CONSIDERATION

1. DEFINITION
There must be consideration (or a promise) by both parties for a contract to be
valid.
Simple definition:
Its something which has value in the form of money, goods or even
promise to do to stay away from something.
Legal definition:
When at the desire of the promisor, the promisee or any other person
does or abstains from doing something.
Case law:
Osman Ghani & Others vs United Asian Banks, court held promise
made by bank not to sue was good consideration
2. TYPES OF CONSIDERATION
2.1. Executory
o Promise made by the parties is executory when neither party have
performed their duties (i.e. their promise) under the contract
o Case law; Murugesu vs Nadarajah; mutual promises to each other is
executory consideration
o (Example; buying and selling house)
2.2. Executed
o One party performs his part and another party has obtained his part of
the contract
o Case law; Carlill vs Carbolic Smoke Ball, where Carlills response to
Carbolics promise of reward was executed.
o (Example; paying for lost dog)
2.3. Past
o Promise is made after one party has already performed his part of the
contract
o Its a situation where person who performs does it voluntarily while
person who receives the consideration may decide to give a reward.
o (Example; paying for saving daughter from a burning house)
3. PAST CONSIDERATION: POSITION OF THE LAW
3.1. English law
o Past consideration not valid
o Case law; Re McArdle, where court held promise to carry out certain
work was considered not valid and considered as work done for free
3.2. Malaysian Law
Past consideration is valid as a result of
o Promisee has done something at the desire of the promisor
o An agreement to compensate a voluntary agreement is valid
consideration