Consideration in Contract Formation
Consideration in contract formation
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Consideration is essential to the formation of any contract made without deed. It distinguishes a bargain or contract from a gift. Lush J in the case of Currie v Misa (1875) referred consideration consist of a benefit to the promisor or a detriment to the promisee as:
“Some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by other”.
Lord Dunedin in Dunlop v Selfridge (1915) defined consideration as:
“An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable”.
However, it is much wider in Section 26 of the Contracts Act 1950; the general rule of an agreement without consideration is void and is defined in Section 2(d) of the Contracts act 1950 as follows:
“When at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise”.
Guthrie Waugh Bhd V Malaippan Muthucumaru (1972)
The court held that as far as the defendant was concerned, the deed was executed by him neither for any past consideration, nor in respect of forbearance to sue him for the supplies made to the estates, nor in consideration of any promise to supply him goods on credit in future. Therefore, there was no cause of action as the claim based on deed agreement for which there was no consideration and the defendant could be said to have undertaken was a moral obligation. (Lee Mei Pheng, 2005)
There are few elements governing the law of consideration in Malaysian law: 1. Consideration Need Not Be Adequate , But Must Be Sufficient
There is no requirement that the consideration must be at market value, as
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Top of Form
Consideration is essential to the formation of any contract made without deed. It distinguishes a bargain or contract from a gift. Lush J in the case of Currie v Misa (1875) referred consideration consist of a benefit to the promisor or a detriment to the promisee as:
“Some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by other”.
Lord Dunedin in Dunlop v Selfridge (1915) defined consideration as:
“An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable”.
However, it is much wider in Section 26 of the Contracts Act 1950; the general rule of an agreement without consideration is void and is defined in Section 2(d) of the Contracts act 1950 as follows:
“When at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise”.
Guthrie Waugh Bhd V Malaippan Muthucumaru (1972)
The court held that as far as the defendant was concerned, the deed was executed by him neither for any past consideration, nor in respect of forbearance to sue him for the supplies made to the estates, nor in consideration of any promise to supply him goods on credit in future. Therefore, there was no cause of action as the claim based on deed agreement for which there was no consideration and the defendant could be said to have undertaken was a moral obligation. (Lee Mei Pheng, 2005)
There are few elements governing the law of consideration in Malaysian law: 1. Consideration Need Not Be Adequate , But Must Be Sufficient
There is no requirement that the consideration must be at market value, as