notes law

Topics: Contract, Contract law, Consideration Pages: 31 (10351 words) Published: April 20, 2015



Section 2 (d)

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;

In short, consideration means that a promisee must give something in return for the promise. It may consist of a conduct, or a price to be paid in return for the promise made by, or the conduct of, the promisor. The conduct need not necessarily to be of a positive nature. In fact it can also be in the form of an abstinence from doing something.

Example: Aini sold his car to Badrul for RM30,000. The consideration in this case comes in the form of the RM30,000 paid to Aini. The consideration is in monetary value.

South East Asia Insurance Bhd v Nasir Ibrahim [1992] 2 MLJ 355, SC The Supreme Court in this case held that the essence of consideration is that the promisee has taken upon him some kind of burden or detriment.

Curie v Misa (1875) LR 10 Exch 153.
Consideration under common law has been defined to ‘consist in some right, interest, profit or benefit, accruing to one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other’

Dunlop Pneumatic Tyre Co Ltd v Selfridge and Co Ltd [1915] AC 847, 57, 89. It was stated in this case that 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.

In a contract, both parties must provide consideration. The promisor by promising to perform the obligation contained in his proposal. While the promisee by promising to do or actually doing what is requested in the proposal.

Types of Consideration


Executory consideration means consideration that consists of a promise. It is executory when one promise is made in return for another i.e. a promise in return for a promise.

Section 24: illustration (a)
A agrees to sell his house to B for RM 10, 000. Here, B’s promise to pay the sum of RM 10, 000 is the consideration for A’s promise to sell the house, and A’s promise to sell the house is the consideration for B’s promise to pay the RM 10, 000. These are lawful consideration.

In this case, nothing has yet been done at the time when the promises were made to fulfill the mutual promises on which the bargain was struck. The whole transaction remains in future, a promise for a promise in the future.

K Murugesu v Nadarajah [1980] 2 MLJ 82
The respondent was the tenant of the appellant. The respondent had pestered the appellant to sell to him the house he was leaving in. The appellant finally wrote on a piece of paper an agreement to sell to the respondent the Said house for RM26,000 within three months from the date of the agreement. Later the appellant refused to sell and the respondent sued for specific performance. The appellant contended that there was no consideration for the offer to sell and the agreement was void for being without consideration. The Federal Court in this case held that the agreement must be seen to be a case of executory consideration. A promise is made by one party in return for a promise made by the other; in such a case each promise is the consideration for the other.


Executed consideration is consideration that consists of doing an act. The example is that of an offer of a reward for an act. If A offers RM X to anyone who shall return his lost cat, the return of the lost cat by B in accordance with the offer constitutes the required consideration. Thus the consideration has been executed by B. Then, A has still to perform his part of consideration by paying B RM X.

Past Consideration

Past consideration consists of something wholly performed before the promise was made. It was made or given not in response to the promise....
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