Exceptions to Past Consideration Rule

Exceptions to past consideration rule: The rule of past consideration is a very important rule in the law of contract because consideration is a very essential part of a valid contract. In other words, where there is no consideration, then a contact cannot be said to be binding or valid according to the law. A consideration is said to be “past” when is consist of an act done prior to (or before) a promise which is sought to be enforced and for which the prior act is taken to be the consideration.

Simply put, an act done by one person will not constitute consideration for a promise made by another person, if such promise is made after the act has been completed. It makes no difference that the promise in question is expressly made in return of the completed act. The promisor is therefore not bound.

exceptions to past consideration rule

exceptions to past consideration rule

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An instance of a case of past consideration is the case of Roscorla v Thomas. The plaintiff that is was a sound house, free from vise. The house was in fact a vicious horse. The plaintiff sued the defendant for breech of the promise. It was held that the action will Fail.

If the promise had been given at the time of sale, it would have been supported by consideration, but since it was given after the sale had taken place, the consideration which the plaintiff furnished was past and had furnished no new consideration for the defendant’s promise.

Also, in Re McArdle, [1951] 1 Ch 669, a number of children, by their father’s will, were entitled to a house after their mother’s death. During their mother’s lifetime, one of the children and his wife lived with their mother in the house. The wife at her own expense made various improvements to the house. Later, all the children signed a document addressed to her saying,

“to Mrs. Marjorie McArdle, Gravel Hill, Wimborne. In consideration of your carrying out certain alteration and improvements to the property, we the beneficiaries under the will of William Edward McArdle hereby agree that the executors shall repay to you from the said on such improvements”.

The court held that since the improvement had been carried out before the document was executed, the consideration for the agreement was a past consideration and accordingly the agreement for the repayment of the sum of €488 was a nudum pactum.

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Exceptions to past consideration

Beleare the exceptions or instances where rule of past consideration will not apply:

1. Where services are rendered at the request, express or implied, of a person who subsequently promises to pay for them; and in circumstances in which it can reasonably be assumed that the parties intended that the service would ultimately be paid for.

In such a case, the presumption is that the request contains an implied promise to pay for the service what it is worth, and that the subsequent express promise to pay is merely an assessment of the value of service. This exception was illustrated in the case of Lampleigh v Braithwaite [1615] Hob 105.

In this case, the defendant Braithwaite, had killed Patrick Mahume. He then requested the plaintiff to do all he could do to obtain a royal pardon for him from the king.

To this end, the plaintiff exerted himself and undertook a lot of journey to and from London, incurring certain expenses. He succeeded in obtaining the pardon and the defendant then promised to pay him the sum of £100 for his trouble and expenses.

It was held that the plaintiff was entitled to the sum as his service were procured at the defendant’s previous request and in circumstances in which it was reasonable to expect that payment would be made for the services. Thus, there was consideration for the defendant’s promise.

2. The second exception to past consideration is contained in the Bill of Exchange Act 1882, which provides that valuable consideration for a bill of exchange (for example a cheque) may be constituted by, “an antecedent debt or liability”. This means that a cheque given in payment of a previous debt is given for valuable consideration. Accordingly, the payee can enforce it in a court of law.

3. The third exception to past consideration is provided for under section 37 Limitation Act Cap 522, LFN 1990 (Nigeria). This section provides that where a debt is statute-barred, but the debtor thereafter acknowledges the debt or promise to pay it, the acknowledgment or promise is binding. An acknowledgement or promise to pay debt after a limitation period must be very clear in order to result in an enforceable promise to pay the debt.

This is because, as has been held in Shell Petroleum Development Co Ltd v Ejebu [2011] 17 NWLR (PT 1276) 324, the acknowledgement of or promise to pay the debt does not extend the period of limitation. It merely establishes a fresh relationship.

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So far I have discussed the 3 major exceptions to past consideration rule with legal authorities. I hope this will help lawyers and law students all over the world in handing contacts where there is the issue of whether a consideration is past or not. Nevertheless, if you still have any question or contribution to the exceptions mentioned above, do not hesitate to let me know using the comment section.

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