collier).
130
Collier [42].
131
Collier [19]. Neither Collier’s continuing to make the payments that he was already making, nor his “wild
speculation” that he could otherwise have pursued the other creditors amounted “to anything rendering it
unconscionable on the part of the creditor now to pursue Mr Collier for the full amount of the debt”.
27
respect different from that immediately before the agreement was made”. 132 Second, this
phantom “reliance” makes it automatically inequitable for the promisor to resile. Third, it
automatically extinguishes the promisor’s original rights. Arden LJ appeals to D&C Builders
Ltd v Rees133 yet all three judges there applied Foakes v Beer rather than promissory estoppel.
Moreover, actual part-payment in Rees did not extinguish the original debt; the pressure that
Mrs Rees brought to bear on the builders to induce their agreement to accept part payment
meant that it would not have been inequitable for them to go back on their promise. In
Collier v P&MJ Wright (Holdings) Ltd, Longmore LJ gave less than enthusiastic support for
Arden LJ’s position. His Lordship said that if this position were sustained, courts should be
slow to find a promise to forgo rights in the first place.134
The preferable solution is to deploy the same collateral unilateral device that I have
already proposed to deal with promises of “more for the same”. Accordingly, the promisor
makes a unilateral offer to discharge the whole debt only if the promisee makes the stipulated
part-performance. 135 The “practical benefit” to the promisor is in actually receiving part-
payment over the mere right to sue; “a bird in the hand is worth two in the bush”.136 Again,
this accurately reflects the promisor’s motivation in promising to accept part payment.
Again, it would protect the promisor’s position; if the promisee fails to make the part-
payment, the new promise is not binding and the full amount remains due. This is entirely
consistent with the result if not the reasoning of Arden LJ’s position. It is also consistent with
the LRC’s recommendation. For, despite its declaration that it is “more logical and more
convenient to recommend that the greater obligation can be discharged either by a promise to
pay a lesser sum or by actual payment of it”,137 the LRC adds that “if the new agreement is
not performed then the original obligation shall revive”.138 Applying the collateral unilateral
approach suggested above to enforce both (i) promises to pay more and (ii) promises to
accept less would eliminate the incoherence of a divergent approach in the current law. It
would also avoid the distortions that Collier v P&MJ Wright (Holdings) Ltd brings to the
132
Collier [36].
133
[1966] QB 617 (CA).
134
Collier v P&MJ Wright (Holdings) Ltd [2007] EWCA Civ 1329; [2008] 1 WLR 643 [47]–[48].
135
Chen-Wishart (n 121).
136
See Foakes v Beer (1884) 9 App Cas 605 (HL) 622.
137
138
28
doctrine of promissory estoppel, and the assault that the LRC’s recommendation would
wrought on the consideration doctrine.
3.2.3.3 Past consideration
The fact that the consideration provided by the promisee must be “in return for” the promise,
implies that her performance must be linked not only causally but also temporally to the
promise. Hence past consideration is not good consideration. The LRC advocates the
abolition of this rule by recommending that “an agreement shall be enforceable … if it be
supported by valuable consideration past or present”.139 The LRC explains that:
“The inconvenience of this [past consideration] rule is frequently evaded by
means of the fiction that the promise made subsequent to the consideration
merely fixes the amount due under an earlier promise deemed to exist
contemporaneously with the consideration … The fact that the promisor has
already received consideration for his promise before he makes it, so far from
enabling him to break his promise seems to us to form an additional reason for
making him keep it.” 140
The first response is that what the LRC calls a “fiction” is simply the construction of the
parties’ acts and promises. It is perfectly acceptable for parties expressly to agree that the
machinery for resolving the price to be paid for the performance shall reside with one
party.141 If no promise is later made, the recipient of the performance may still be required to
pay a reasonable price on the basis that this was impliedly agreed, 142 or on a non-contractual
basis (a quantum meruit or quantum valebat) because otherwise she would be unjustly
enriched by receiving a benefit that she requested and understood not to have been rendered
gratuitously. 143 If a promise is later made, there is no difficulty in finding that the
performance and the later promise are sufficiently linked for the former to constitute
consideration for the latter.
139
140
141
Beale, Chitty (n 76) [2-132]; see also Sale of Goods Act 1979 (UK) s 8(1).
142
Sale of Goods Act 1979 (UK) s 8(2); Supply of Goods and Services Act 1982 (UK) s 15(1).
143
Beale, Chitty (n 76) [20-071].
29
Now if the parties can expressly agree for one of them to fix the price for the other’s
performance after that performance, then the court can find that they have done so
impliedly.144 In such cases, the Privy Council requires that:
“The act must have been done at the promisors’ request; the parties must have
understood that the act was to be remunerated either by a payment or the
conferment of some other benefit; and payment, or the conferment of a benefit,
must have been legally enforceable had it been promised in advance.”145
The LRC’s recommendation is not so constrained. Insofar as it severs the temporal

connection between one party’s performance and the other’s later promise to pay, the
recommendation should be rejected. As the Editorial Committee of the Modern Law Review
recognised: “[p]ast consideration … is a contradiction in terms, for it is not consideration at
all”.146 To adopt this recommendation is tantamount to the abolition of consideration, which
the LRC has expressly rejected.147
3.2.3.4 Firm offers
A firm offer (a promise to keep a particular offer open for a fixed period) can be revoked
before the expiry of the period unless there is consideration for it. The LRC recommends that
“an agreement to keep an offer open for a definite period of time or until the occurrence of
some specified event shall not be unenforceable by reason of the absence of
consideration”. 148 The LRC’s first reason 149 is that the unenforceability of firm offers
contravenes business practice. However, doubt was cast on this by the Law Commission
when it reported on firm offers;150 it observed that research into business practices in the
construction industry in the US (albeit in 1952) 151 showed that promisees were neither
144
Lampleigh v Brathwait (1615) Hob 105, 106; 80 ER 255, 255; Eastwood v Kenyon (1840) 11 Ad & El 438,
451–52; 113 ER 482, 487; Re Casey’s Patents [1892] 1 Ch 104 (CA) 1116.
145
Pao On v Lau Yiu Long [1980] AC 614 (PC) 630.
146
The Editorial Committee of the Modern Law Review, “The Law Revision Committee’s Sixth Interim
Report” [1937] 1 MLR 97, 101.
147
148
149
150
Sixth Interim Report (n 4) [38]; see also Law Commission, Working Paper 60: Firm Offers (1975) [20].
151
Franklin M Schultz, “The Firm Offer Puzzle: A Study of Business Practice in the Construction Industry”
(1952) 19 U Chi L Rev 237.
30
surprised nor aggrieved by the revocability of firm offers. Second, the LRC says that “if the
offeror wants a consideration for keeping it open, he can stipulate for it … Merely because he
does not so stipulate, he ought not to be allowed to revoke his offer with impunity”.152 But, it
could equally be said that the offeree could have given consideration to enforce the firm offer
and that, failing that, she should not be allowed to enforce it. This leaves the third and most
persuasive reason put forward by the LRC for reform—the protection of the offeree’s
reliance on the offer.153 The problem is that the LRC does not make reliance a requirement of
enforcement in its recommendation.154
An analysis is proposed here that responds to the justified concern about protecting the
promisee’s reliance while remaining within the orthodox consideration analysis. The model is
provided by cases where courts have found a preliminary (and usually unilateral) contract
aimed at protecting reliance or the integrity of the negotiating process. For example, where
parties have not yet concluded the main contract the court may find that they have made a
preliminary or collateral contract to pay a reasonable sum for preliminary work or
performance of the main agreement at the other’s request, 155 or to sell to the highest bidder
where the auction is advertised to be “without reserve”156 (the same applying to tenders).157
Consideration is provided by the bidder or tenderer submitting a bid that satisfies the
objectively definable criterion (such as the lowest or highest price) specified by the other
party.
The same analysis was deployed in Blackpool and Fylde Aero Club Ltd v Blackpool
BC158 where an invitation to tender was sent by a local authority to seven selected parties
stating that tenders submitted after a specified deadline would not be considered. It was held
that the local authority was contractually bound to consider (though not to accept) the
claimant’s tender. Consideration was provided when the claimant sent a conforming tender
152
153
154
155
Beale, Chitty (n 76) [2-208]–[2-210], [2-212], [2-126].
156
157
Harvela Investments Ltd v Royal Trust Co of Canada (CI) Ltd [1986] AC 207 (HL).
158
[1990] 1 WLR 1195 (CA). No decision was reached on the quantum of damages.
31
by the specified time. Again, a “lock out” agreement 159 was recognised in principle in
Walford v Miles 160 where the promisee’s consideration was the provision of a letter of
comfort from the promisee’s bank sought by the promisor. A “lock out” agreement protects
the promisee’s expenditure of money and time to “assess what he is prepared to offer for its
purchase or whether he wishes to make any offer at all”, without taking the risk that the
promisor “may have already disposed of it or, alternatively, may be so advanced in
negotiations with a third party as to be unwilling or for all practical purposes unable, to
negotiate with” the promisee.161
By analogy, an enforceable firm offer would protect the promisee from the risk that,
having spent time and perhaps money to determine whether to accept the substantive offer or
otherwise relied on the availability of the offer, the promisor might revoke the offer within
the stipulated time period. But what is the consideration? There is no problem if the promisee
has paid a sum of money, or given some promise (such as to apply for a loan to finance the
main contract) or completed some stipulated action (as in Walford itself). But, on the current
law, the promisee’s reliance on the promise to her detriment does not, by itself, amount to
consideration, unless the promisor requested that detriment, expressly or impliedly.162
The answer, then, lies in that proviso. Accordingly, a firm offer would be binding if a
court finds that (i) the promisee has relied on the promise and (ii) that reliance was impliedly
requested by the promisor. It is entirely realistic to say that a promisor makes a firm offer for
a stipulated period to increase its chances of concluding the main contract by encouraging the
promisee to invest resources in assessing the offer, or by putting itself in the position to
accept the offer. The promisee need not do anything, but if she has acted in reliance on the
promise such that her position may, or would be prejudiced if the promisor revokes, then the
promisor cannot revoke. This is either because the promisee has given consideration by
159
160
161
Walford v Miles [1992] 2 AC 128 (HL) 139.
162
Eg Alliance Bank Ltd v Broom (1864) 2 Dr & Sm 289; 62 ER 631 where forbearance to sue was found to
have been impliedly requested and hence good consideration.
32
completing the impliedly requested acts, or because her commencement of performance bars
the promisor from revoking its unilateral offer.163
CONCLUSION
Serious intention to be bound is necessary for contractual liability, but it is not sufficient. A
party’s reliance cannot justify the imposition of contractual liability on the relied-upon party
unless the reliance is on the latter’s promise and is expressly or impliedly requested by the
latter as the price of the promise. The basis of contractual liability at common law is a
voluntary exchange as the mark of mutually respectful dealing that tracks the reciprocity
instinct, keeps the law out of the domain of gratuitous promises, and preserves scope for
change of mind as constitutive of valuable autonomy.
The problems identified by the LRC (ie not enforcing all seriously intended promises,
not protecting all foreseeable reliance) are either not problems; or are already, and better,
dealt with by alternative, carefully circumscribed doctrines (ie the deed and promissory
estoppel); or can be largely resolved within the orthodox framework by realigning the scope
of valuable consideration with reality (ie one-sided contract variations and firm offers).
There is no need and no justification for dispensing with consideration or jumping to a
different basis of contractual liability. The LRC’s recommendations promise no greener
pastures. We are better off tending and refining the patch we have tilled for hundreds of
years. Evolution and not revolution has always been the common law way.
163
Errington v Errington [1952] 1 KB 290, Soulsbury v Soulsbury [2007] EWCA Civ 969; [2008] 2 WLR
874 [50], Daulia Ltd v Four Millbank Nominees Ltd [1978] Ch 231.
33
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1. THE ENFORCEMENT OF SERIOUSLY INTENDED PROMISES

Further, Fuller’s thesis is based on a flawed understanding of the historical evolution of

1.2 Vitiation factors are not just evidence of serious intention

1.5 Serious promises should not be enforceable per se

1.5.1 Making space for change of mind

1.5.2 Keeping out of private domain

In this context, the enforceability of gratuitous promises by an outside force could

Moreover, enforcement against an unwilling gratuitous promisor will normally

In addition, if gratuitous promises are to be enforced, to what extent should they be

It could be countered that the consideration requirement is unnecessary since the

1.6.1 The function of the stipulated writing is unclear

The LRC said:

1.6.2 Writing is insufficient to perform the cautionary function

2.1 Incoherence of contractual liability for induced reliance

2.2 The essence of liability is promise and not reliance

The LRC recommendation is limited to reliance on a promise. This is curious. If an aim of

2.3 Failure to take due account of the promisor’s interest

3. THE ENFORCEMENT OF SERIOUSLY INTENDED EXCHANGES

I have written elsewhere in defence of consideration.83 I emphasised a neglected perspective

3.1.1 Respectful dealing in the market domain

Here, we can immediately refer to vitiating factors such as duress, misrepresentation,

Moreover, reciprocity is a generalised moral norm, a deep intuition, the foundation of

3.1.2 Justification of expectation damages

3.2.1 Not requiring genuine bargains

3.2.2 Inconsistent or backwards reasoning

3.2.3.1 More for the same

3.2.3.2 The same for less

3.2.3.3 Past consideration

The LRC’s recommendation is not so constrained. Insofar as it severs the temporal

3.2.3.4 Firm offers

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