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Past Consideration And Its Exceptions.

INTRODUCTION

Assuming you helped Emeka to gain admission into a prestigious University (let us say Ahmadu Bello University, Zaria), and after three weeks, he remembered what you did for him and promises you #10, 000 but unfortunately he failed to pay you the money.

Would you legally be able to enforce the payment of the #10, 000 he promised? In other words, is the promise he made legally binding?

To fully appreciate and understand the questions, let us delve into two concepts in the law of contract “Consideration ” and “Past Consideration”.

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In the law of contract, consideration is a fundamental element that makes a contract legally binding. It essentially refers to the value exchanged between the parties involved. Consider it the “something for something” (quid pro quo in Latin) principle: each party gives up something of value in exchange for something else of value from the other party.

 

Principle of Past Consideration.

Past consideration, in legal terms, refers to an act or promise that was already done or made before a promise to compensate it is given. Put simply, it is something you did for someone in the past, for which they are promising to pay you back now.

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However, here is the crucial point: past consideration is generally not considered valid consideration in most legal systems. This means it cannot be used as the basis for enforcing a contract or promise.

The lack of consensus ad idem at the time of the first consideration contributes to the unenforceability of past consideration. It is a trite law that there must be a “meeting of minds” of the offeror and the offeree.
Regarding the scenario earlier mentioned, I hate to be a bearer of bad news but I have to break it to you that you must say a very goodbye to that #10, 000. Your consideration is past and as such, not a valid consideration and unenforceable.

You may start asking, “Why now? Does that mean I did it for free? Is this playing? What type of play is this?”

Here is why:

  • Lack of inducement: Since the action or promise already happened before the offer of compensation, it did not induce the promisor to make the promise. Therefore, it lacks the element of exchange that forms the foundation of contracts.
  • Unfairness: Allowing past considerations to be enforceable could lead to unfair situations. Imagine someone doing you a favour years ago, and then suddenly demanding an unreasonable reward. You might feel obligated due to the past service, even if it was not agreed upon at the time.
    Imagine an old woman approaching you to pay her for bathing you when you were an infant.

Three things are certain; Death, Tax, and Exceptions in law. Past consideration has its accruing exceptions in the law. While past consideration generally is not valid in the law of contract, there are situations where it can be recognized as sufficient for an enforceable promise.

All hope is not lost, you may get paid that #10, 000 if you satisfy any of the exceptions.
Let us delve into the main exceptions and explore some supporting cases.

1. Requested Past Performance:
This exception applies when the last act was done at the promisor’s request, and it would have been a valid consideration if promised upfront.

In Lampleigh v Braithwaite (1615), a son undertook a dangerous journey as requested by his father, who later promised to pay him. The past act (taking the journey) was requested and would have been a valid consideration if promised beforehand, making the father’s later promise enforceable. The court held that the father’s promise was enforceable and legally binding.

2. Part Payment of Debt:
A partial payment, even if small, can revive a previously unenforceable debt due to the statute of limitations. This part payment constitutes a new consideration, making the entire debt (including the past portion) enforceable again.

In Pinnel’s Case (1600), a debtor paid part of a debt before the due date. While the full debt was past consideration and unenforceable, the partial payment revived the entire debt, allowing the creditor to collect the remaining amount.

3. Moral Obligation:
In rare cases, a past act might create a strong moral obligation on the part of the promisor, making their subsequent promise to compensate it enforceable.

This exception is controversial and requires a significant moral duty (e.g., saving someone’s life).

While this exception lacks a clear-cut precedent, there is ongoing debate regarding its application in situations like rescuing someone from danger.

4. Promissory Estoppel:
This equitable doctrine applies when a promisor induces the promisee to rely on their promise to their detriment, even if the promise is based on past consideration. The promisor is then estopped from denying the enforceability of the promise to avoid injustice i.e. the law stops the promisor from going back on his word which the promisee acted on.

In Central London Property Trust Ltd v High Trees House Ltd (1945), popularly called the High Trees Case, the landlord promised to reduce rent due to wartime constraints. Through past consideration, the tenant relied on this promise and changed their business plans, creating an estoppel that made the rent reduction enforceable.

The court held that the landlord’s promise is enforceable and the landlord can not go back on his word.

 

CONCLUSION
It is germane to know that there are some requirements before one can successfully use promissory estoppel as a shield in any contractual circumstance. There must be an unequivocal promise, the promisee must have relied on the promise and suffered detriment and it must be unjust or inequitable to deny the enforcement of such promise.

While past consideration is generally not a valid basis for contracts, exceptions exist when specific criteria are met, ensuring some flexibility and fairness in the law of contract.
Going back to the scenario earlier mentioned, Emeka’s promise can be binding and enforceable if it falls under any of the exceptions listed above.

 

About the Author

Bwala Stephen Amos is a year 3 law student at the prestigious Ahmadu Bello University, Zaria. He is an enthusiastic reader, researcher, and legal writer. His interest in the legal sphere includes (but is not limited to), Corporate law, Commercial law, Arbitration, and Tech law.

He can be contacted via the following media: Linkedin profile: https://www.linkedin.com/in/amos-stephen-bwala-2160061b8

Phone number: 07066334459

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